Are there any exceptions to the restriction on competitive restaurant businesses for a Carls Jr. developer?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
This restriction shall not apply to Developer's existing restaurant or foodservice operations, if any, which are identified in Appendix B, nor shall it apply to other restaurants operated by Developer that are franchised by CJR or its affiliates.
For purposes of the previous sentence, the term "Designated Entrée Items" means any hamburger sandwich, chicken sandwich, breakfast sandwich and any other entrée item of a type designated by CJR as part of the Carl's Jr.
System at any time during the term of this Agreement.
During the Development Term, there is no geographical limitation on this restriction.
Following the expiration, transfer or termination of this Agreement, this restriction shall apply within the Development Territory, within 2 miles of the border of the Development Territory and within a 2-mile radius of any then-existing Carl's Jr.
Restaurant.
If any part of these restrictions is found to be unreasonable in time or distance, each month of time or mile of distance may be deemed a separate unit so that the time or distance may be reduced by appropriate order of the court to that deemed reasonable. If, at any time during the 2 year period following expiration, Transfer or termination of this Agreement, Developer fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Developer's satisfaction of the 2 year obligation.
D. Modification
CJR shall have the right, in its sole discretion, to reduce the scope of any covenant in this Section 12 effective immediately upon Developer's receipt of written notice, and Developer agrees that it shall comply forthwith with any covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section 20.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, there are a few exceptions to the restrictions on competitive restaurant businesses for a Carls Jr. developer. The restriction does not apply to a developer's existing restaurant or foodservice operations if these are identified in Appendix B of the agreement. Additionally, the restriction does not apply to other restaurants operated by the developer that are already franchised by Carls Jr. or its affiliates.
During the development term, there are no geographical limitations to the restriction. However, after the agreement expires, is transferred, or terminated, the restriction applies within the Development Territory, within 2 miles of the border of the Development Territory, and within a 2-mile radius of any then-existing Carls Jr. Restaurant.
Carls Jr. also retains the right to reduce the scope of any covenant in Section 12, which addresses these restrictions. This modification becomes effective immediately upon the developer receiving written notice. The developer must then comply with the modified covenant. These stipulations are designed to protect the Carls Jr. system while allowing some flexibility for existing businesses and future agreements.