What is the required action for a Carls Jr. franchisee regarding fees imposed on the franchisor?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
dates | Actual cost of updates | As incurred | The Franchise Agreement gives us the right to require you, at your expense, to use any software or other technology that we may designate or develop in the future. |
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Costs and Attorneys' Fees | CJR's costs and expenses | As incurred | If we prevail in litigation regarding enforcement of the terms of any agreement with you, you must pay our attorneys' fees and costs. |
| Carl's Jr. Renewal Fee | $5,000 for a renewal term of 5 years; $10,000 for a renewal term of 10 years | At the time the new franchise agreement is signed | We reserve the right to prorate the Renewal Fee to align with a renewal term with a corresponding lease expiration date. |
| Liquidated Damages | As calculated (see Remarks) | As incurred | If the Franchise Agreement is terminated following your default, since it would be difficult, if not impossible, to determine the amount of damages that we will suffer as a result of your breach, unless waived by us in our sole discretion, you must immediately pay us, as damages and not as a penalty, the amount of the royalty fee that you would have paid during the period ("Damages Period") from the effective date of termination to the earlier of: (a) the 3-year anniversary of the effective date of termination; or (b) the date on which the initial term of the Franchise Agreement was scheduled to expire. The amount of such royalty fee during the Damages Period will be calculated by multiplying the average weekly royalty fee that you owed for the 52-week period prior to the effective date of termination by the number of weeks in the Damages Period. |
Source: Item 6 — Other Fees (FDD pages 28–35)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees are generally required to pay fees imposed by the franchisor, CJR, unless otherwise noted. These fees are payable to CJR, are non-refundable, and are uniformly imposed on all franchisees who receive the disclosure document.
Specifically, if Carls Jr. prevails in litigation regarding the enforcement of any agreement terms with a franchisee, the franchisee must cover Carls Jr.'s attorney's fees and associated costs. Additionally, franchisees are responsible for covering Carls Jr.'s costs and expenses related to collection if required, which may include collection agency fees, attorney's fees, court costs, and other related expenses. These collection costs also include interest charges on all the aforementioned costs.
Furthermore, if a franchisee fails to maintain the required insurance coverage, Carls Jr. has the right to procure the insurance and charge the franchisee for the cost of coverage, along with any out-of-pocket expenses incurred. The franchisee is then required to pay the insurance cost immediately upon receipt of the invoice. Franchisees must also pay liquidated damages under certain conditions, such as if the Franchise Agreement is terminated following a franchisee default.