Under what conditions can CJR terminate the Carls Development Agreement if a transfer occurs?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of CJR shall be null and void and shall constitute a material
CJR TR Development Agreement – 5/24 Franchisee (Alpha Code) DMA/Area of Development – Number of Restaurants
breach of this Agreement, for which CJR may terminate this Agreement without providing Developer an opportunity to cure the breach.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, CJR can terminate the Development Agreement if a transfer occurs without prior written consent. Carls requires that the franchisee obtain approval before any direct or indirect interest in the Development Agreement is sold, assigned, transferred, conveyed, given away, pledged, mortgaged, or otherwise encumbered.
Carls emphasizes that the rights and duties outlined in the Development Agreement are personal to the developer. Carls enters into the agreement based on the developer's business skills, financial capacity, personal character, experience, and ability to operate high-quality foodservice operations. The agreement is made with the understanding that the developer will be the exclusive franchisee in the Development Territory during the Development Term, except as otherwise reserved by CJR.
Any transfer without prior written consent from Carls constitutes a material breach of the Development Agreement. In the event of such a breach, Carls has the right to terminate the agreement immediately, without providing the developer an opportunity to rectify the breach. This underscores the importance Carls places on controlling who becomes a developer within their system and ensuring they meet the company's standards.