What is the maximum fee that Carls Jr. can charge for reviewing a supplier or distributor?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Approval of a supplier or a distributor may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, sanitation standards, facility standards, insurance and other quality assurance requirements or other criteria, and concentration of purchases, as set forth above, and such approval may be temporary pending a further evaluation of the supplier by us. A fee not to exceed our actual costs of reviewing the supplier or distributor and auditing the facility, if needed, may be charged by us and must be paid by you.
If you propose to purchase any goods or materials (that you are not required to purchase from CJR, an affiliate of CJR or a designated supplier) from a supplier that we have not previously approved, you must submit to us a written request for such approval, or you must request that the supplier do so. We have the right to require, as a condition of approval, that our representatives be permitted to inspect the supplier's facilities and that such information, specifications and samples as we reasonably designate be delivered to us and/or to an independent, certified laboratory designated by us for testing prior to granting approval. You must pay a fee not to exceed the reasonable cost of the inspection and the actual cost of the test. In addition to product testing, a facility audit may be required. We will notify you within 60 days as to whether you are authorized to purchase such products from that supplier. In the event we tentatively approve a request for an alternative supplier, you must submit a check for $1,500 to us as a deposit against the cost we incur in inspecting the supplier's facility. You will be responsible for additional costs and expenses associated with the inspection of the facility, which must occur before final approval. Approval of a supplier also may be subject to the frequency of delivery, reporting capabilities, standards of service (including prompt attention to complaints) or other criteria (including the number of suppliers already approved) and may be temporary pending further evaluation of such supplier. We may periodically require that the testing and/or facility audit be performed again at your expense to ensure continued compliance with our specifications and facility standards. We will advise you in writing if we revoke any approvals.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 37–41)
What This Means (2025 FDD)
According to Carls Jr.'s 2025 Franchise Disclosure Document, the brand may charge a fee for reviewing a proposed supplier or distributor. This fee will not exceed the actual costs incurred by Carls Jr. for the review and any necessary facility audits. This fee is paid by the franchisee.
If a franchisee proposes to purchase goods from a supplier not already approved by Carls Jr., they must submit a written request for approval. As a condition of approval, Carls Jr. can require an inspection of the supplier's facilities and the delivery of information, specifications, and samples for testing. The franchisee must cover the reasonable cost of the inspection and the actual cost of the test. In the event of tentative approval for an alternative supplier, the franchisee must submit a $1,500 deposit to cover the inspection costs, with the franchisee responsible for any additional expenses associated with the facility inspection before final approval.
Carls Jr. will notify the franchisee within 60 days regarding the authorization to purchase from the proposed supplier. Approvals may be subject to conditions such as delivery frequency, reporting capabilities, service standards, and the number of existing approved suppliers. These approvals can also be temporary, pending further evaluation. Carls Jr. may periodically require repeat testing or facility audits at the franchisee's expense to ensure ongoing compliance with specifications and standards. The brand will provide written notice if any approvals are revoked.