Can Carls Jr. exclude certain assets from the purchase?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
CJR may exclude from the Assets purchased in accordance with this Section any equipment, vehicles, furnishings, fixtures, signs, and inventory that are not approved as meeting then-current standards for a Carl's Jr. Restaurant or for which Franchisee cannot deliver a Bill of Sale in a form satisfactory to CJR.
- D. If CJR and Franchisee are unable to agree on the fair market value of the Assets within 30 days after Franchisee's receipt of CJR's notice of its intent to exercise its option to purchase the Assets, the fair market value shall be determined by two professionally certified appraisers, Franchisee selecting one and CJR selecting one within 60 days after Franchisee's receipt of CJR's notice of intent to exercise its purchase option.
If the higher appraisal is more than 10% greater than the other appraisal, the two appraisers shall select a third professionally certified appraiser who also shall appraise the fair market value of the Assets.
The average value set by the appraisers (whether two or three appraisers as the case may be) shall be conclusive and shall be the Purchase Price.
- E. The appraisers shall be given full access to the Franchised Restaurant, the Franchised Location and Franchisee's books and records during customary business hours to conduct the appraisal and shall value the leasehold improvements, equipment, furnishings, fixtures, signs and inventory in accordance with the standards of this Section 23.
The appraisers' fees and costs shall be borne equally by CJR and Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. (CJR) has the right to exclude certain assets from the purchase of a franchised restaurant. Specifically, CJR may exclude any equipment, vehicles, furnishings, fixtures, signs, and inventory that do not meet the current standards for a Carls Jr. Restaurant. Additionally, CJR can exclude assets for which the franchisee cannot provide a satisfactory Bill of Sale.
This provision protects Carls Jr. from being obligated to purchase outdated or non-compliant assets during a buyback or acquisition of a franchise. It ensures that the restaurant maintains the brand's standards and operational requirements. For a franchisee, this means maintaining up-to-date equipment and proper documentation to ensure all assets are eligible for purchase by Carls Jr. should the occasion arise.
In the event that Carls Jr. exercises its option to purchase the assets and there is a disagreement on the fair market value, a formal appraisal process is outlined. If CJR and the franchisee cannot agree on the fair market value within 30 days of notice, each party selects a professionally certified appraiser within 60 days. If the higher appraisal exceeds the lower one by more than 10%, a third appraiser is selected, and the average of the appraisals determines the purchase price. This appraisal process ensures a fair valuation of the assets, with both parties sharing the costs of the appraisers.