What is the consequence if a Developer transfers interest without Carls Jr.'s consent?

According to the 2025 Carls Jr. Franchise Disclosure Document, if a Developer transfers interest without obtaining prior written consent from CJR (Carls Jr.), it constitutes a material breach of the Development Agreement. Specifically, Item 23 outlines various conditions that constitute a material breach, including any transfer that requires CJR's prior written consent but occurs without it.

This means that Carls Jr. could take action against the Developer for violating the agreement. While the specific remedies available to Carls Jr. are not detailed in this excerpt, such a breach typically allows the franchisor to terminate the agreement, pursue legal action for damages, and prevent the unauthorized transfer from proceeding. The FDD excerpt emphasizes the importance of adhering to the transfer requirements outlined in Section 10 of the agreement.

For a prospective Carls Jr. franchisee, this highlights the critical need to understand and comply with all transfer provisions. Seeking legal counsel to review the Development Agreement and ensuring all required consents are obtained before making any transfer of interest is essential to avoid potential legal and financial repercussions. The franchisee should discuss with Carls Jr. what specific actions the franchisor may take if a transfer occurs without their consent.