When renewing a Carls Jr. franchise, who is required to execute a general release and covenant not to sue?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) Franchisee, all individuals who executed this Agreement and all guarantors of Franchisee's obligations shall have executed a general release and a covenant not to sue, in a form satisfactory to CJR, of any and all claims against CJR and its affiliates and their respective past and present officers, directors, managers, shareholders, members, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement, any other agreements between Franchisee and CJR or its affiliates and Franchisee's operation of the Franchised Restaurant, other Carl's Jr.
Restaurants operated by Franchisee and all other restaurants operated by Franchisee that are franchised by CJR or its affiliates.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, to renew a franchise, the franchisee, all individuals who initially signed the franchise agreement, and all guarantors of the franchisee's obligations must execute a general release and a covenant not to sue. This release must be in a form satisfactory to Carls Jr.
This release covers any and all claims against Carls Jr., its affiliates, and their respective past and present officers, directors, managers, shareholders, members, agents, and employees in their corporate and individual capacities. The claims include, but are not limited to, those arising under federal, state, and local laws, rules, and ordinances. It also encompasses claims arising out of or relating to the franchise agreement, any other agreements between the franchisee and Carls Jr. or its affiliates, and the franchisee's operation of the franchised restaurant, other Carls Jr. restaurants operated by the franchisee, and all other restaurants operated by the franchisee that are franchised by Carls Jr. or its affiliates.
This requirement ensures that Carls Jr. is protected from potential legal claims related to the franchisee's past operations and agreements. For a prospective franchisee, this means that upon renewal, they, along with any original signatories and guarantors, must waive their rights to sue Carls Jr. regarding any past issues, with the understanding that this is a condition of renewing the franchise agreement.