What legal documents must the developer and guarantors execute to transfer a Carls Jr. franchise?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) Developer, all individuals who executed this Agreement and all guarantors of Developer's obligations must execute a general release and a covenant not to sue, in a form satisfactory to CJR, of any and all claims against CJR and its affiliates and their respective past and present officers, directors, managers, shareholders, members, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement and any other agreements between Developer and CJR or its affiliates and all other restaurants operated by Developer that are franchised by CJR or its affiliates.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, in order to transfer a franchise, the developer, all individuals who executed the agreement, and all guarantors of the developer's obligations must execute a general release and a covenant not to sue. This release and covenant must be in a form that is satisfactory to Carls Jr.
This release covers any and all claims against Carls Jr., its affiliates, and their respective past and present officers, directors, managers, shareholders, members, agents, and employees, both in their corporate and individual capacities. The claims include, but are not limited to, those arising under federal, state, and local laws, rules, and ordinances. It also includes claims arising out of, or relating to, the Development Agreement and any other agreements between the developer and Carls Jr. or its affiliates, as well as all other restaurants operated by the developer that are franchised by Carls Jr. or its affiliates.
This requirement ensures that Carls Jr. is protected from any potential legal action by the transferring franchisee and associated parties after the transfer is completed. It is a standard practice in franchising to include such releases to mitigate future legal risks and ensure a clean break between the franchisor and the outgoing franchisee.