Are there any exceptions to the restriction on a Carls Jr. franchisee operating a competing restaurant?

According to the 2025 Carls Jr. Franchise Disclosure Document, there are specific exceptions to the restriction on a franchisee operating a competing restaurant. During the term of the Franchise Agreement, a franchisee is generally restricted from owning, operating, or having an interest in any restaurant business that competes with Carls Jr., particularly those with a significant portion of sales from 'Designated Entrée Items' (hamburgers, chicken sandwiches, breakfast sandwiches, etc.) or those operating in a quick-service format. This restriction has no geographical limitation during the agreement term.

However, the restriction does not apply to a franchisee's existing restaurant or foodservice operations if they are identified in Appendix A of the Franchise Agreement. Additionally, the restriction does not apply to other restaurants operated by the franchisee that are also franchised by Carls Jr. or its affiliates. This means a franchisee can operate other restaurant concepts if they were pre-existing and disclosed or if they are other Carls Jr. franchises.

Following the expiration, transfer, or termination of the Franchise Agreement, the restriction applies to any restaurant business located within a 2-mile radius of the former Franchised Location and any restaurant business within a 2-mile radius of any then-existing Carls Jr. Restaurant. This post-term restriction ensures that former franchisees do not directly compete with existing Carls Jr. locations in close proximity. A prospective franchisee should carefully review Appendix A and understand the implications of these restrictions before signing the Franchise Agreement.