Can Carls Jr. reject a proposed transfer if the sales price is too high?

According to Carls Jr.'s 2025 Franchise Disclosure Document, Carls Jr. has the right to deny a proposed transfer of a franchise if it deems the sales price to be too high. Specifically, Carls Jr. may reject a transfer if, in its reasonable judgment, the sales price could jeopardize the transferee's ability to successfully manage the franchise. This includes concerns about the transferee's capacity to develop, maintain, operate, and promote the Franchised Restaurants, as well as their ability to meet financial obligations to Carls Jr., third-party suppliers, and creditors.

This provision protects the Carls Jr. system by ensuring that new franchisees are not burdened with excessive debt from the outset. By assessing the sales price, Carls Jr. aims to prevent situations where a new franchisee might struggle financially due to an over-inflated purchase price, which could negatively impact the brand's reputation and the overall performance of the franchise network.

For a prospective franchisee, this means that the sales price negotiated with the transferring franchisee must be reasonable and justifiable. Carls Jr. will scrutinize the financial implications of the sale to ensure the new franchisee has a solid foundation for success. It is advisable for both the transferring and prospective franchisees to consider this factor when determining the sales price to avoid potential rejection by Carls Jr.