Is Carls Jr. obligated to offer a franchise to the Applicant based solely on this agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
RECITALS:
- A. Applicant wishes to be considered by CJR for a franchise opportunity to develop and operate one or more Carl's Jr. ("Franchised Restaurants").
- B. Before CJR will consider offering Applicant a franchise opportunity, Applicant must attend a meeting at CJR's offices and at a Carl's Jr. during which Applicant will have the opportunity to meet with, and be evaluated by, various CJR personnel ("Discovery Day"). In addition, CJR may require that Applicant, and/or an employee or employees or other individual or individuals designated by Applicant, and as agreed to and deemed appropriate by CJR ("Other Individuals"), each satisfactorily complete other training programs (collectively "Training Programs"), depending on CJR's determination of the need of those attending the Training Programs.
- C. CJR will provide Applicant and Other Individuals a variety of information both while Applicant and Other Individuals attend Discovery Day and the Training Programs and thereafter, if CJR and Applicant continue to pursue a franchise opportunity.
- D. The information that will be provided by CJR is confidential and CJR is not willing to disclose the information to Applicant or Other Individuals unless they agree to keep the information confidential. Accordingly, the parties are entering into this Agreement to ensure that Applicant and Other Individuals keep all such information confidential.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, agreements and obligations set forth below, the parties agree as follows:
1. Confidential Information. As used in this Agreement, the term "Confidential Information" means any and all information, manuals and materials containing trade secrets; non-public business methods; improvements; data processes; formulae; designs; know-how; maps and trade area analyses; and all confidential technical and non-technical information that is disclosed by or on behalf of CJR or its affiliates to Applicant and/or Other Individuals. "Confidential Information" also includes all other information that Applicant and/or Other Individuals know or have reason to know is the confidential, trade secret, or proprietary information of CJR and/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, the agreement to be considered for a franchise opportunity does not obligate Carls Jr. to grant a franchise. The document states that the agreement only provides the applicant with the opportunity to enter into a franchise agreement.
The agreement outlines that before Carls Jr. considers offering a franchise, the applicant must attend a Discovery Day at Carls Jr.'s offices and possibly complete training programs. During this time, Carls Jr. will provide confidential information to the applicant, and the agreement ensures that this information remains confidential. This initial agreement focuses on the evaluation process and the protection of Carls Jr.'s proprietary information during the consideration phase.
The 2025 FDD emphasizes that the development agreement is distinct from a franchise agreement. It explicitly states that the development agreement does not grant the developer the right to operate Carls Jr. restaurants or use the Carls Jr. system. A separate franchise agreement is required for each restaurant, and the development agreement merely provides the opportunity to obtain those franchise agreements for locations accepted by Carls Jr.