What are the default conditions related to other agreements or obligations of a Carls Jr. developer or related parties?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
(12) Developer, the Development Principal, any member of the Continuity Group, any 10% Owner or any Affiliated Entity remains in default beyond the applicable cure period: (a) under any other agreement with CJR or its affiliates; (b) under any real estate lease, equipment lease, or financing instrument relating to a Franchised Restaurant; or (c) with any vendor or supplier to a Franchised Restaurant; provided that if the default is not by Developer, Developer is given written notice of the default and 30 days to cure said default.
(13) Developer fails or refuses to comply with any other provision of this Agreement or any requirement of the Carl's Jr. System and does not correct the failure or refusal within 30 days (10 days for monetary defaults) after receiving written notice of default.
Except for monetary defaults, if the default cannot be corrected within 30 days, Developer shall have such additional time to correct the default as reasonably required (not to exceed 90 days) provided that Developer begins taking the actions necessary
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a developer can be in default of their development agreement under several conditions related to other agreements or obligations. Specifically, the developer, a Development Principal, any member of the Continuity Group, any 10% Owner or any Affiliated Entity remaining in default beyond the applicable cure period under any other agreement with Carls Jr. or its affiliates constitutes a breach of the development agreement. This also applies to defaults under any real estate lease, equipment lease, or financing instrument relating to a Franchised Restaurant.
Furthermore, a default with any vendor or supplier to a Franchised Restaurant can also trigger a breach, provided that if the default is not by the developer, the developer is given written notice of the default and 30 days to cure it. This means that the financial health and compliance of related parties and entities can directly impact the developer's standing with Carls Jr.
Carls Jr. also stipulates that if a developer fails or refuses to comply with any other provision of the Development Agreement or any requirement of the Carls Jr. system, and does not correct the failure or refusal within 30 days (or 10 days for monetary defaults) after receiving written notice of default, this constitutes another condition for default. However, for non-monetary defaults, if the default cannot be corrected within 30 days, the developer has additional time, not exceeding 90 days, to correct the default, provided they begin taking the necessary actions. This highlights the importance of maintaining compliance and addressing any issues promptly to avoid jeopardizing the development agreement.