According to Carls's 2024 Franchise Disclosure Document, a franchisee is prohibited from financing the construction, renovation, or operation of their franchised restaurant through a public or private offering of any right, title, or interest in the restaurant, the property it's built on, or the receipts from its operation without prior written approval from Carls. This approval will not be unreasonably withheld.

This stipulation means that franchisees need to seek and obtain explicit permission from Carls before seeking external funding through methods like selling shares or interests in the restaurant's assets or revenue. This requirement allows Carls to maintain control over the financial structure of its franchises and ensure that franchisees are not entering into agreements that could negatively impact the brand or the franchisee's ability to operate the business effectively.

For a prospective Carls franchisee, this implies that they must have a clear and approved financing plan in place before starting construction, renovation, or operations. If the franchisee intends to use any form of public or private offering to raise capital, they must first present their plan to Carls and obtain written consent. This process adds a layer of complexity to the financing process but is designed to protect both the franchisee and the Carls brand. It is important for potential franchisees to factor this requirement into their timelines and financial planning.

It is fairly common in the franchise industry for franchisors to have some oversight regarding how franchisees finance their businesses, as the financial stability of each location can impact the overall brand. However, the stipulation that Carls's approval "shall not be unreasonably withheld" provides some assurance to franchisees that legitimate financing plans will be considered fairly.