What instruments must a franchisee deliver to CJR at the closing of a Carls Jr. franchise transfer?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
at the rights and duties set forth in this Agreement are personal to Franchisee and that CJR has entered into this Agreement in reliance on Franchisee's (and Franchisee's direct and indirect owners') business skill, financial capacity, personal character, experience and demonstrated or purported ability in developing and operating high quality foodservice operations. Accordingly, neither Franchisee nor any immediate or remote successor to any part of Franchisee's interest in this Agreement, nor any individual, partnership, corporation or other legal entity which directly or indirectly has an interest in Franchisee shall sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in Franchisee, this Agreement, the Franchise, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to Franchisee's operations under this Agreement (collectively "Transfer") without the prior written consent of CJR, unless otherwise permitted by this Section.
Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of CJR shall be null and void and shall constitute a material breach of this Agreement, for which CJR may terminate this Agreement without providing Franchisee an opportunity to cure the breach.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
Based on the 2025 Carls Jr. Franchise Disclosure Document, a franchisee must provide CJR with a copy of all contracts and other agreements or proposals related to the proposed transfer. Additionally, the franchisee must submit any other information requested by CJR regarding the transfer. If CJR exercises its option to purchase the assets of the franchise, the franchisee must deliver a Bill of Sale in a form satisfactory to CJR for any equipment, vehicles, furnishings, fixtures, signs, and inventory approved as meeting the current standards for a Carls Jr. Restaurant.
In the event of a transfer, the proposed transferee must also submit a franchise application. The transferee needs to demonstrate extensive experience in high-quality restaurant operations similar to Carls Jr., meet the brand's managerial, operational, and business standards, and possess a good character, business reputation, and credit rating. The transferee's management culture must align with CJR's, and they must have adequate financial resources and working capital to meet the obligations of the Franchise Agreement.
If Carls Jr. and the franchisee cannot agree on the fair market value of the assets, two certified appraisers, one selected by each party, will determine the value. If the higher appraisal exceeds the other by more than 10%, a third appraiser will be selected, and the average of the appraisals will determine the purchase price. The appraisers will have full access to the restaurant, location, and franchisee's books and records to conduct the appraisal. The franchisee is obligated to provide access to these materials to facilitate the valuation process.
At closing, the purchase price, determined through the appraisal process if necessary, must be paid in cash or cash equivalents. The closing must occur no later than 60 days after CJR provides written notice of exercising its option to purchase the assets. This ensures a timely transfer of ownership and assets, contingent upon meeting all outlined conditions and providing the necessary documentation.