Can the primary residence requirement for the Operating Principal of a Carls Jr. franchise be waived?
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.
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 requirement for the Operating Principal to maintain a primary residence within a reasonable driving distance of the franchised restaurant can be waived. Specifically, the FDD states that the Operating Principal must maintain their primary residence within a reasonable driving distance of the Franchised Restaurant, "unless waived in writing by us." This indicates that Carls Jr. has the discretion to waive this requirement.
This waiver provides flexibility for franchisees who may not live near their restaurant location. It is important to note that the waiver must be in writing, providing a documented agreement between the franchisee and Carls Jr. This ensures clarity and avoids potential misunderstandings regarding the residency requirement.
It is important for prospective Carls Jr. franchisees to discuss the possibility of obtaining a written waiver with the franchisor if they do not plan to live within a reasonable driving distance of the restaurant. Understanding the conditions under which a waiver may be granted is crucial for effective planning and management of the franchise.