Under what conditions does the Development Term for a Carls franchise end?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
CJR hereby grants to Developer, subject to the terms, conditions, provisions and limitations of this Agreement, the right to develop Franchised Restaurants in the Development Territory during the Development Term. The Development Term begins on the date this Agreement is signed by CJR and terminates on the first to occur of: (1) the date that the last Franchised Restaurant required by the Development Schedule in attached Appendix B opens for business; or (2) the date that the last Franchised Restaurant was required to be opened pursuant to the Development Schedule. There is no renewal term for this Agreement. Each Franchised Restaurant shall be located in the Development Territory at a specific location accepted by CJR.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Development Term, which begins when the Development Agreement is signed by CJR, ends when one of two conditions is met. First, the Development Term ends on the date that the last Franchised Restaurant required by the Development Schedule in attached Appendix B opens for business. Second, the Development Term ends on the date that the last Franchised Restaurant was required to be opened pursuant to the Development Schedule.
This means a prospective Carls developer needs to carefully review the Development Schedule (Appendix B) to understand their obligations. The Development Term dictates the period during which the developer has the right to develop Carls restaurants in a specific territory. Missing a scheduled opening date will trigger the end of the agreement.
It is important to note that there is no renewal term for the Development Agreement. Each Franchised Restaurant must be located in the Development Territory at a specific location accepted by CJR. The Development Agreement grants development rights only and is not a franchise agreement, meaning it does not give the developer the right to operate Franchised Restaurants or use the Carl's Jr. System without a separate Franchise Agreement.