Regarding a Crisis Situation at a Carls Jr. franchise, what communications are franchisees prohibited from making?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
If an event occurs at the Franchised Restaurant that may damage the Proprietary Marks, the System or the reputation of CJR (collectively "Crisis Situation"), Franchisee shall: (1) immediately contact appropriate emergency care providers to assist it in curing the harm or injury; and (2) immediately inform CJR by telephone of the Crisis Situation. Franchisee shall refrain from making any internal or external announcements (i.e., no communication with the news media) regarding the Crisis Situation (unless otherwise directed by CJR or public health officials).
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, in the event of a crisis situation that may damage the brand's reputation, franchisees are restricted from making certain announcements. Specifically, franchisees are prohibited from making any internal or external announcements, which includes communicating with the news media, unless explicitly directed otherwise by Carls Jr. or public health officials. This restriction is in place to ensure that Carls Jr. maintains control over the messaging and management of any crisis situation that could potentially harm the brand's image.
This provision in the franchise agreement means that if a crisis occurs at a Carls Jr. location, the franchisee must immediately inform Carls Jr. and is then required to refrain from communicating any details about the situation to the public or the media. Carls Jr. reserves the right to manage all communications related to the crisis, potentially utilizing attorneys, experts, doctors, testing laboratories, and public relations firms as deemed necessary. The franchisee is obligated to fully cooperate with Carls Jr.'s efforts and adhere to any crisis situation procedures developed by the company.
The franchisee's compliance with these communication restrictions is crucial, as any unauthorized statements could have legal and financial repercussions. The franchise agreement stipulates that the franchisee is responsible for indemnifying Carls Jr. for any losses and expenses resulting from the company's exercise of its management rights during a crisis. This includes costs associated with legal counsel, public relations efforts, and other professional services engaged by Carls Jr. to manage the situation effectively.
This level of control is not uncommon in franchise systems, as franchisors typically want to protect their brand's reputation and ensure consistent messaging across all locations. However, it places a significant responsibility on the franchisee to act quickly in informing Carls Jr. of any crisis and to then defer to the company's expertise in handling external communications. Prospective franchisees should carefully consider these obligations and ensure they are prepared to relinquish control over communications in crisis situations.