What specific actions or omissions by Carls Jr. or its employees would trigger the indemnification obligation?

According to the 2025 Carls Jr. Franchise Disclosure Document, a developer (franchisee) agrees that no past, present, or future director, officer, employee, incorporator, member, partner, stockholder, subsidiary, affiliate, controlling party, entity under common control, ownership or management, vendor, service provider, agent, attorney or representative of CJR will have any liability for any obligations or liabilities of CJR relating to or arising from the agreement; any claim against CJR based on, in respect of, or by reason of the relationship between Developer and CJR; or any claim against CJR based on any alleged unlawful act or omission of CJR. This essentially means Carls Jr. is shielded from liability for various claims except for those arising from misrepresentations in the Franchise Disclosure Document or violations of franchise laws.

This provision aims to protect Carls Jr. and its related parties from potential lawsuits or financial claims that a franchisee might bring. The franchisee is essentially waiving their right to sue Carls Jr. for most issues related to the franchise agreement, the relationship between the franchisee and Carls Jr., or any actions or inactions by Carls Jr.. This is a significant point for potential franchisees to consider, as it limits their legal recourse in many situations.

However, there are exceptions to this release. The franchisee does not waive claims arising from misrepresentations made by Carls Jr. in the Franchise Disclosure Document itself. Additionally, the franchisee retains the right to pursue claims arising under state or federal franchise laws that regulate the offer and sale of franchises, including the FTC Rule on Franchising. This ensures that Carls Jr. cannot use this clause to shield itself from liability for violating franchise regulations or for providing false information to induce someone to buy a franchise.

This type of clause is relatively common in franchise agreements, as franchisors seek to limit their liability and protect their business interests. However, the specific scope and exceptions can vary. Prospective Carls Jr. franchisees should carefully review this section of the franchise agreement with legal counsel to fully understand their rights and obligations and the extent to which they are waiving their ability to sue Carls Jr. or its related parties.