What are the requirements for a Carls Jr. franchisee to renew the franchise agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Franchise | Summary | |
|---|---|---|---|
| Agreement | |||
| c. | Requirements for you to renew or extend d. Termination by you | Section 2.B. Not Applicable | In order to renew at the end of the Initial Term you must: give timely notice; sign general release; comply with training requirements; be in good standing; not be in default under any agreement with us and our affiliates; not be in default beyond the cure period under any real estate or equipment lease or financing instrument relating to the Franchised Restaurant or any agreement with any vendor or supplier to the Franchised Restaurant; have the right to remain in possession of the Franchised Location for the Renewal Term; remodel in accordance with our then-current standards; and pay a renewal fee. You must also sign our then-current form of Franchise Agreement, the terms of which likely will differ from your original Franchise Agreement, including, without limitation, those relating to royalty fees and advertising obligations. |
| e. | Termination by us without cause | Not Applicable | |
| f. | Termination by us with cause | Section 21 | We may terminate upon default, which includes, but is not limited to, remaining in default beyond any applicable cure period under any agreement with us or our affiliates, including any Development Agreement. |
| g. "Cause" defined– curable defaults | Section 21.B. | You have 10 days to cure monetary defaults. You have 30 days to cure all other defaults except those discussed in paragraph h. below. | |
| h. "Cause" defined – non curable defaults | Sections 21.A., 21.B.(3) & 21.C. | Non-curable defaults include: closure of Franchised Restaurant for more than 5 days; insolvency; bankruptcy; execution levied on your business or property; foreclosure; material breach of covenants; transfer without our prior written consent; material misrepresentation; falsification of reports; failure to open Franchised Restaurant within 60 days after opening is authorized; imminent danger to public health or safety; loss of possession of Franchised Location; felony conviction; breach of representation or warranty; default beyond cure period under other agreements with us or our affiliates; default after receipt of 2 or more notices of default within previous 12 months; and receipt of second consecutive failing score on an inspection. | |
| i. | Your obligations on termination/nonrenewal | Section 22 | Obligations include: immediately cease operating the Franchised Restaurant; payment of amounts due; return OPM; continued observance of covenants; discontinue use of Proprietary Marks; complete de-identification of the Franchised Restaurant; and upon termination based on your default, payment of future lost royalties. |
| j. | Assignment of contract by us | Section 17 | There are no restrictions on our right to assign. |
| k. "Transfer" by you defined | Section 18.A. | Includes sale, assignment, transfer, conveyance, gift, pledge, mortgage or other encumbrance of any direct or indirect interest in you, the Franchise Agreement, the Franchise, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to your operations under the Franchise Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the initial franchise term is 20 years from the date the franchised restaurant opens. A franchisee can renew the franchise for either a 10-year or a 5-year renewal term, as stated in Section 2.B. of the Franchise Agreement.
To renew the franchise agreement, a Carls Jr. franchisee must provide timely notice of their intent to renew, sign a general release, and comply with all training requirements. The franchisee must also be in good standing with Carls Jr. and not be in default under any agreement with the company or its affiliates. This includes being current on all payments and complying with the terms of any real estate or equipment leases, financing instruments, or agreements with vendors and suppliers.
Additionally, the franchisee must have the right to remain in possession of the franchised location for the renewal term and remodel the restaurant in accordance with Carls Jr.'s then-current standards. A renewal fee must also be paid. Furthermore, the franchisee will be required to sign the then-current form of the Franchise Agreement, which may contain terms that differ from the original agreement, potentially including changes to royalty fees and advertising obligations. These conditions ensure that franchisees remain compliant with Carls Jr.'s standards and practices, and that the brand maintains a consistent image and quality across all locations.