Does Carls Jr. assume liability if a transferee experiences financial difficulties after Carls Jr. consents to the transfer?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
CJR's decision with respect to a proposed Transfer shall not create any liability on the part of CJR: (a) to the transferee, if CJR consents to the Transfer and the transferee experiences financial difficulties; or (b) to Developer or the proposed transferee, if CJR withholds consent to the Transfer.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. does not assume liability to a transferee if they experience financial difficulties after Carls Jr. has consented to the transfer. The document states that Carls Jr.'s decision regarding a proposed transfer does not create any liability on their part to the transferee if they face financial struggles post-transfer.
This provision protects Carls Jr. from potential legal or financial repercussions if a new franchisee, despite being approved, encounters financial problems. It clarifies that Carls Jr.'s approval of a transfer does not equate to a guarantee of the transferee's financial success.
This clause is fairly standard in franchise agreements, as franchisors typically want to avoid being held responsible for the financial performance of individual franchisees. Prospective Carls Jr. franchisees should carefully evaluate their own financial capabilities and business acumen before entering into a franchise agreement, as their success is not guaranteed by Carls Jr.'s approval of the transfer.