Who is responsible for paying the tax liabilities incurred in connection with the operation of the Carls Jr. franchised restaurant prior to closing?

According to the 2025 Carls Jr. Franchise Disclosure Document, the franchisee is responsible for paying all tax liabilities incurred in connection with the operation of the franchised restaurant prior to the closing date of a sale. This means that if a franchisee decides to sell their Carls Jr. restaurant, they must settle all outstanding tax obligations related to the business's operation up to the point of sale.

This requirement ensures that Carls Jr. is not held responsible for any prior tax issues of the franchisee. It also protects the buyer from inheriting any tax liabilities from the previous owner. The franchisee must fulfill these obligations before or at the time the sale is finalized.

Furthermore, Carls Jr. has the right to offset any amounts owed to them by the franchisee from the purchase price. This could include unpaid franchise fees, marketing contributions, or other debts. This provision gives Carls Jr. a mechanism to recover any outstanding financial obligations before the sale is completed, ensuring that both tax liabilities and debts to the franchisor are settled during the transfer of ownership.