What constitutes a default related to transfers of the Carls Jr. development agreement requiring CJR's consent?

According to the 2025 Carls Jr. Franchise Disclosure Document, a default related to transfers of the development agreement occurs when any transfer that requires CJR's prior written consent happens without obtaining that consent. This means that if a developer attempts to transfer their rights or obligations under the development agreement without first getting approval from CJR, it will be considered a breach of the agreement.

Carls Jr. requires developers to seek approval for transfers to ensure that the new party meets certain standards. These standards include having extensive experience in high-quality restaurant operations, meeting managerial and operational standards, possessing a good character and credit rating, having a compatible management culture, and demonstrating adequate financial resources. The franchisor wants to ensure that any new developer is well-qualified to uphold the Carls Jr. brand and meet the obligations of the development agreement.

This requirement protects Carls Jr. by allowing them to control who becomes a developer within their system. It ensures that all developers meet the brand's standards and are capable of fulfilling the development obligations. For a prospective Carls Jr. developer, it means they cannot freely transfer their agreement without franchisor approval, and failure to comply can result in termination of the agreement.