In the Carls Jr. franchise agreement, what is the state of formation for CJR?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. This Agreement and any claim or controversy arising out of, or relating to, rights and obligations of the parties under this Agreement and any other claim or controversy between the parties shall be governed by and construed in accordance with the laws of the State of Tennessee without regard to conflicts of laws principles.
Nothing in this Section is intended, or shall be deemed, to make any Tennessee law regulating the offer or sale of franchises or the franchise relationship applicable to this Agreement if such law would not otherwise be applicable.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
The 2025 Carls Jr. Franchise Disclosure Document specifies that the franchise agreement and any related claims or controversies are governed by the laws of Tennessee, without regard to its conflicts of laws principles. This means that the laws of Tennessee will be used to interpret the franchise agreement and resolve any disputes that may arise between the franchisee and Carls Jr. However, the FDD does not explicitly state the state in which CJR (Carls Jr. Restaurants) was formed or incorporated.
While the franchise agreement is governed by Tennessee law, this does not automatically mean that Carls Jr. is incorporated or formed in Tennessee. Many companies choose a state for governing law that is different from their state of incorporation. The governing law clause primarily dictates which state's legal principles will be applied in interpreting the contract and resolving disputes.
A prospective Carls Jr. franchisee should confirm the state of formation of CJR with the franchisor directly. This information is essential for understanding the company's legal structure and potential liabilities. It is also important to consult with legal counsel to fully understand the implications of the governing law provision in the franchise agreement.