Can Carls Jr. require a guarantor to provide personal financial statements?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
All members of the Continuity Group and their spouses, if applicable, shall jointly and severally guarantee Developer's payment and performance under this Agreement and shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee and Assumption of Developer's Obligations ("Guarantee"). Notwithstanding the foregoing, CJR reserves the right, in its sole discretion, to waive the requirement that some or all of the previously described individuals execute the attached Guarantee and/or to limit the scope of the Guarantee. CJR reserves the right to require any guarantor to provide personal financial statements to CJR from time to time.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. reserves the right to request personal financial statements from any guarantor. This condition is part of the broader agreement where guarantors, including members of the Continuity Group and their spouses, guarantee the developer's payment and performance under the agreement. This guarantee binds them to the terms outlined in the agreement.
This provision enables Carls Jr. to assess the financial capacity of the guarantors, ensuring they can fulfill their obligations should the developer default. The FDD specifies that Carls Jr. has the discretion to waive the requirement for some or all individuals to execute the guarantee or limit its scope. However, the right to demand financial statements provides Carls Jr. with an added layer of security.
For a prospective franchisee, this means that if a guarantee is required, they and their guarantors should be prepared to provide personal financial statements to Carls Jr. This is a standard practice in franchising, as it allows the franchisor to evaluate the financial stability of those backing the franchisee's obligations. Franchisees should discuss with Carls Jr. under what specific circumstances these financial statements would be required and what the process entails.