What constitutes a waiver by a Carls Jr. franchisee of their option to remain a franchisee beyond the expiration of the Initial Term?

According to the 2025 Carls Jr. Franchise Disclosure Document, a franchisee's failure to provide timely written notice to CJR regarding their intent to exercise the renewal option constitutes a waiver of their option to remain a franchisee beyond the initial term.

Specifically, the franchisee must notify Carls Jr. in writing whether they intend to renew the franchise agreement, and if so, for a renewal term of either 10 years or 5 years. This notice must be given no less than 12 months and no more than 24 months before the initial term expires. However, if the franchisee subleases the franchised location from Carls Jr., the notification period is shorter: not less than 6 months and not more than 12 months before notice of renewal is required to be provided to the landlord under the master lease.

This requirement is significant because it places the onus on the franchisee to proactively communicate their intentions within a specific window of time. Missing this deadline results in forfeiting the right to renew the franchise, regardless of the franchisee's performance or investment in the business. Franchisees should mark these dates on their calendars and consult with legal counsel to ensure compliance.

The notice requirements and potential waiver highlight the importance of careful planning and adherence to deadlines in the franchise agreement. Franchisees should be aware of these stipulations well in advance of the expiration of their initial term to avoid unintentionally losing their renewal option.