What obligations does the transferor retain to Carls Jr. after the transfer date?

According to the 2025 Carls Jr. Franchise Disclosure Document, a transferor (the current franchisee selling their business) retains specific liabilities to Carls Jr. even after the transfer is completed. The transferor remains liable for all obligations to Carls Jr. that were incurred before the date of the transfer. To formalize this liability, the transferor must execute any instruments reasonably requested by Carls Jr. to provide evidence of this ongoing responsibility. This ensures that Carls Jr. can still seek recourse from the former franchisee for any outstanding debts or unfulfilled commitments that predate the transfer.

This requirement protects Carls Jr.'s financial interests and ensures continuity in fulfilling contractual obligations. It is a standard practice in franchising to hold the transferor accountable for past liabilities, as it prevents franchisees from evading their financial responsibilities by simply selling the business.

For a prospective Carls Jr. franchisee, this means that if they are considering purchasing an existing franchise, they should conduct thorough due diligence to identify any outstanding obligations the current franchisee may have to Carls Jr. These could include unpaid royalties, marketing contributions, or other fees. Understanding these potential liabilities is crucial, as the transferor remains responsible for them even after the business changes hands. This clause encourages transparency and careful financial management on the part of existing franchisees, as any pre-existing debts will remain their responsibility even after they sell the franchise.