What is the franchisee's obligation to Carls Jr. regarding reimbursement for taxes, fees, or assessments?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty | 4%-5% of Gross Sales (2) | Within 10 calendar days after the end of each fiscal week | Gross Sales includes all revenue from the sale of all services and products (except CJR-approved promotional items) and all other income of every kind and nature (excluding revenue from the sale of stored value gift cards or gift certificates but including revenue when gift certificates are redeemed or stored value gift cards are debited) related to the Franchised Restaurant, whether for cash or credit and regardless of collection in the case of credit; provided, however, that Gross Sales do not include sales taxes or other taxes collected from customers by you for transmittal to the appropriate taxing authority. |
| Taxes | You must reimburse us for any taxes, fees or assessments imposed on us for acting as franchisor or licensing the Proprietary Marks. | Within 10 days of invoice, except if the invoice is associated with taxes tied to rent then due upon receipt of invoice |
Source: Item 6 — Other Fees (FDD pages 28–35)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees are required to reimburse Carls Jr. for any taxes, fees, or assessments that are imposed on Carls Jr. for acting as the franchisor or for licensing its proprietary marks. This means that if a taxing authority levies a tax or fee specifically on Carls Jr. due to its role as a franchisor, the franchisee is responsible for covering that cost.
The reimbursement is due within 10 days of the franchisee receiving an invoice from Carls Jr., except if the invoice is associated with taxes tied to rent, in which case payment is due upon receipt of the invoice. This quick turnaround time means franchisees need to be prepared to handle these costs promptly to avoid any late payment issues.
This type of pass-through tax obligation is not uncommon in franchising, as franchisors often structure their agreements to ensure that franchisees bear the burden of taxes and fees related to the franchise operation. Prospective Carls Jr. franchisees should factor this potential expense into their financial planning and ensure they understand what types of taxes or fees might be passed on to them.