Can CJR establish commissaries and distribution facilities as approved suppliers for Carls Jr. franchisees?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
CJR may approve one or more suppliers for any goods or materials and may approve a supplier only as to certain goods or materials. CJR may concentrate purchases with one or more suppliers to obtain lower prices and/or the best advertising support and/or services for any group of Carl's Jr. Restaurants or any other group of restaurants franchised or operated by CJR or its affiliates. Approval of a supplier may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, or other criteria, and concentration of purchases, as set forth above, and may be temporary pending a further evaluation of such supplier by CJR. CJR may establish commissaries and distribution facilities owned and operated by CJR or an affiliate that CJR shall designate as an approved supplier.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, CJR (presumably referring to Carl's Jr. Restaurants' parent company or an affiliate) has the right to establish commissaries and distribution facilities. These facilities can be owned and operated by CJR or an affiliate, and CJR can designate them as approved suppliers for the franchisees. This means that Carls Jr. franchisees may be required to purchase certain goods and materials from these commissaries or distribution centers.
This arrangement allows Carls Jr. to potentially control the quality and consistency of products used in its restaurants, as well as negotiate better pricing through bulk purchasing. It also gives Carls Jr. an additional revenue stream through the operation of these facilities. For a franchisee, this could mean potentially lower costs due to the franchisor's ability to negotiate better deals, but it also means less flexibility in choosing suppliers.
Carls Jr. also maintains the right to approve other suppliers for goods and materials. However, this approval may be conditional, based on factors such as delivery frequency, reporting capabilities, and service standards. If a franchisee wants to use a supplier not already approved by Carls Jr., they must submit a written request for approval, and Carls Jr. has the right to inspect the supplier's facilities and test their products, with the franchisee bearing the costs of inspection and testing. Carls Jr. can also re-inspect approved suppliers and revoke approval if they fail to meet the required criteria.