Can Carls Jr. concentrate purchases with one supplier to obtain lower prices?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
roducts, you must use only our secret recipe products and purchase them from us, our affiliate or a source designated by us. For the fiscal year ended January 27, 2025, neither our affiliates nor us received any revenue from the sale of these products to our franchisees.
We may approve one or more suppliers or distributors for any products, equipment (including computer/cash register system as noted below), goods or materials, and we may approve a supplier or distributor only as to certain goods or materials. We 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 operated or franchised by CJR or our affiliates. Although you are not required to lease a location from us or an affiliate, we must consent to your selection of the site for your Carl's Jr. Restaurant. If you lease the Restaurant premises from a third party landlord, you must sign the Franchise Lease Addendum attached as Appendix G to the Franchise Agreement.
Approval of a supplier or a distributor may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, sanitation standards, facility standards, insurance and other quality assurance requirements or other criteria, and concentration of purchases, as set forth above, and such approval may be temporary pending a further evaluation of the supplier by us. A fee not to exceed our actual costs of reviewing the supplier or distributor and auditing the facility, if needed, may be charged by us and must be paid by you. We may establish commissaries and distribution facilities owned and operated by us or an affiliate that we will designate as an approved supplier.
One or more of our officers may own nominal interests in certain of our approved suppliers which are publicly traded companies or through investment funds.
We and our affiliates may receive fees, payments, commissions, field-of-use license royalties or other consideration from approved suppliers based on sales to franchisees, from promotional allowances and volume discounts. We and our affiliates may use all amounts received from approved suppliers, distributors or third parties, whether or not based on your and/or other franchisees' actual or prospective dealings with them, without restriction for any purposes we or our affiliates deem appropriate.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 37–41)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. has the right to concentrate purchases with one or more suppliers to potentially secure lower prices, better advertising support, or services for any group of Carls Jr. restaurants. This includes restaurants operated or franchised by CJR or its affiliates.
Carls Jr. also negotiates system-wide contracts with various suppliers, allowing franchisees to purchase products at negotiated prices and terms. However, Carls Jr. reserves the right to limit the number of suppliers who can offer these negotiated prices and terms. For equipment, smallwares, and supplies, franchisees must purchase from Wasserstrom Holdings, Inc. and its subsidiaries to obtain the negotiated price and be eligible for certain revenue-sharing incentives.
Approximately 90% of a franchisee's purchases or leases of fixtures, furnishings, equipment, décor, signs, food items, ingredients, supplies, and other products related to establishing the franchised restaurant must adhere to Carls Jr.'s specifications or be sourced from approved suppliers. These items are estimated to represent about 65% of a franchisee's controllable purchases, excluding labor and general administrative costs. Carls Jr. does not provide material benefits to franchisees based on their use of designated or approved suppliers.