Does the Carls Jr. agreement specify that the Developer will be the only franchisee in the Development Territory?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as reserved in the preceding paragraph, CJR will not, during the Development Term, operate or license others to operate Carl's Jr. Restaurants in the Development Territory, provided Developer is in compliance with the terms of this Agreement and any other agreements with CJR or its affiliates and is current on all obligations due CJR and its affiliates. This Section 2 does not prohibit CJR or its affiliates from: (1) operating and licensing others to operate, during the Development Term, Carl's Jr. Restaurants at any location outside of the Development Territory; (2) operating and licensing others to operate, after this Agreement terminates or expires, Carl's Jr. Restaurants at any location, including in the Development Territory; and (3) operating and licensing others to operate at any location, during or after the Development Term, any type of restaurant other than a Carl's Jr. Restaurant.
The restrictions contained in this Section 2 apply only to CJR and do not apply to Carl's Jr. Restaurants under development or in operation in the Development Territory as of the date of this Agreement. Nothing shall prohibit CJR or its affiliates from operating or licensing a restaurant at any location in or outside the Development Territory, other than a restaurant in the Development Territory that primarily is identified by the name and mark "Carl's Jr."
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Development Agreement grants the developer limited exclusive rights within the Development Territory. During the Development Term, Carls Jr. will not operate or license others to operate Carls Jr. Restaurants in the Development Territory, provided the Developer complies with the agreement terms and is current on all obligations. This exclusivity is limited and subject to several exceptions.
Carls Jr. retains the right to operate or license others to operate Carls Jr. Restaurants outside the Development Territory at any time. After the Development Agreement terminates or expires, Carls Jr. can operate or license others to operate Carls Jr. Restaurants at any location, including within the Development Territory. Additionally, Carls Jr. is not restricted from operating or licensing other types of restaurants (other than Carls Jr.) at any location during or after the Development Term. The restrictions only apply to Carls Jr. and do not affect Carl's Jr. Restaurants already under development or in operation in the Development Territory as of the agreement date.
Carls Jr. also reserves specific rights within the Development Territory, including operating or licensing Carls Jr. Restaurants in travel plazas, gas stations, convenience stores, airports, train stations, bus stations, toll plazas, stadiums, arenas, convention centers, military facilities, schools, colleges, universities, hospitals, recreational theme parks, business or industrial foodservice venues, venues in which foodservice is or may be provided by a master concessionaire or contract foodservice provider, Indian reservations, casinos, "ghost" or "dark" kitchens or any similar captive or non-traditional "brick and mortar" locations. They can also award national or regional licenses to third parties to sell products under the Proprietary Marks in foodservice facilities primarily identified by the third party's trademark, develop and operate restaurants other than Carls Jr. Restaurants, merchandise and distribute products identified by some or all of the Proprietary Marks through any other method or channel of distribution, and sell and distribute products identified by some or all of the Proprietary Marks to restaurants other than Carls Jr. Restaurants, provided those restaurants are not licensed to use the Proprietary Marks in connection with their retail sales. These reservations significantly limit the developer's exclusive rights, as Carls Jr. retains considerable freedom to operate or license others within the Development Territory under various circumstances.