After termination or expiration of the Development Agreement for Carls Jr., under what condition is the Developer entitled to complete and open a Franchised Restaurant?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of this Agreement:
- A. Developer shall have no further right to develop or open Franchised Restaurants in the Development Territory, except that Developer shall be entitled to complete and open a Franchised Restaurant for which a Franchise Agreement has been fully executed. Termination or expiration of this Agreement shall not affect Developer's right to continue to operate Franchised Restaurants that were open and operating as of the date this Agreement terminated or expired.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a developer's right to develop or open franchised restaurants in the development territory ceases upon termination or expiration of the Development Agreement. However, there is an exception: the developer can complete and open a Carls Jr. restaurant if a Franchise Agreement has already been fully executed for that specific location.
This provision ensures that Carls Jr. developers are not left in a lurch if their Development Agreement ends while they are in the process of opening a store for which all the franchise paperwork is complete. It allows them to finalize the opening of that particular restaurant, but it does not grant any further development rights beyond that one location.
It is important to note that the termination or expiration of the Development Agreement does not affect the developer's right to continue operating any Carls Jr. restaurants that were already open and operating as of the termination or expiration date, provided those restaurants are operating under an effective Franchise Agreement. This distinction is crucial for developers who have successfully established operating restaurants within their territory.