What are the Carls Jr. franchisee's obligations regarding trademarks as described in Item 9, and how do these relate to the trademark rights granted in Item 13?

According to the 2025 FDD, Item 13 details the trademark rights granted to a Carl's Jr. franchisee, while other Items outline the franchisee's obligations regarding those trademarks. Carl's Jr. grants franchisees the right to operate a restaurant under the "Carl's Jr." name and to use other trademarks designated for the Franchised Restaurant. These trademarks include trade names, trademarks, trade dress, service marks, logos, insignias, slogans, emblems, symbols, designs, and any combination of these, which are collectively referred to as "Proprietary Marks." Carl's Jr. retains ownership of all rights, title, and interest in these Proprietary Marks, and the franchisee's rights are limited to those explicitly granted in the Franchise Agreement. This means a franchisee can only use the trademarks in the manner and context specified by Carl's Jr.

Item 22 indicates that the franchisee must diligently perform their obligations under the agreement and continuously exert their best efforts to promote and enhance the business of the Franchised Restaurant. This includes properly using and displaying the Proprietary Marks to maintain brand consistency and recognition. The franchisee cannot engage in any activity that conflicts with their obligations under the agreement, except for operating other Carl's Jr. Restaurants or other restaurants franchised by CJR or its affiliates, or other restaurants disclosed to CJR. This ensures that the franchisee's efforts are focused on promoting the Carl's Jr. brand and not diluted by conflicting business interests.

Item 12 states that franchisees may only sell or distribute products identified by the Proprietary Marks from the Franchised Location and cannot use any other method or channel of distribution unless approved. While there are no geographic restrictions on soliciting customers, Item 13 likely contains Internet restrictions that franchisees must adhere to. Carl's Jr. reserves all rights to use and license the Carl's Jr. System, other than those expressly granted to the franchisee, including the right to merchandise and distribute goods and services identified by the Proprietary Marks through any method or channel of distribution, including the Internet. This highlights that the franchisee's rights are limited and that Carl's Jr. retains significant control over the use of its trademarks and the overall distribution strategy.

In summary, while Item 13 grants the franchisee the right to use Carl's Jr.'s trademarks, other Items, particularly Item 22 and Item 12, impose obligations and limitations on how those trademarks can be used. The franchisee must diligently promote the brand, adhere to specific distribution channels, and avoid any conflicting activities. Carl's Jr. retains ultimate control over the Proprietary Marks and reserves the right to use them in any manner it deems appropriate, ensuring brand consistency and protecting its intellectual property rights.