Does the Development Rights Agreement for Carls Jr. grant the developer the right to operate franchised restaurants or use the Carl's Jr. system?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Development Rights Only
This Agreement is not a license or a franchise agreement. It does not give Developer the right to operate Franchised Restaurants or use the Carl's Jr. System. In addition, this Agreement does not give Developer any right to license others to operate Franchised Restaurants or use the Carl's Jr. System. This Agreement only gives Developer the opportunity to enter into Franchise Agreements for the operation of Franchised Restaurants at locations in the Development Territory accepted by CJR. Each Franchised Restaurant developed pursuant to this Agreement shall be established and operated only in strict accordance with a separate Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Development Rights Agreement does not grant the developer the right to operate franchised restaurants or use the Carl's Jr. system. The agreement solely provides the developer with the opportunity to enter into Franchise Agreements for operating franchised restaurants at accepted locations within the Development Territory.
Carls Jr. emphasizes that the Development Rights Agreement is distinct from a franchise agreement. It strictly pertains to the right to develop franchised restaurants within a specific territory and according to a development schedule. Each restaurant developed under this agreement must be established and operated under a separate Franchise Agreement.
This distinction is crucial for prospective developers as it clarifies that the Development Rights Agreement is only the first step in establishing a Carls Jr. presence. Developers must understand that securing development rights does not automatically grant the right to operate a franchise. A separate franchise agreement, with its own terms and conditions, is required for each restaurant.