Does the Carls Jr. Development Agreement create a fiduciary relationship between the parties?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
15. RELATIONSHIP OF THE PARTIES
This Agreement does not create a fiduciary or other special relationship between the parties. No agency, employment, or partnership is created or implied by the terms of this Agreement, and Developer is not and shall not hold itself out as agent, legal representative, partner, subsidiary, joint venturer or employee of CJR or its affiliates or a joint employer with CJR or its affiliates. Developer shall have no right or power to, and shall not, bind or obligate CJR or its affiliates in any way or manner, nor represent that Developer has any right to do so. Developer shall not issue any press releases without the prior written approval of CJR.
Developer is an independent contractor and is solely responsible for all aspects of the development and operation of the Franchised Restaurants, subject only to the conditions and covenants established by this Agreement and the Franchise Agreements. Without limiting the generality of the foregoing, Developer acknowledges that CJR has no responsibility to ensure that the Franchised Restaurants are developed and operated in compliance with all applicable laws, ordinances and regulations and that CJR shall have no liability in the event the development or operation of the Franchised Restaurants violates any law ordinance or regulation.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Development Agreement does not create a fiduciary or other special relationship between the parties. Specifically, the agreement states that no agency, employment, or partnership is created or implied by the terms of the agreement. The developer is explicitly defined as an independent contractor.
Carls Jr. franchisees should understand that they cannot represent themselves as agents, legal representatives, partners, subsidiaries, joint venturers, or employees of Carls Jr. They also cannot bind or obligate Carls Jr. in any way, nor issue press releases without prior written approval from Carls Jr.
This section of the agreement clarifies that the developer is solely responsible for all aspects of the development and operation of the franchised restaurants, subject to the conditions and covenants established by the agreement and the Franchise Agreements. Carls Jr. has no responsibility to ensure that the franchised restaurants are developed and operated in compliance with all applicable laws, ordinances, and regulations, and Carls Jr. has no liability if the development or operation violates any law, ordinance, or regulation.
This type of clause is common in franchise agreements, as franchisors typically want to maintain an arm's-length relationship with their franchisees and avoid potential liability for the franchisee's actions. Franchisees should seek legal counsel to fully understand their responsibilities and obligations under the Development Agreement and Franchise Agreements.