Do Carls Jr. and the Developer waive the right to participate in class action suits?

According to the 2025 Carls Jr. Franchise Disclosure Document, both Carls Jr. and the Developer (franchisee) waive the right to participate in class action lawsuits to the fullest extent permitted by law. This means that any disputes arising between Carls Jr. and the franchisee must be pursued on an individual basis, rather than as part of a collective group. This waiver also extends to the right to a trial by jury, indicating that disputes may be resolved through alternative methods such as arbitration or bench trials.

This waiver has significant implications for prospective Carls Jr. franchisees. By agreeing to waive the right to participate in class action suits, franchisees give up the opportunity to join forces with other franchisees to collectively address issues or grievances against Carls Jr. This could potentially weaken a franchisee's position in disputes with the franchisor, as they must bear the costs and burdens of litigation individually. It also means disputes will be resolved by a judge rather than a jury.

However, the FDD also states that in the event of a dispute, each party's recovery is limited to actual damages sustained. This means neither Carls Jr. nor the franchisee can seek consequential, punitive, or exemplary damages from the other party. This limitation on damages, along with the class action waiver, aims to streamline dispute resolution and reduce the potential for large, costly legal battles.

It is important for prospective franchisees to carefully consider the implications of these waivers before entering into a franchise agreement with Carls Jr. While such waivers are not uncommon in franchise agreements, franchisees should understand the potential impact on their rights and ability to seek redress in case of disputes. Consulting with an attorney experienced in franchise law is advisable to fully understand these provisions.