What must a Carls Jr. franchisee do to indicate its independent ownership of the Franchised Restaurant?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, Franchisee shall maintain stop-transfer instructions against the transfer on its records of any voting securities, and each stock certificate of the corporation shall have conspicuously endorsed upon its face the following statement: "Any assignment or transfer of this stock is subject to the restrictions imposed on assignment by the Carl's Jr. Restaurant Franchise Agreement(s) to which the corporation is a party." If Franchisee is a publicly-held corporation these requirements shall apply only to the stock owned by Franchisee's Continuity Group. If Franchisee is a limited liability company, each membership or management certificate or other evidence of interest in Franchisee shall have conspicuously endorsed upon its face the following statement: "Any assignment or transfer of an interest in this limited liability company is subject to the restrictions imposed on assignment by the Carl's Jr. Restaurant Franchise Agreement(s) to which the limited liability company is a party." If Franchisee is a partnership, its written partnership agreement shall provide that ownership of an interest in the partnership is held subject to, and that further assignment or transfer is subject to, all restrictions imposed on assignment by this Agreement. If Franchisee is any other type of business entity, its organizational and governing documents shall provide that an ownership interest in the business entity is held subject to, and further assignment or transfer is subject to, all restrictions imposed on assignment by this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the requirements for indicating independent ownership vary based on the franchisee's business structure. If the franchisee is a corporation, they must maintain stop-transfer instructions on record for any voting securities. Additionally, each stock certificate must have a conspicuous statement: "Any assignment or transfer of this stock is subject to the restrictions imposed on assignment by the Carl's Jr. Restaurant Franchise Agreement(s) to which the corporation is a party." For publicly-held corporations, these rules apply only to stock owned by the franchisee's Continuity Group.
For franchisees operating as a limited liability company, each membership or management certificate (or other evidence of interest) must be endorsed with the statement: "Any assignment or transfer of an interest in this limited liability company is subject to the restrictions imposed on assignment by the Carl's Jr. Restaurant Franchise Agreement(s) to which the limited liability company is a party." If the franchisee is a partnership, the written partnership agreement must state that ownership of partnership interest and any further assignment/transfer are subject to all restrictions imposed by the Franchise Agreement.
For any other type of business entity, the organizational and governing documents must state that ownership interest is subject to all restrictions imposed on assignment by the Franchise Agreement. These measures ensure that any transfer of ownership or interest in the franchise is subject to the franchisor's approval and the terms of the franchise agreement, regardless of the franchisee's business structure.