What responsibilities does the Operating Principal have regarding the day-to-day activities of a Carls Jr. Franchised Restaurant?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
rement. You also agree not to contest CJR's interest in the trade secrets and confidential and proprietary information that comprise the Carl's Jr. System.
We are not required by any agreement to protect or defend copyrights or confidential information, although we intend to do so as appropriate.
ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS
You are not obligated to participate personally in the direct operation of the Franchised Restaurant; however, you must designate, and we must approve, a qualified individual to serve as the "Operating Principal" of your Franchised Restaurant. If you sign a Development Agreement, you must designate, and we must approve, a qualified individual to serve as your "Development Principal."
The Operating Principal must own at least a 10% equity ownership interest in you, or in your general partner if you are a limited partnership, unless modified by us in our sole discretion, and be a person acceptable to both us and you. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between you and us.) The Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant, including control over the standards of operation and financial performance. Unless you have named, and we have approved, a Multi-Unit Manager (discussed below), the Operating Principal must: (1) devote full time and best efforts to the supervision and conduct of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant; and (2) maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us. The Operating Principal will be required to successfully complete the FMTP and any additional training required by us. If you operate restaurants in multiple markets that are franchised by us or our affiliates, an individual meeting the above qualifications will serve as the Operating Principal in at least one market.
If you operate restaurants that are franchised by us or our affiliates in multiple geographic markets, for all markets in which the Operating Principal fails to satisfy our requirements, you must designate and retain an individual to serve as Multi-Unit Manager. The Multi-Unit Manager will be under the supervision of the Operating Principal. The Multi-Unit Manager must devote full time and best efforts to supervising the operation of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market, successfully complete the FMTP and any additional training required by us, and be approved by us. In addition, the Multi-Unit Manager must maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 59–61)
What This Means (2025 FDD)
According to Carls Jr.'s 2025 Franchise Disclosure Document, while franchisees are not required to be involved in the direct operation of the franchised restaurant, they must designate an Operating Principal who is approved by Carls Jr. The Operating Principal is responsible for the day-to-day activities of the Carls Jr. restaurant.
The Operating Principal must possess at least a 10% equity ownership interest in the franchisee entity, unless otherwise modified by Carls Jr. This individual must also be a member of the Continuity Group, which includes key stakeholders in the franchise. The Operating Principal has full control over the daily operations, standards, and financial performance of the franchised restaurant, as well as any other Carls Jr. restaurants the franchisee operates in the same geographic market.
Unless a Multi-Unit Manager has been approved, the Operating Principal is required to devote their full time and best efforts to supervising and managing the Carls Jr. restaurant and other affiliated restaurants in the same area. They must also live within a reasonable driving distance of the restaurant, unless Carls Jr. waives this requirement in writing. The Operating Principal is required to complete the Franchise Management Training Program (FMTP) and any additional training that Carls Jr. requires. If a franchisee operates Carls Jr. restaurants in multiple markets, the Operating Principal must meet these qualifications in at least one of those markets.
The Carls Jr. restaurant must be under the on-site supervision of the Operating Principal, a Multi-Unit Manager, a restaurant General Manager, or a Site Manager. The franchisee must employ at least one General Manager and enough employees who have completed the FMTP to ensure the restaurant operates according to Carls Jr.'s system standards. If the restaurant does not have enough trained personnel, the franchisee has 30 days to hire and enroll the necessary staff in the FMTP. Similarly, if a manager leaves, the franchisee has 30 days to hire a replacement and enroll them in the training program. It is important to note that managers are not required to have an equity interest in the franchise.