Does Carls Jr. consider the franchisee's personal character when entering into the Franchise Agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Franchisee shall advise CJR in writing of any proposed Transfer, submit (or cause the proposed transferee to submit) a franchise application for the proposed transferee, submit a copy of all contracts and all other agreements or proposals and submit all other information requested by CJR relating to the proposed Transfer.
If CJR does not exercise its right of first refusal pursuant to Section 18.J., the decision as to whether or not to consent to a proposed Transfer shall be made by CJR in its sole discretion and shall include numerous factors deemed relevant by CJR.
These factors may include, but will not be limited to, the following:
- (1) The proposed transferee (and if the proposed transferee is not a natural person, all persons that have any direct or indirect interest in the transferee as CJR may require) must demonstrate to CJR's satisfaction extensive experience in high quality restaurant operations of a character and complexity similar to Carl's Jr.
Restaurants; must meet the managerial, operational, experience, quality, character and business standards for a franchisee promulgated by CJR from time to time; must possess a good character, business reputation and credit rating; must have an organization whose management culture is compatible with CJR's management culture; and must have adequate financial resources and working capital, as determined by CJR in its sole discretion, to meet Franchisee's obligations under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. does consider the franchisee's personal character when entering into the Franchise Agreement, particularly in the context of a transfer. Specifically, if a franchisee proposes to transfer their franchise to a new owner, Carls Jr. assesses the proposed transferee's character.
Carls Jr. requires that the proposed transferee demonstrate a good character and business reputation. The transferee must also meet the managerial, operational, experience, quality, and business standards that Carls Jr. promulgates for franchisees. Furthermore, the organization's management culture must be compatible with Carls Jr.'s management culture.
This evaluation of character ensures that new franchisees or transferees align with the brand's values and standards, which is a common practice in franchising to protect brand reputation and customer experience. Prospective Carls Jr. franchisees should be prepared to undergo a thorough assessment of their background and business ethics as part of the approval process, especially if they plan to transfer the franchise in the future.