Does Carls Jr.'s acceptance of payments in a manner not specified in the Franchise Agreement constitute a waiver of its right to demand payment according to the agreement's requirements?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
No payment by Franchisee or acceptance by CJR of any monies under this Agreement for a lesser amount than due shall be treated as anything other than a partial payment on account. Franchisee's payment of a lesser amount than due with an endorsement, statement or accompanying letter to the effect that payment of the lesser amount constitutes full payment shall be given no effect and CJR may accept the partial payment without prejudice to any rights or remedies it may have against Franchisee. Acceptance of payments by CJR other than as set forth in this Agreement shall not constitute a waiver of CJR's right to demand payment in accordance with the requirements of this Agreement or a waiver by CJR of any other remedies or rights available to it pursuant to this Agreement or under applicable law. Notwithstanding any designation by Franchisee, CJR shall have sole discretion to apply any payments by Franchisee to any of its past due indebtedness for royalty fees, advertising contributions, purchases from CJR or its affiliates, interest or any other indebtedness. CJR has the right to accept payment from any other entity as payment by Franchisee. Acceptance of that payment by CJR will not result in that other entity being substituted for Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr.'s acceptance of payments in a manner not specified in the Franchise Agreement does not constitute a waiver of its right to demand payment according to the agreement's requirements. Specifically, the document states that acceptance of payments by Carls Jr. other than as set forth in the agreement does not waive Carls Jr.'s right to demand payment as required by the agreement. This protects Carls Jr.'s ability to enforce the payment terms of the franchise agreement, even if they have accepted payments in a non-standard way.
Furthermore, the 2025 FDD states that no payment by the franchisee or acceptance by Carls Jr. of any monies under the agreement for a lesser amount than due shall be treated as anything other than a partial payment on account. This means that if a franchisee pays less than the full amount due, Carls Jr.'s acceptance of that partial payment does not prevent them from pursuing the remaining balance. Carls Jr. can accept the partial payment without giving up any of its rights or remedies against the franchisee.
Carls Jr. also retains the sole discretion to apply any payments received from the franchisee to any past due indebtedness, regardless of any designation made by the franchisee. This includes applying payments to royalty fees, advertising contributions, purchases from Carls Jr. or its affiliates, interest, or any other indebtedness. Additionally, Carls Jr. has the right to accept payment from any other entity as payment by the franchisee, without that entity being substituted for the franchisee.