According to the Carls Jr. agreement, what is the Development Term defined as?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 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.
This Agreement is not a license or a franchise agreement. It does not give Developer the right to operate Franchised Restaurants or use the Carl's Jr. System. In addition, this Agreement does not give Developer any right to license others to operate Franchised Restaurants or use the Carl's Jr. System. This Agreement only gives Developer the opportunity to enter into Franchise Agreements for the operation of Franchised Restaurants at locations in the Development Territory accepted by CJR. Each Franchised Restaurant developed pursuant to this Agreement shall be established and operated only in strict accordance with a separate Franchise Agreement.
Developer acknowledges that, over time, CJR has entered, and will continue to enter, into agreements with other developers and franchisees that may contain provisions, conditions and obligations that differ from those contained in this Agreement. The existence of different forms of agreement and the fact that CJR and other developers and franchisees may have different rights and obligations does not affect the duties of the parties to this Agreement to comply with the terms of this Agreement.
During the Development Term, Developer and the Development Principal shall devote their best efforts to the development, management and operation of the Franchised Restaurants in the Development Territory.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Development Term refers to the period during which a developer has the right to develop franchised restaurants within a specific territory. The Development Term begins when the Development Agreement is signed by Carls Jr. and concludes when either the last restaurant required by the Development Schedule opens or the date the last restaurant was required to open, as detailed in Appendix B of the agreement. There is no renewal term for the Development Agreement. Each franchised restaurant must be located within the Development Territory at a site approved by Carls Jr.
This agreement grants development rights but is explicitly not a license or franchise agreement. It does not authorize the developer to operate restaurants or use the Carls Jr. system directly. Instead, it provides the opportunity to enter into separate Franchise Agreements for each restaurant developed within the territory. The developer also cannot license others to operate Carls Jr. restaurants under the Development Agreement.
Carls Jr. retains the right to enter into agreements with other developers and franchisees that may differ from the current agreement. The existence of different agreements does not affect the parties' obligations to comply with the terms of their specific Development Agreement. During the Development Term, the developer is expected to dedicate their best efforts to the development, management, and operation of the franchised restaurants within their territory.