After termination of a Carls Jr. franchise agreement, what actions must the franchisee take regarding the use of Proprietary Marks?

According to the 2025 Carls Jr. Franchise Disclosure Document, after the termination of the franchise agreement, the franchisee must immediately discontinue all use of the Proprietary Marks in connection with the Franchised Restaurant and on any items bearing the Proprietary Marks. This includes removing the Proprietary Marks from the Franchised Restaurant itself, as well as from clothing, signs, materials, motor vehicles, and other items used in the operation of the restaurant. However, Carls Jr. may direct the franchisee to temporarily refrain from removing the Proprietary Marks while Carls Jr. determines whether it will exercise its option to purchase the restaurant. The franchisee is also responsible for canceling all advertising for the Franchised Restaurant that contains the Proprietary Marks, including telephone directory listings, and taking any necessary action to cancel filings or registrations for the Franchised Restaurant that contain any Proprietary Marks.

These requirements are standard in franchise agreements to protect the brand's trademarks and prevent any potential confusion or misuse after the franchise relationship ends. By ensuring the removal of all Proprietary Marks, Carls Jr. maintains control over its brand identity and prevents the former franchisee from continuing to benefit from the brand's reputation and goodwill. This is crucial for maintaining consistency and quality across all Carls Jr. locations and preventing any unauthorized representation of the brand.

For a prospective Carls Jr. franchisee, this means understanding that upon termination of the agreement, they will lose all rights to use the Carls Jr. brand and must take immediate steps to remove all branding from the premises and related materials. This includes not only physical signage but also online presence and advertising. Franchisees should be prepared for these actions and factor in the costs associated with rebranding or discontinuing operations if the agreement is terminated.