What factors are excluded from the purchase price calculation for Carls Jr. assets?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Further, the Purchase Price for the Assets shall not contain any factor or increment for any trademark, service mark or other commercial
symbol used in connection with the operation of the Franchised Restaurant nor any goodwill or "going concern" value for the Franchised Restaurant. 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.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 FDD, the purchase price calculation for Carls Jr. assets does not include any consideration for trademarks, service marks, or other commercial symbols associated with the franchise operation. Additionally, the calculation excludes any goodwill or "going concern" value attributed to the Franchised Restaurant. This means that when Carls Jr. exercises its option to purchase the assets of a franchise upon termination or expiration of the agreement, the franchisee will not be compensated for the brand recognition or the potential of the business as an ongoing entity.
Carls Jr. also retains the right to exclude certain assets from the purchase if they do not meet the company's current standards or if the franchisee cannot provide a satisfactory bill of sale. This provision protects Carls Jr. from acquiring outdated or non-compliant equipment and ensures clear ownership of the assets being purchased. The assets considered for purchase generally include leasehold improvements, equipment, vehicles, furnishings, fixtures, signs, and inventory used in the Franchised Restaurant, as well as the real estate or lease for the Franchised Location.
In practical terms, this means a franchisee should not expect to receive compensation for the brand value they have helped build or for the potential future earnings of the restaurant when Carls Jr. purchases the assets. The purchase price will be strictly based on the depreciated value and condition of the tangible assets. Franchisees should maintain their equipment and ensure they can provide clear documentation of ownership to maximize the value they receive in the event of a purchase by Carls Jr.