Are capital expenses for repair and maintenance of the Franchised Location subject to the time limitations for modernization at a Carls Jr. franchise?

According to the 2025 Carls Jr. Franchise Disclosure Document, capital expenses for the repair and maintenance of the franchised location are not subject to the time limitations for modernization. The FDD specifies that extensive structural changes, major remodeling and renovations, and substantial modifications to existing equipment and improvements to modernize and conform the Franchised Restaurant to the image of the System for new franchised and company restaurants shall be required (i) as a condition of renewal, (ii) as a condition of CJR issuing its consent to a proposed transfer as defined further in Section 18 below, or (iii) at CJR's request (but not more often than every 5 years). However, capital expenses necessary for the repair and maintenance of the Franchised Location and modifications required by applicable law or required to abate a hazardous situation are not subject to these time limitations.

This means that while Carls Jr. franchisees will be required to modernize their locations periodically, the costs associated with routine repairs and maintenance, legal compliance, and hazard abatement are handled differently. These expenses are not tied to the modernization schedule, providing some financial flexibility for franchisees. This distinction is important for budgeting and financial planning, as franchisees need to account for both planned modernization expenses and unplanned repair and maintenance costs.

For a prospective Carls Jr. franchisee, this information highlights the importance of understanding the different types of capital expenditures and their associated timelines. While modernization requirements are predictable and can be planned for, repair and maintenance costs can be less predictable and may require a more flexible budget. It would be prudent for potential franchisees to inquire about the typical range of repair and maintenance costs for a Carls Jr. location and to factor this into their financial projections.