What are the possible lengths of the Renewal Term for a Carls Jr. franchise?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) At the expiration of the Initial Term, Franchisee shall have an option to remain a franchisee at the Franchised Location for a Renewal Term of 10 years or, at Franchisee's option, 5 years.
Franchisee must give CJR written notice of whether or not it intends to exercise its renewal option and the length of the proposed Renewal Term not less than 12 months, nor more than 24 months, before the expiration of the Initial Term.
Notwithstanding the foregoing, if Franchisee subleases the Franchised Location from CJR, Franchisee must give CJR the notice described in the preceding sentence not less than 6 months, nor more than 12 months, before notice of renewal is required to be provided to the landlord under the master lease.
Failure by Franchisee to timely provide CJR the required notice constitutes a waiver by Franchisee of its option to remain a franchisee beyond the expiration of the Initial Term.
- (5) Franchisee shall pay CJR a renewal fee in the amount of $5,000 for a Renewal Term of 5 years or $10,000 for a Renewal Term of 10 years.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a franchisee has the option to renew their franchise agreement for either 5 or 10 years. The franchisee must notify Carls Jr. in writing of their intent to renew, specifying the desired length of the renewal term, no less than 12 months and no more than 24 months before the initial term expires. However, if the franchisee subleases the location from Carls Jr., the notification period is shortened to between 6 and 12 months before the renewal notice is due to the landlord under the master lease. Failure to provide timely notice constitutes a waiver of the renewal option.
To be eligible for renewal, the Carls Jr. franchisee must not be in default of the franchise agreement or any other agreements with Carls Jr. or its affiliates. They also must not be in default with any real estate lease, equipment lease, financing instrument, vendor, or supplier. Furthermore, the franchisee must make necessary capital expenditures to renovate and modernize the restaurant to meet Carls Jr.'s current image standards. The franchisee and its employees must also comply with Carls Jr.'s then-current training requirements.
Carls Jr. will review the franchisee's renewal request and advise them within 4 months whether they are eligible for renewal. If approved, Carls Jr. will send a new franchise agreement for the renewal term at least 4 months before the initial term expires. This new agreement will likely differ from the original, particularly in royalty fees and advertising obligations. The franchisee must then execute the renewal agreement and return it with the renewal fee ($5,000 for a 5-year term or $10,000 for a 10-year term) at least one month before the initial term expires.