Does the statute of limitations apply to payments owed between parties in the Carls Jr. Development Agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Except for payments owed by one party to the other, and unless prohibited by applicable law, any legal action or proceeding (including the offer and sale of a franchise to Developer) brought or instituted with respect to any dispute arising from or related to this Agreement or with respect to any breach of the terms of this Agreement must be brought or instituted within a period of 2 years after the initial occurrence of any act or omission that is the basis of the legal action or proceeding, whenever discovered.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the statute of limitations does not apply to payments owed between the parties. Specifically, any legal action regarding disputes related to the Development Agreement must be initiated within 2 years of the initial occurrence, except for payments owed by one party to the other. This means that Carls Jr. is not subject to a 2-year limitation period for actions to recover payments owed to them under the Development Agreement.
For a prospective Carls Jr. developer, this clause has significant implications. Carls Jr. retains the right to pursue legal action for owed payments without the constraint of a 2-year statute of limitations, which provides them with a longer window to address payment defaults. This could affect the developer's financial obligations and potential legal liabilities over an extended period.
This exception regarding payments is a notable deviation from the standard 2-year limitation applied to other disputes. Franchisees should be aware of this provision and its potential impact on their financial and legal responsibilities under the Development Agreement. It is advisable to maintain meticulous records of all payments and communications related to financial obligations to mitigate any future disputes.