In the event of a transfer, can Carls Jr. require the franchisee and transferee to execute an assignment agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
ity upgrades to modernize and conform the Franchised Restaurant to the image of the System for new franchised restaurants.
- (6) Franchisee, all individuals who executed this Agreement and all guarantors of Franchisee's obligations must execute a general release and a covenant not to sue, in a form satisfactory to CJR, of any and all claims against CJR and its affiliates and their respective past and present officers,
directors, managers, shareholders, members, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement, any other agreements between Franchisee and CJR or its affiliates and Franchisee's operation of the Franchised Restaurant and all other restaurants operated by Franchisee that are franchised by CJR or its affiliates.
- **(7)
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 the option to require both the franchisee (transferor) and the proposed new franchisee (transferee) to execute an assignment agreement before a transfer becomes effective. This agreement would also include any necessary amendments to the existing franchise agreement. The purpose is to reflect the transfer and/or to align the agreement with Carls Jr.'s current standard franchise agreement terms, with the new term expiring on the same date as the original agreement.
In addition to the assignment agreement, Carls Jr. may also require a guarantee from individuals identified in Section 16.F of the agreement. The franchisee, proposed transferor, and proposed transferee must also sign any other documents and take actions deemed necessary by Carls Jr. to protect its rights under the franchise agreement.
This requirement ensures that Carls Jr. maintains control over who becomes a franchisee and that the terms of the franchise agreement are updated and adhered to during the transfer process. It also allows Carls Jr. to ensure that all parties involved understand and agree to their obligations, protecting the brand's interests and standards.