Does CJR have discretion in determining whether a Carls Jr. franchisee has operated the Franchised Restaurant in accordance with the applicable franchise agreements and System Standards for renewal?

According to the 2025 Carls Jr. Franchise Disclosure Document, CJR (Carls Jr. Restaurants LLC) has sole discretion in determining whether a franchisee has operated their restaurant according to franchise agreements and system standards for renewal. Specifically, Carls Jr. will assess if the franchisee has operated the Franchised Restaurant and all other franchised Carl's Jr. Restaurants in accordance with the applicable franchise agreements and with the System Standards. These standards are detailed in the OPM (Operating Procedures Manual) or otherwise revised by CJR.

This means that a franchisee's eligibility for renewal is not guaranteed, even if they meet other requirements. Carls Jr. retains the right to deny renewal if they determine the franchisee has not adhered to the brand's standards and agreements. This determination is based on Carls Jr.'s assessment of the franchisee's compliance with operational and system-wide standards across all their Carls Jr. locations.

For a prospective franchisee, this highlights the importance of strictly adhering to all operational guidelines and standards set forth by Carls Jr. Not only is compliance essential for the day-to-day operation of the franchise, but it is also a critical factor in securing franchise renewal. A franchisee should maintain detailed records of their adherence to these standards and address any potential issues promptly to demonstrate their commitment to the Carls Jr. system. Franchisees should also maintain good relationships with the franchisor to ensure concerns are addressed and resolved.