Will Carls Jr. have liability to the franchisee for any decision or action it takes regarding the Carls Jr. franchise agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
F. Franchisee agrees that no past, present or future director, officer, employee, incorporator, member, partner, stockholder, subsidiary, affiliate, controlling party, entity under common control, ownership or management, vendor, service provider, agent, attorney or representative of CJR will have any liability for: (1) any obligations or liabilities of CJR relating to or arising from this Agreement; (2) any claim against CJR based on, in respect of, or by reason of the relationship between Franchisee and CJR; or (3) any claim against CJR based on any alleged unlawful act or omission of CJR. This provision does not include a release of claims arising from representations in the Carl's Jr. Franchise Disclosure Document provided to Franchisee in connection with this Agreement or any claims arising under any applicable state or federal franchise laws regulating the offer or sale of the franchise for this Agreement (including without limitation the FTC Rule on Franchising (16 C.F.R. Part 436)).
31. GOVERNING LAW, FORUM AND LIMITATIONS
- A. This Agreement and any claim or controversy arising out of, or relating to, rights and obligations of the parties under this Agreement and any other claim or controversy between the parties shall be governed by and construed in accordance with the laws of the State of Tennessee without regard to conflicts of laws principles.
Nothing in this Section is intended, or shall be deemed, to make any Tennessee law regulating the offer or sale of franchises or the franchise relationship applicable to this Agreement if such law would not otherwise be applicable.
- B. The parties agree that, to the extent any disputes cannot be resolved directly between them, Franchisee shall file any suit against CJR only in the federal or state court having jurisdiction where CJR's principal offices are located at the time suit is filed.
CJR may file suit in the federal or state court located in the jurisdiction where its principal offices are located at the time suit is filed or in the jurisdiction where Franchisee resides or does business or where the Franchised Restaurant is or was located or where the claim arose.
Franchisee consents to the personal jurisdiction of those courts over Franchisee and to venue in those courts.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the franchisee agrees that no past, present, or future director, officer, employee, or affiliate of CJR (Carls Jr. Restaurants) will have any liability for obligations relating to the franchise agreement. This includes claims against CJR based on the relationship between the franchisee and CJR, or any alleged unlawful act or omission of CJR. This means that franchisees are limited in their ability to sue Carls Jr. for actions related to the franchise agreement.
However, this provision does not release Carls Jr. from liability for claims arising from representations made in the Franchise Disclosure Document itself, or from claims arising under state or federal franchise laws regulating the offer or sale of the franchise, including the FTC Rule on Franchising. This ensures that Carls Jr. can still be held accountable for misrepresentations in the FDD or violations of franchise laws.
The franchise agreement is governed by the laws of Tennessee, without regard to its conflicts of laws principles. Franchisees must file any lawsuit against CJR in the federal or state court having jurisdiction where CJR's principal offices are located. CJR, on the other hand, can file suit in the jurisdiction where its principal offices are located, where the franchisee resides or does business, where the franchised restaurant is or was located, or where the claim arose. This clause establishes the legal framework and venue for resolving disputes between Carls Jr. and its franchisees.