Does Carls Jr. receive fees or commissions from approved suppliers based on sales to franchisees?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
nd distribution facilities owned and operated by us or an affiliate that we will designate as an approved supplier.
One or more of our officers may own nominal interests in certain of our approved suppliers which are publicly traded companies or through investment funds.
We and our affiliates may receive fees, payments, commissions, field-of-use license royalties or other consideration from approved suppliers based on sales to franchisees, from promotional allowances and volume discounts. We and our affiliates may use all amounts received from approved suppliers, distributors or third parties, whether or not based on your and/or other franchisees' actual or prospective dealings with them, without restriction for any purposes we or our affiliates deem appropriate. Finally, we and our affiliates provide supply chain, quality assurance, distribution and logistics services for the franchise system. These services include negotiating with suppliers and distributors who will sell and distribute goods to our franchisees, designating one or more distributors to service our franchisees, and managing distribution logistics. As a result, we and our affiliates reserve the right to recover our costs related to performing these services by collecting a per-case distribution fee for all cases sold by an approved supplier to our franchisees and from other logistics-related programs.
We may charge non-approved suppliers reasonable testing and/or inspection fees.
If you propose to purchase any goods or materials (that you are not required to purchase from CJR, an affiliate of CJR or a designated supplier) from a supplier that we have not previously approved, you must submit to us a written request for such approval, or you must request that the supplier do so. We have the right to require, as a condition of approval, that our representatives be permitted to inspect the supplier's facilities and that such information, specifications and samples as we reasonably designate be delivered to us and/or to an independent, certified laboratory designated by us for testing prior to granting approval. You must pay a fee not to exceed the reasonable cost of the inspection and the actual cost of the test.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 37–41)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. and its affiliates may receive fees, payments, commissions, field-of-use license royalties, or other consideration from approved suppliers based on sales to franchisees, promotional allowances, and volume discounts. Carls Jr. and its affiliates can use these amounts received from suppliers, distributors, or third parties without restriction for any purposes they deem appropriate.
Carls Jr. also provides supply chain, quality assurance, distribution, and logistics services for the franchise system. These services include negotiating with suppliers and distributors, designating distributors to service franchisees, and managing distribution logistics. As a result, Carls Jr. and its affiliates reserve the right to recover their costs related to performing these services by collecting a per-case distribution fee for all cases sold by an approved supplier to franchisees and from other logistics-related programs.
For the fiscal year ended January 27, 2025, Carls Jr. received rebates from several suppliers, including $50,000 from CDM, $31,670.74 from KDM, $114,623.12 from Dr. Pepper, and $1,793,188 from Coca-Cola. These funds were used primarily to offset the cost of point-of-purchase advertising and other production advertising costs. Additionally, during the same fiscal year, Carls Jr. and its affiliates' revenue from all sales and leases to Carls Jr. franchisees was approximately $86.2 million, representing approximately 12.9% of the total revenue of the Securitization Entities of approximately $671.4 million. In some instances, Carls Jr. simply passes through the franchisee payments to the designated vendor, supplier, or landlord.