Is the standard Carls Jr. franchise agreement modified by the Development Incentive Program Addendum?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
THIS ADDENDUM to the Carl's Jr. Restaurant Franchise Agreement dated as of , ("Franchise Agreement") between Carl's Jr. Restaurants LLC ("CJR") and ("Franchisee") is entered into simultaneously with the Franchise Agreement.
RECITALS
- A. In order to stimulate the development of new franchised Carl's Jr. Restaurants and the continued expansion of the System at eligible travel center and gas and convenience locations, CJR has established the 2025 CJR Travel Center Development Incentive Program (the "Travel Center Program").
- B. To be eligible for the Travel Center Program, the following requirements must be satisfied: (i) the Carl's Jr. Restaurant must be located at a travel center location or gas and convenience location that is within ½ mile of an interstate or limited access highway and must include a combination of high rise pylon sign, billboard or other highway sign, (ii) the travel center location or gas and convenience location must be opened pursuant to a Development Agreement dated no later than May 24, 2026, that includes the development of at least ten (10 newlyconstructed Carl's Jr. Restaurant(s), (iii) Franchisee must open the Franchise Restaurants from a travel center location or gas and convenience location by the date(s) outlined in the corresponding Development Agreement, (iv) Franchisee may not be in default of its obligations under its existing franchise agreements or related agreements with CJR or its affiliates, (v) Franchisee must be approved for growth by CJR and its affiliates, (vi) Franchisee must satisfy CJR's then-current financial and operational requirements for new restaurant development, and (vii) Franchisee and the Carl's Jr. Restaurant(s) otherwise meet the requirements of the Travel Center Program.
- C. Franchisee and CJR are parties to a Development Agreement dated as of
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the standard franchise agreement is indeed modified by addenda related to development incentive programs. Specifically, the FDD mentions addenda for both a general Development Incentive Program and a Travel Center Development Incentive Program. These addenda are designed to reflect a franchisee's participation in the incentive programs.
The purpose of these addenda is to modify the existing Franchise Agreement to account for the incentives offered under the programs. These modifications can include adjustments to royalty fees, Advertising Pool Obligations (APO), and the initial franchise fee. For example, under the standard Development Incentive Program, Carls Jr. may waive the remaining $15,000 of the initial franchise fee if the restaurant opens six months before the date specified in the Development Agreement.
However, these modifications are limited in scope. The addendum specifies that unless explicitly modified by the addendum, the original Franchise Agreement remains in full effect. This ensures that only the aspects related to the incentive program are altered, while the rest of the agreement stays consistent. Furthermore, the incentive program and addendum can be terminated if the franchisee fails to meet certain obligations, such as opening the restaurant on time or failing to cure a default notice. If terminated, the royalty fee and APO revert to the amounts in the original Franchise Agreement.