Under what circumstances related to property control dates can a Carls developer be in default?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
No later than 9 months after CJR's written acceptance of the site, Developer shall deliver to CJR a fully-signed lease or sublease for the Authorized Site (defined below) or proof of Developer's purchase of such site.
The effective date of the lease or sublease, or the closing day of the purchase of the real property, shall be the "Property Control Date".
Developer shall open the Franchised Restaurant no later than the Opening Date set forth in Appendix B.
Strict compliance with the Development Schedule is essential to this Agreement.
Any failure by Developer in fulfilling its obligations to develop and open any Franchised Restaurant when required by the Development Schedule or to obtain site acceptance by the date specified in the Development Schedule shall constitute a material, non-curable breach of this Agreement permitting CJR immediately to terminate this Agreement by giving written notice of termination to Developer. Time is of the essence.
- (1) Developer fails to provide CJR with a fully-executed lease or sublease, or proof of purchase of the real property, for a proposed site by the applicable Property Control Date listed in Appendix B.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a developer can face termination of their development agreement if they fail to meet specific deadlines related to securing property control. Specifically, Carls requires the developer to provide a fully-signed lease or sublease, or proof of purchase for the real property of a proposed site within 9 months of Carls's written acceptance of the site. Failure to meet this deadline constitutes grounds for termination.
Carls emphasizes strict compliance with the development schedule, stating that any failure to develop and open a franchised restaurant as required, or to obtain site acceptance by the specified date, is considered a material, non-curable breach of the agreement. This means that Carls can immediately terminate the agreement by providing written notice, without offering an opportunity to cure the breach.
The Property Control Date is defined as the effective date of the lease or sublease, or the closing day of the purchase of the real property. This date is critical because failing to provide the necessary documentation by the specified Property Control Date is a direct trigger for termination of the development agreement with Carls. This underscores the importance of securing property and providing the required documentation within the stipulated timeframe to maintain the development rights granted by Carls.