Under what conditions can Carls terminate the Development Agreement with cause?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section In Development Agreement | Summary |
|---|---|---|
| f. Termination by us with cause | Section 13 | We may terminate upon default, which includes, but is not limited to, remaining in default beyond any applicable cure period under any agreement with us or our affiliates, including any Franchise Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, Carls can terminate the Development Agreement with cause if the franchisee defaults. This includes remaining in default beyond any applicable cure period under any agreement with Carls or its affiliates, including any Franchise Agreement.
This means that if a franchisee fails to meet their obligations as outlined in the Development Agreement or any related agreements, and they do not correct the issue within the given timeframe (if a cure period is provided), Carls has the right to terminate the agreement. This could include failure to meet development schedules, non-payment of fees, or violation of brand standards.
It is important for prospective Carls franchisees to carefully review the Development Agreement and any related documents to fully understand their obligations and the potential consequences of failing to meet them. Understanding the specific conditions that could lead to termination with cause is crucial for maintaining a successful and long-term relationship with Carls.