After the Carls Jr. Franchise Agreement terminates or expires, can Carls Jr. operate or license others to operate Carls Jr. Restaurants at any location, including the Franchised Location?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement does not give Franchisee any exclusive rights to use the System or the Proprietary Marks in any geographic area. Nothing in this Agreement prohibits CJR from, among other things: (1) operating or licensing others to operate at any location, during or after the term of this Agreement, any type of restaurant other than Carl's Jr. Restaurants; (2) operating or licensing others to operate, during the term of this Agreement, Carl's Jr. Restaurants at any location other than the Franchised Location; (3) operating or licensing others to operate, after this Agreement terminates or expires, Carl's Jr. Restaurants at any location, including the Franchised Location; and (4) merchandising and distributing goods and services identified by the Proprietary Marks at any location through any other method or channel of distribution. CJR reserves to itself all rights to use and license the System and the Proprietary Marks other than those expressly granted under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. retains the right to operate or license others to operate Carls Jr. restaurants at any location, including the franchisee's location, after the franchise agreement terminates or expires. This means that upon the end of the agreement, Carls Jr. is not restricted from opening a competing store nearby or even at the same location.
This lack of exclusivity is a standard practice in franchising. The agreement does not grant the franchisee any exclusive rights to the System or Proprietary Marks in any geographic area. Carls Jr. explicitly reserves all rights to use and license the System and Proprietary Marks, except for those rights expressly granted to the franchisee during the term of the agreement.
For a prospective franchisee, this clause highlights the importance of building a strong customer base and operating a successful franchise during the term of the agreement. While the franchisee operates the Carls Jr. restaurant, they must exert their best efforts to promote and enhance the business of the Franchised Restaurant. This is because the franchisee will likely face competition from Carls Jr. itself or another franchisee after the agreement ends. The franchisee should also be aware of the restrictions on operating a competing restaurant during the term of the agreement and for two years afterward within a specified radius, as detailed elsewhere in the FDD.