After termination or expiration of the Carls Jr. Development Agreement, can the Developer operate a business that gives the impression it is connected with Carls Jr.?
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, after the termination or expiration of the Development Agreement, the developer is restricted from operating a business that could be perceived as connected to Carls Jr. Specifically, the developer cannot operate under any name or manner that might lead the public to believe they are associated with Carls Jr. or have the right to use the Carl's Jr. system or proprietary marks. This restriction applies unless the developer is operating a restaurant franchised by Carls Jr. or its affiliates under an effective franchise agreement, or if a restaurant is under construction with a valid franchise agreement.
Furthermore, the developer is prohibited from using or disclosing any materials or information provided by Carls Jr. under the Development Agreement. They also cannot assist anyone not licensed by Carls Jr. in constructing or equipping a foodservice outlet that is substantially similar to a Carls Jr. Restaurant. These measures are in place to protect the Carls Jr. system, trade secrets, and brand identity.
These restrictions are typical in franchising to prevent confusion among customers and to protect the brand's reputation and proprietary information. A prospective Carls Jr. franchisee should understand these post-termination obligations to avoid any legal issues or conflicts with the franchisor after the agreement ends. It is important to note that these obligations are in addition to the restrictions outlined in Section 12 of the agreement, which continue to apply even after termination or expiration.