Under what circumstances is a Carls franchisee required to designate and retain a Multi-Unit Development Manager, and what is the relationship between the Multi-Unit Development Manager and the Development Principal?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If Developer is developing restaurants in multiple markets that are franchised by CJR or its affiliates, an individual meeting the qualifications of this Section will serve as Development Principal in at least one market.
G. Multi-Unit Development Manager
CJR TR Development Agreement – 5/24 If Developer is developing Franchised Restaurants in multiple geographic markets, for all markets in which the Development Principal fails to satisfy the requirements of Section 8.F., Developer shall
Franchisee (Alpha Code)
DMA/Area of Development – Number of Restaurants
designate and retain an individual to serve as Multi-Unit Development Manager. The Multi-Unit Development Manager shall be under the supervision of the Development Principal. The Multi-Unit Development Manager shall meet all of the following qualifications:
- (1) The Multi-Unit Development Manager shall devote full time and best efforts to supervising the development of the Franchised Restaurants and other restaurants to be operated by Developer that are franchised by CJR or its affiliates in a geographic market and shall not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility.
- (2) Unless waived in writing by CJR, the Multi-Unit Development Manager shall maintain his primary residence within a reasonable driving distance of the Development Territory.
- (3) If requested by CJR, the Multi-Unit Development Manager shall successfully complete CJR's development training. In addition, the Multi-Unit Development Manager shall successfully complete the FMTP and any additional training required by CJR.
- (4) CJR shall have approved the Multi-Unit Development Manager, and not have later withdrawn that approval.
If a Multi-Unit Development Manager no longer qualifies as such, Developer shall designate another qualified person to act as Multi-Unit Development Manager within 30 days after the date the prior Multi-Unit Manager ceases to be qualified. Developer's designee to become Multi-Unit Development Manager must successfully complete the FMTP and any additional development training required by CJR.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee, referred to as the Developer, is required to designate and retain a Multi-Unit Development Manager if they are developing franchised restaurants in multiple geographic markets and the Development Principal fails to meet specific requirements. The Development Principal is an individual who meets certain qualifications and serves as the main point of contact for development in at least one market when the Developer is expanding in multiple markets franchised by CJR or its affiliates.
The Multi-Unit Development Manager is responsible for supervising the development of the franchised restaurants and other restaurants operated by the Developer that are franchised by CJR or its affiliates within a specific geographic market. This manager must dedicate their full time and best efforts to this task and cannot engage in other business activities that demand substantial management responsibility. Unless Carls waives this requirement in writing, the Multi-Unit Development Manager must live within a reasonable driving distance of the Development Territory.
The Multi-Unit Development Manager operates under the supervision of the Development Principal. Carls must approve the Multi-Unit Development Manager, and this approval cannot be withdrawn later. Furthermore, the Multi-Unit Development Manager must complete Carls's development training, the Franchise Management Training Program (FMTP), and any additional training that Carls requires. If a Multi-Unit Development Manager no longer meets the qualifications, the Developer has 30 days to appoint a replacement who meets the necessary criteria and completes the required training programs.
In summary, the Multi-Unit Development Manager is a subordinate role to the Development Principal, designed to ensure adequate oversight and management of restaurant development in specific markets when the Development Principal cannot fulfill all requirements, particularly when a franchisee is expanding across multiple geographic areas. This structure ensures that Carls maintains consistent standards and adequate support for its franchisees during the development process.