During the Development Term for a Carls Jr. franchise, can the Developer own, maintain, or operate a restaurant business that features or promotes any Designated Entrée Item in its advertising without CJR's consent?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Accordingly, Developer covenants and agrees that, except with CJR's prior written consent, during the Development Term, and for a continuous period of 2 years following its expiration, transfer or termination, Developer shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with, any person, firm, partnership, corporation, or other entity:
(b) Own, maintain, operate, engage in, grant a franchise to, advise, help, make loans to, lease property to, sell the real property underlying any Franchised Location and related assets to, or have any interest in, either directly or indirectly, any restaurant business: (ii) that features or promotes any Designated Entrée Item in its advertising;
For purposes of the previous sentence, the term "Designated Entrée Items" means any hamburger sandwich, chicken sandwich, breakfast sandwich and any other entrée item of a type designated by CJR as part of the Carl's Jr.
System at any time during the term of this Agreement.
During the Development Term, there is no geographical limitation on this restriction.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a Developer is restricted from owning or operating certain restaurant businesses during the Development Term without prior written consent from CJR. Specifically, the Developer cannot own, maintain, operate, engage in, grant a franchise to, advise, help, make loans to, lease property to, sell the real property underlying any Franchised Location and related assets to, or have any interest in, either directly or indirectly, any restaurant business that features or promotes any Designated Entrée Item in its advertising.
The term "Designated Entrée Items" includes hamburger sandwiches, chicken sandwiches, breakfast sandwiches, and any other entrée item designated by CJR as part of the Carls Jr. System. This restriction applies without geographical limitation during the Development Term.
This clause ensures that the Developer does not engage in activities that directly compete with the Carls Jr. system. Obtaining written consent from CJR is essential if a Developer wishes to engage in any business activity that might conflict with these restrictions. This is a standard practice in franchising to protect the brand and prevent conflicts of interest.