During the Due Diligence Period, what rights does Carls Jr. have regarding investigations?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
To determine whether Franchisee and the Franchised Restaurant are in compliance with this Agreement and with all specifications, quality standards, operating procedures and brand standards prescribed by CJR for the operation of Carl's Jr.
Restaurants, CJR or its designees shall have the right at any reasonable time and without prior notice to Franchisee to: (1) inspect the Franchised Location; (2) observe, photograph and videotape the operations of the Franchised Restaurant for such consecutive or intermittent periods as CJR deems necessary; (3) remove samples of any food and beverage product, material or other products for testing and analysis (without paying for the samples); (4) interview personnel of the Franchised Restaurant; (5) interview customers of the Franchised Restaurant; and (6) inspect and copy any books, records and documents, including any electronic records, relating to the operation of the Franchised Restaurant or, upon the request of CJR or its designee, require Franchisee to send copies thereof to CJR or its designee.
Franchisee agrees to cooperate fully with CJR or its designee in connection with any such inspections, observations, videotaping, product removal and interviews.
Franchisee shall take all necessary steps to immediately correct any deficiencies detected during these inspections, including, without limitation, ceasing further sale of unauthorized menu items, correcting any critical food safety issues, correcting any identified deficiencies that adversely impact guest safety or the ability to operate the restaurant in conformance with OPM procedures or brand standards, and ceasing further use of any equipment, advertising materials or supplies that do not conform with the standards and requirements promulgated by CJR from time to time.
If CJR deems such deficiencies to create an imminent health hazard to Franchisee's customers, CJR may direct Franchisee to temporarily close the Franchised Restaurant until all hazards are corrected to CJR's satisfaction pursuant to CJR's Closure Policy, as amended from time to time.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. has specific rights to inspect a franchised restaurant to ensure compliance with the Franchise Agreement, quality standards, operating procedures, and brand standards. To this end, Carls Jr. or its designees have the right to inspect the franchised location at any reasonable time and without prior notice.
Carls Jr. can observe, photograph, and videotape the restaurant's operations for consecutive or intermittent periods as deemed necessary. They can also remove samples of food and beverage products, materials, or other products for testing and analysis without paying for the samples. Additionally, Carls Jr. has the right to interview both personnel and customers at the franchised restaurant.
Furthermore, Carls Jr. can inspect and copy any books, records, and documents, including electronic records, related to the restaurant's operation. If requested, the franchisee must send copies of these documents to Carls Jr. or its designee. The franchisee is obligated to cooperate fully with these inspections, observations, videotaping, product removal, and interviews. Franchisees must immediately correct any deficiencies detected during these inspections, including ceasing the sale of unauthorized menu items, correcting critical food safety issues, and discontinuing the use of non-conforming equipment or supplies. If Carls Jr. determines that deficiencies create an imminent health hazard, they may direct the franchisee to temporarily close the restaurant until all hazards are corrected to their satisfaction, according to Carls Jr.'s Closure Policy.