During the term of the agreement, what is the geographic limitation on the restriction regarding a Carls Jr. franchisee's involvement with competing restaurant businesses?

According to the 2025 Carls Jr. Franchise Disclosure Document, during the term of the agreement, there is no geographical limitation on the restriction regarding a franchisee's involvement with competing restaurant businesses. This means that a Carls Jr. franchisee is restricted from owning, operating, or having any interest in any competing restaurant business anywhere in the world during the term of the Franchise Agreement.

This restriction applies to any restaurant business whose sales of specific entrée items (hamburger, chicken, or breakfast sandwiches) are reasonably likely to account for 20% or more of the restaurant's sales during any part of the day, features or promotes any of these entrée items in its advertising, or operates in a quick-service format. The FDD specifies that these restrictions do not apply to existing restaurant or foodservice operations the franchisee already owns, as long as they are disclosed in Appendix A of the agreement, or to other restaurants operated by the franchisee that are franchised by Carls Jr. or its affiliates.

After the agreement expires, is transferred, or is terminated, the restriction changes to a 2-mile radius of the franchised location and any restaurant business within a 2-mile radius of any then-existing Carls Jr. Restaurant. This non-compete clause is typical in franchise agreements to protect the brand and market share of the franchise system.