Under what condition are Carl's Jr. collection costs and expenses due?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
e. | | Costs and Attorneys' Fees | CJR's costs and expenses | As incurred | If we prevail in litigation regarding enforcement of the terms of any agreement with you, you must pay our attorneys' fees and costs. |
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Carl's Jr. Renewal Fee | $5,000 for a renewal term of 5 years or less or $10,000 for a renewal term greater than 5 years, but no more than 10 years | At the time the new franchise agreement is signed | |
| Collection Costs and Expenses | CJR's costs and expenses | On demand, if required | These costs and expenses include, but are not limited to, costs and commissions due a collection agency, reasonable attorneys' fees, costs incurred in creati |
Source: Item 6 — Other Fees (FDD pages 26–31)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, collection costs and expenses are due on demand, if required. These costs encompass a range of items, including fees for collection agencies, attorney's fees, costs related to creating or replicating gross sales reports for the franchised restaurant, court costs, expert witness fees, discovery costs, and attorney's fees and costs on appeal. The costs also include interest charges on all of the aforementioned items.
For a prospective Carls franchisee, this means that if Carls incurs costs and expenses to collect payments or enforce the franchise agreement, the franchisee will be responsible for covering those costs. This can include scenarios where the franchisee is late on payments, violates the franchise agreement, or requires legal action from Carls to resolve a dispute.
The "on demand, if required" condition suggests that these costs are not automatically charged but are levied when Carls deems it necessary to pursue collection or legal action. Franchisees should be aware of this potential financial burden and strive to maintain compliance with the franchise agreement to avoid incurring such expenses. It is common in the franchise industry for franchisors to pass on collection and legal costs to franchisees in cases of non-compliance or disputes, as it protects the franchisor's financial interests and ensures that franchisees bear the responsibility for their actions.