Under the Management Agreement, who may fulfill Carls' duties and obligations under existing and future Franchise Agreements and Development Agreements?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Under an April 1, 2013 management agreement ("Management Agreement") among our indirect corporate parent, CKE Restaurants Holdings, Inc., us and several other parties, CKE Restaurants Holdings, Inc. may – at all times acting on our behalf – fulfill all of our duties and obligations under all existing and future Franchise Agreements and Development Agreements, including: managing the Carl's Jr. System; marketing and offering new and renewal Franchise Agreements and Development Agreements as our franchise broker; training franchisees and their employees; and providing the required support to franchisees. CKE Restaurants Holdings, Inc. will act in conjunction with CKE in fulfilling our duties and obligations under the Franchise Agreements and Development Agreements.
If CKE Restaurants Holdings, Inc. fails to perform its obligations under the Management Agreement, it may be replaced as the franchise service provider. However, as the franchisor, we will always be ultimately responsible for fulfilling all of our duties and obligations under your Franchise Agreements and Development Agreements.
Source: Item 1 — THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 7–19)
What This Means (2024 FDD)
According to the 2024 FDD, CKE Restaurants Holdings, Inc., Carls' indirect corporate parent, has the authority to fulfill Carls' duties and obligations under existing and future Franchise Agreements and Development Agreements. This arrangement is formalized through an April 1, 2013 Management Agreement among CKE Restaurants Holdings, Inc., Carls Jr. Restaurants LLC, and other parties. CKE Restaurants Holdings, Inc. acts on behalf of Carls.
Specifically, CKE Restaurants Holdings, Inc. is responsible for managing the Carl's Jr. system, marketing and offering new and renewal Franchise Agreements and Development Agreements as Carls' franchise broker, training franchisees and their employees, and providing the necessary support to franchisees. CKE Restaurants Holdings, Inc. works in conjunction with Carls in fulfilling these duties.
However, the FDD stipulates that Carls, as the franchisor, retains ultimate responsibility for fulfilling all duties and obligations under the Franchise Agreements and Development Agreements, even if CKE Restaurants Holdings, Inc. fails to perform its obligations under the Management Agreement. In such a case, CKE Restaurants Holdings, Inc. may be replaced as the franchise service provider, but Carls remains accountable.