What must a Carls Jr. franchisee do to propose a transfer of the franchise?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Franchisee shall advise CJR in writing of any proposed Transfer, submit (or cause the proposed transferee to submit) a franchise application for the proposed transferee, submit a copy of all contracts and all other agreements or proposals and submit all other information requested by CJR relating to the proposed Transfer.
If CJR does not exercise its right of first refusal pursuant to Section 18.J., the decision as to whether or not to consent to a proposed Transfer shall be made by CJR in its sole discretion and shall include numerous factors deemed relevant by CJR.
These factors may include, but will not be limited to, the following:
- (1) The proposed transferee (and if the proposed transferee is not a natural person, all persons that have any direct or indirect interest in the transferee as CJR may require) must demonstrate to CJR's satisfaction extensive experience in high quality restaurant operations of a character and complexity similar to Carl's Jr.
Restaurants; must meet the managerial, operational, experience, quality, character and business standards for a franchisee promulgated by CJR from time to time; must possess a good character, business reputation and credit rating; must have an organization whose management culture is compatible with CJR's management culture; and must have adequate financial resources and working capital, as determined by CJR in its sole discretion, to meet Franchisee's obligations under this Agreement.
- (2) If the Transfer is a sale, the sales price shall not be so high, in CJR's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurant and meet financial obligations to CJR, third party suppliers and creditors.
CJR's decision with respect to a proposed Transfer shall not create any liability on the part of CJR: (a) to the transferee, if CJR consents to the Transfer and the transferee experiences financial difficulties; or (b) to Franchisee or the proposed transferee, if CJR withholds consent to the Transfer.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a franchisee must take specific steps to propose a transfer of their franchise. The franchisee is required to inform Carls Jr. in writing about the proposed transfer. Along with this notification, the franchisee must submit a franchise application for the potential new franchisee. The franchisee needs to provide copies of all contracts, agreements, and proposals related to the transfer. Additionally, the franchisee must supply any other information that Carls Jr. requests concerning the proposed transfer.
Carls Jr. retains the right of first refusal regarding the transfer. If Carls Jr. chooses not to exercise this right, the decision to approve or deny the transfer rests solely with Carls Jr., based on factors they deem relevant. These factors include the proposed transferee's experience in high-quality restaurant operations, their managerial and operational standards, their character, business reputation, and credit rating. The compatibility of the transferee's management culture with that of Carls Jr. is also considered, as well as the transferee's financial resources and working capital.
Furthermore, if the transfer involves a sale, Carls Jr. will assess whether the sale price might jeopardize the transferee's ability to successfully operate the franchise and meet their financial obligations. Carls Jr. emphasizes that its decision regarding the transfer does not create any liability on its part, either to the transferee if they experience financial difficulties after the transfer or to the franchisee and proposed transferee if the transfer is not approved. This comprehensive process ensures that Carls Jr. maintains control over who operates its franchises and protects the brand's standards and reputation.
This level of detail is typical in franchise agreements, as franchisors need to ensure that any new franchisee meets their standards to protect the brand. Prospective Carls Jr. franchisees should carefully review these requirements and be prepared to provide all necessary documentation and information to facilitate a smooth transfer process if they decide to sell their franchise in the future.