After termination or expiration of the Carls Jr. Development Agreement, what happens to the exclusive rights granted to the Developer in the Development Territory?

According to the 2025 Carls Jr. Franchise Disclosure Document, upon termination or expiration of the Development Agreement, the limited exclusive rights granted to the Developer in the Development Territory will terminate. Following this, Carls Jr. has the right to operate or license others to operate Carls Jr. Restaurants anywhere within the Development Territory.

This means that once the Development Agreement ends, the developer no longer holds exclusive rights to develop Carls Jr. restaurants in the previously assigned territory. Carls Jr. regains the freedom to either establish its own restaurants or grant licenses to other parties to do so within that same territory.

This provision is significant for prospective developers as it clarifies the duration and limitations of their exclusive rights. While the Development Agreement is active, the developer benefits from a protected territory, but this protection ceases upon termination or expiration of the agreement, creating a potential risk of increased competition in the future.