What specific provision in the Carls Jr. franchise agreement did the Assurance of Discontinuance (AOD) address?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Assurance of Discontinuance. To resolve an investigation by the Washington Attorney General and without admitting any liability, we have entered into an Assurance of Discontinuance ("AOD") with the State of Washington, where we have agreed to remove from our form franchise agreement a provision which restricts a franchisee from soliciting and/or hiring the employees of our other franchisees, which the Attorney General alleges violates Washington state and federal antitrust and unfair practices laws. We have agreed, as part of the AOD, to not enforce any such provisions in any existing franchise agreement, to request that our Washington franchisees amend their existing franchise agreements to remove such provisions, and to notify our franchisees about the entry of the AOD. In addition, the State of Washington did not assess any fines or other monetary penalties against us.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Assurance of Discontinuance (AOD) with the State of Washington addressed a specific provision in the franchise agreement. This provision restricted a franchisee from soliciting and/or hiring employees of other Carls Jr. franchisees. The Washington Attorney General considered this provision to be in violation of Washington state and federal antitrust and unfair practices laws.
As part of the AOD, Carls Jr. agreed to remove this provision from their standard franchise agreement. Furthermore, Carls Jr. committed to not enforce this provision in any existing franchise agreements. They also agreed to request that their Washington franchisees amend their current agreements to remove the provision and to inform all franchisees about the AOD.
It is important to note that the State of Washington did not impose any fines or other monetary penalties on Carls Jr. as part of this agreement. This AOD indicates a proactive step by the Washington Attorney General to ensure fair labor practices within the Carls Jr. franchise system in the state. For prospective franchisees, this means that they are not restricted from hiring employees from other Carls Jr. locations, which could be a benefit in staffing their own restaurants.