After termination or expiration of the Carls Jr. Development Agreement, can the Developer assist someone not licensed by CJR to construct a foodservice outlet similar to a Carl's Jr. Restaurant?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
H. Developer shall not, except with respect to a restaurant franchised by CJR or its affiliates which is then open and operating pursuant to an effective franchise agreement or a restaurant under construction that is franchised by CJR or its affiliates for which there is an effective franchise agreement: (1) operate or do business under any name or in any manner that might tend to give the public the impression that Developer is connected in any way with CJR or its affiliates or has any right to use the Carl's Jr. System or any of the Proprietary Marks; (2) make, use or avail itself of any of the materials or information furnished or disclosed by CJR or its affiliates under this Agreement or disclose or reveal any such materials or information or any portion thereof to anyone else; or (3) assist anyone not licensed by CJR or its affiliates to construct or equip a foodservice outlet substantially similar to a Carl's Jr. Restaurant.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, even after the termination or expiration of the Development Agreement, a developer is restricted from assisting anyone not licensed by Carls Jr. or its affiliates in constructing or equipping a foodservice outlet that is substantially similar to a Carls Jr. Restaurant.
This restriction is in place to protect the Carls Jr. system and brand. The Development Agreement ensures that developers do not use the knowledge and resources gained during their time with Carls Jr. to benefit competitors or create similar concepts that could confuse customers or dilute the brand's value.
This obligation extends beyond the duration of the Development Agreement, meaning that even after the agreement ends, the developer cannot use their expertise to help others replicate a Carls Jr.-like restaurant. This restriction aims to maintain the uniqueness and integrity of the Carls Jr. brand and prevent unfair competition.
For a prospective Carls Jr. franchisee, this clause highlights the importance of understanding the full scope of the Development Agreement and its long-term implications. It is crucial to recognize that the knowledge and experience gained as a Carls Jr. developer cannot be used to assist competing businesses, even after the formal relationship with Carls Jr. has ended.