What minimum equity ownership interest must the Operating Principal have in the franchisee for a Carls Jr. franchise?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
The Operating Principal must own at least a 10% equity ownership interest in you, or in your general partner if you are a limited partnership, unless modified by us in our sole discretion, and be a person acceptable to both us and you. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between you and us.) The Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant, including control over the standards of operation and financial performance. Unless you have named, and we have approved, a Multi-Unit Manager (discussed below), the Operating Principal must: (1) devote full time and best efforts to the supervision and conduct of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant; and (2) maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us. The Operating Principal will be required to successfully complete the FMTP and any additional training required by us. If you operate restaurants in multiple markets that are franchised by us or our affiliates, an individual meeting the above qualifications will serve as the Operating Principal in at least one market.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 59–61)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Operating Principal must own at least a 10% equity ownership interest in the franchisee. If the franchisee is a limited partnership, the Operating Principal must have at least a 10% equity ownership in the general partner. This requirement can be modified at Carls Jr.'s sole discretion. However, this equity ownership requirement does not apply if the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity on the date of the first franchise-related agreement between the franchisee and Carls Jr.
The Operating Principal must be acceptable to both Carls Jr. and the franchisee. The Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the franchised restaurant and other restaurants franchised by Carls Jr. or its affiliates operated by the franchisee in the same geographic market. This control extends to the standards of operation and financial performance.
Unless a Multi-Unit Manager has been named and approved by Carls Jr., the Operating Principal must devote full time and best efforts to the supervision and conduct of the franchised restaurant and other restaurants franchised by Carls Jr. or its affiliates operated by the franchisee in the same geographic market. The Operating Principal must also maintain their primary residence within a reasonable driving distance of the franchised restaurant, unless Carls Jr. waives this requirement in writing. The Operating Principal will be required to successfully complete the FMTP and any additional training required by Carls Jr.