Is a Carls Jr. franchisee permitted to contest the validity or ownership of the Proprietary Marks, either directly or indirectly?

According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees are explicitly prohibited from challenging the validity or ownership of the company's Proprietary Marks. This restriction is a standard practice in franchising, as the brand's trademarks are crucial assets for maintaining uniformity and customer recognition across all franchise locations.

This means that a Carls Jr. franchisee cannot initiate or participate in any legal or administrative action that questions Carls Jr.'s rights to use, license, or protect its trademarks. The Proprietary Marks encompass trade names, trademarks, trade dress, service marks, logos, insignias, slogans, emblems, symbols, designs, and any combination of these elements that distinguish the Carls Jr. brand.

This provision protects Carls Jr.'s brand identity and ensures consistent brand representation. If a franchisee were allowed to contest the trademarks, it could create legal complications and potentially undermine the entire franchise system. Franchisees must also promptly inform Carls Jr. of any infringement of the Proprietary Marks they become aware of and must obtain written approval before taking any action regarding such infringement. Carls Jr. retains the right to take any action it deems necessary to prevent infringement and can include the franchisee in any related legal proceedings.