What constitutes 'Designated Entrée Items' for the purpose of restrictions on competitive restaurant businesses related to a Carls Jr. franchise?

According to Carls Jr.'s 2025 Franchise Disclosure Document, 'Designated Entrée Items' are defined specifically for the purpose of outlining restrictions on a franchisee's involvement in competitive restaurant businesses. These restrictions are in place during the Development Term and for a period of two years after the agreement expires, is transferred, or is terminated.

For the purposes of these restrictions, 'Designated Entrée Items' include any hamburger sandwich, chicken sandwich, breakfast sandwich, and any other entrée item that Carls Jr. designates as part of the Carls Jr. system at any point during the term of the franchise agreement. This definition is important because it determines the scope of the non-compete clause. A franchisee is restricted from owning, operating, or having an interest in a restaurant business if its sales of these 'Designated Entrée Items' are reasonably likely to account for 20% or more of the restaurant's total entrée sales during any daypart.

Furthermore, the franchisee is restricted if the competing restaurant features or promotes any of these 'Designated Entrée Items' in its advertising, or if it operates in a quick-service format, regardless of whether it offers table service. This broad definition and the associated restrictions are designed to protect Carls Jr.'s market share and prevent franchisees from directly competing with the brand, ensuring that franchisees remain focused on growing the Carls Jr. business within their designated territory.