What is the required action for a Carls Jr. franchisee regarding taxes imposed on the franchisor?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Taxes | You must reimburse us for any taxes, fees or assessments imposed on us for acting as franchisor or licensing the Proprietary Marks. | Within 10 days of invoice, except if the invoice is associated with taxes tied to rent then due upon receipt of invoice |
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 required to reimburse Carls Jr. for any taxes, fees, or assessments that are imposed on Carls Jr. for acting as a franchisor or for licensing its proprietary marks. This means that if a taxing authority levies a tax specifically on Carls Jr. because they operate a franchise system or because they allow franchisees to use the Carls Jr. brand name and logos, the franchisee is responsible for covering those costs.
The reimbursement is due within 10 days of receiving an invoice from Carls Jr., except in cases where the invoice is associated with taxes tied to rent, in which case payment is due upon receipt of the invoice. This implies that Carls Jr. will bill franchisees for these taxes as they are incurred. It is important for prospective franchisees to understand that this is an additional cost on top of the standard royalty fees, advertising fees, and other expenses associated with operating a Carls Jr. franchise.
This type of tax reimbursement clause is not uncommon in franchise agreements. It ensures that the franchisor does not have to bear the burden of taxes related to the franchise operations, shifting the responsibility to the franchisees who are directly benefiting from the franchise system and brand. Prospective Carls Jr. franchisees should factor this potential expense into their financial projections and seek clarification from Carls Jr. regarding the types and amounts of taxes they might be expected to reimburse.