Under what conditions must a Carls franchisee designate and retain a Multi-Unit Manager?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
aintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us. The Operating Principal will be required to successfully complete the FMTP and any additional training required by us. If you operate restaurants in multiple markets that are franchised by us or our affiliates, an individual meeting the above qualifications will serve as the Operating Principal in at least one market.
If you operate restaurants that are franchised by us or our affiliates in multiple geographic markets, for all markets in which the Operating Principal fails to satisfy our requirements, you must designate and retain an individual to serve as Multi-Unit Manager. The Multi-Unit Manager will be under the supervision of the Operating Principal. The Multi-Unit Manager must devote full time and best efforts to supervising the operation of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market, successfully complete the FMTP and any additional training required by us, and be approved by us. In addition, the Multi-Unit Manager must maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us.
The Development Principal must own at least a 10% equity ownership interest in you, or in your general partner if you are a limited partnership, unless modified by us in our sole discretion. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publiclyheld entity as of the date of the first franchise-related agreement between you and us.) The Development Principal must be a member of the Continuity Group and have full control over the day-to-day development of the Franchised Restaurants.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 59–61)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee must designate and retain a Multi-Unit Manager under specific circumstances related to their operational and developmental performance. If a franchisee operates restaurants franchised by Carls or its affiliates in multiple geographic markets, they must designate and retain a Multi-Unit Manager for any market where the Operating Principal fails to meet Carls's requirements. This manager operates under the supervision of the Operating Principal. Similarly, if a franchisee is developing franchised restaurants in multiple geographic markets, they must designate and retain a Multi-Unit Development Manager for all markets where the Development Principal fails to satisfy Carls's requirements. This manager is supervised by the Development Principal.
The Multi-Unit Manager, whether focused on operations or development, must devote their full time and best efforts to supervising either the operation or development of the Carls restaurants within their designated geographic market. They must also successfully complete the Franchise Management Training Program (FMTP) and any additional training required by Carls, and they must be approved by Carls. Furthermore, unless waived in writing by Carls, the Multi-Unit Manager must maintain their primary residence within a reasonable driving distance of the Franchised Restaurant or Development Territory.
These requirements ensure that Carls maintains consistent operational and developmental standards across all franchised locations, especially when franchisees are expanding or managing multiple units. By mandating a Multi-Unit Manager in underperforming markets, Carls aims to provide additional oversight and support to improve performance and adherence to the Carls system. This requirement also ensures that someone is readily available and accessible to address any issues that may arise, as indicated by the residency requirement.