Under what circumstances related to a Multi-Unit Development Manager is the Development Principal for a Carls franchise required to devote full-time efforts to supervising the development of Franchised Restaurants?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
e Guarantee. Accordingly, if any 10% Owner is not an individual, CJR shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Developer and their spouses, if applicable. (By way of example, if a 10% Owner of Developer is a corporation, CJR has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation and their spouses, if applicable.)
If Developer, any guarantor or any parent, subsidiary or affiliate of Developer holds any interest in other restaurants that are franchised by CJR or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to CJR and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by CJR in its sole discretion. For purposes of this Agreement, an affiliate of Developer is any company controlled, directly or indirectly, by Developer or Developer's parent or subsidiary.
CJR TR Development Agreement – 5/24
Franchisee (Alpha Code)
DMA/Area of Development – Number of Restaurants
F. Development Principal
Developer shall designate and retain an individual to serve as the Development Principal.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a Development Principal is generally required to devote full-time efforts to supervising the development of Franchised Restaurants. However, there are specific conditions under which this requirement is modified, particularly when a Multi-Unit Development Manager is involved.
Specifically, unless Carls has approved a Multi-Unit Development Manager, the Development Principal must devote full-time and best efforts to supervising the development of the Carls Franchised Restaurants. This means the Development Principal cannot engage in other business activities that demand substantial management responsibility. This ensures that the Development Principal is fully dedicated to the development of Carls restaurants.
If the Developer is building Carls restaurants in multiple geographic markets, and the Development Principal does not meet specific requirements, the Developer must designate a Multi-Unit Development Manager. This manager will operate under the supervision of the Development Principal. The Multi-Unit Development Manager is required to devote their full-time efforts to supervising the development of Carls Franchised Restaurants and cannot participate in other business activities that require significant management responsibilities. This structure ensures focused oversight in markets where the Development Principal may not be able to provide sufficient attention.