For what purpose is CJR (Carls Jr.) deemed a third-party beneficiary of the addendum?

According to the 2025 Carls Jr. Franchise Disclosure Document, Carl's Jr. Restaurants LLC (CJR) is considered a third-party beneficiary of the Lease Addendum. This designation is specifically for the purpose of enforcing any rights granted to or otherwise available to CJR under the Lease Addendum. This means that while Carls Jr. is not a direct party to the lease agreement between the landlord and the franchisee (tenant), it has the legal right to ensure that certain provisions within the addendum that benefit Carls Jr. are upheld.

One such right is the option for Carls Jr. to take over the lease if the franchisee's lease or franchise agreement expires or terminates. Carls Jr. can exercise this "step-in right" by providing written notice to the landlord within 30 days after the termination or expiration of the lease or franchise agreement, or the date the franchisee ceases restaurant operations, whichever is later. This provision ensures that Carls Jr. has the ability to maintain a restaurant location within its system, even if the original franchisee is no longer operating the business.

Another right granted to Carls Jr. is the ability to exercise any term renewal or term extension right under the lease if the tenant fails to do so. Similarly, if the tenant fails to exercise any purchase option or right of first refusal, Carls Jr. can step in and exercise that right. In both cases, the lease is deemed transferred and assigned to CJR, with the landlord's consent, while the tenant remains obligated under the lease. However, Carls Jr.'s ability to exercise these rights is subject to the tenant's right to legally exercise them within the time permitted by the lease; if the tenant does so, Carls Jr.'s exercise is void.

Furthermore, the Lease Addendum specifies that it controls in the event of any conflict with the terms in the main body of the lease. This ensures that the rights and protections afforded to Carls Jr. through the addendum take precedence. Overall, these provisions in the Lease Addendum, and Carls Jr.'s status as a third-party beneficiary, are designed to protect Carls Jr.'s interests in maintaining its brand presence and operational continuity at the franchised location.