If the Carls Jr. Developer is an individual or a partnership comprised solely of individuals, what are the three additional representations and warranties that each individual makes regarding the Carls Jr. agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
If Developer is an individual, or a partnership comprised solely of individuals, Developer makes the following additional representations and warranties: (A) each individual has executed this Agreement; (B) each individual shall be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of this Agreement; and (C) notwithstanding any transfer for convenience of ownership, pursuant to Section 10.D., each individual shall continue to be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, if the Developer is an individual or a partnership comprised solely of individuals, each individual makes three additional representations and warranties. First, each individual must execute the Development Agreement. Second, each individual is jointly and severally bound by, and personally liable for, the timely and complete performance and a breach of, each and every provision of the Development Agreement. Third, even if there is a transfer for convenience of ownership, each individual will continue to be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of the Development Agreement.
These representations and warranties are significant because they ensure that Carls Jr. has recourse to the personal assets of the individuals involved in the development agreement. This provides Carls Jr. with a greater level of security and assurance that the development obligations will be met. The joint and several liability means that each individual is responsible for the entire obligation, regardless of their individual contribution or involvement.
For a prospective Carls Jr. franchisee, this means that if you are entering into a development agreement as an individual or partnership, you are putting your personal assets at risk. It is crucial to understand the full scope of the obligations under the Development Agreement and to ensure that you have the resources and ability to meet those obligations. You should consult with an attorney and financial advisor to fully understand the implications of these representations and warranties before signing the agreement.
This requirement is fairly standard in the franchise industry, as franchisors typically seek to ensure that franchisees are fully committed to the business and have sufficient resources to operate it successfully. However, the specific terms and conditions can vary, so it is important to carefully review the franchise agreement and seek professional advice.