What is prohibited regarding construction of a Carls Jr. restaurant before a Franchise Agreement is executed and the Initial Franchise Fee is paid?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
H. Developer shall not, except with respect to a restaurant franchised by CJR or its affiliates which is then open and operating pursuant to an effective franchise agreement or a restaurant under construction that is franchised by CJR or its affiliates for which there is an effective franchise agreement: (1) operate or do business under any name or in any manner that might tend to give the public the impression that Developer is connected in any way with CJR or its affiliates or has any right to use the Carl's Jr. System or any of the Proprietary Marks; (2) make, use or avail itself of any of the materials or information furnished or disclosed by CJR or its affiliates under this Agreement or disclose or reveal any such materials or information or any portion thereof to anyone else; or (3) assist anyone not licensed by CJR or its affiliates to construct or equip a foodservice outlet substantially similar to a Carl's Jr. Restaurant.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a developer is restricted from certain activities related to a Carls Jr. restaurant before an effective franchise agreement is in place. Specifically, unless there is an effective franchise agreement, a developer cannot operate or conduct business in a way that suggests they are connected with Carls Jr. or have the right to use the Carls Jr. system or proprietary marks.
Furthermore, the developer is prohibited from using any materials or information provided by Carls Jr. under the agreement or disclosing such information to others. They also cannot assist anyone not licensed by Carls Jr. to construct or equip a foodservice outlet that is substantially similar to a Carls Jr. restaurant.
In practical terms, this means that a prospective Carls Jr. franchisee must wait until the Franchise Agreement is fully executed before commencing construction or operations that utilize Carls Jr.'s branding, systems, or confidential information. This protects Carls Jr.'s brand identity and proprietary information, ensuring that only authorized franchisees operate under the Carls Jr. name and standards. It also prevents potential misuse or unauthorized duplication of the Carls Jr. restaurant concept by unlicensed parties.