Is a Carls Jr. franchisee allowed to operate other restaurants franchised by CJR or its affiliates, and are those operations subject to the non-compete?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that it will at all times faithfully, honestly and diligently perform its obligations under this Agreement, that it will continuously exert its best efforts to promote and enhance the business of the Franchised Restaurant and that it will not engage in any other business or activity that may conflict with its obligations under this Agreement, except the operation of other Carl's Jr. Restaurants or other restaurants operated by Franchisee that are franchised by CJR or its affiliates or other restaurants as disclosed to CJR by Franchisee in Appendix A.
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This restriction shall not apply to Franchisee's existing restaurant or foodservice operations, if any, which are identified in Appendix A, nor shall it apply to other restaurants operated by Franchisee that are franchised by CJR or its affiliates.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a franchisee is permitted to operate other restaurants franchised by CJR or its affiliates. The franchise agreement states that franchisees will not engage in any other business or activity that may conflict with their obligations, except for the operation of other Carls Jr. restaurants or other restaurants franchised by CJR or its affiliates, or other restaurants disclosed to CJR in Appendix A. This indicates that franchisees can own and operate multiple Carls Jr. locations or other CJR-affiliated restaurants without violating the agreement.
However, the non-compete clause outlines restrictions on operating competing restaurant businesses. During the term of the agreement, there is no geographical limitation on this restriction. Following the expiration, transfer, or termination of the agreement, this restriction applies to any restaurant business located within a 2-mile radius of the franchised location and any restaurant business within a 2-mile radius of any then-existing Carls Jr. Restaurant.
Importantly, this restriction does not apply to the franchisee's existing restaurant or foodservice operations, if any, which are identified in Appendix A, nor does it apply to other restaurants operated by the franchisee that are franchised by CJR or its affiliates. This means that while franchisees are bound by a non-compete agreement, it specifically excludes other Carls Jr. restaurants or CJR-affiliated restaurants they operate. Therefore, the non-compete primarily aims to prevent franchisees from operating competing concepts, not additional Carls Jr. franchises.