What is the deadline for Carls Jr. to exercise its option to purchase assets after the termination or expiration of the franchise agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. Upon the expiration or termination of this Agreement for any reason, CJR will have the option to purchase from Franchisee some or all of the assets used in the Franchised Restaurant ("Assets"). CJR may exercise its option by giving written notice to Franchisee at any time following expiration or termination up until 60 days after the later of: (1) the effective date of termination or expiration; or (2) the date Franchisee ceases to operate the Franchised Restaurant. As used in this Section 23, "Assets" shall mean and include, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (non-perishable products, materials and supplies) used in the Franchised Restaurant, and the real estate fee simple or the lease or sublease for the Franchised Location. CJR shall be entitled to the entry of interlocutory and permanent orders of specific performance by a court of competent jurisdiction if Franchisee fails or refuses to timely meet its obligations under this Section 23.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, upon the expiration or termination of the franchise agreement, Carls Jr. has the option to purchase some or all of the assets used in the franchised restaurant. Carls Jr. can exercise this option by providing written notice to the franchisee within 60 days after the later of two dates: either the effective date of the termination or expiration, or the date the franchisee ceases to operate the franchised restaurant.
The assets that Carls Jr. may purchase include leasehold improvements, equipment, vehicles, furnishings, fixtures, signs, inventory (non-perishable products, materials, and supplies), and the real estate (either the fee simple or the lease/sublease) for the franchised location. This broad definition of assets gives Carls Jr. significant leverage in potentially acquiring the physical components of the business after the franchise relationship ends.
If a franchisee fails to meet its obligations regarding the asset purchase, Carls Jr. is entitled to seek court orders for specific performance, compelling the franchisee to comply. Carls Jr. also has the right to assign its option to purchase the assets to another party. This assignment right provides Carls Jr. with flexibility in managing its assets and franchise network. The purchase price for the assets will be their fair market value, determined as of the effective date of purchase, accounting for depreciation and condition, but excluding any value associated with the Carls Jr. trademark or goodwill.