Are there any restrictions on Carls Jr.'s ability to solicit customers?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
oss of possession of the original franchised location; and (4) you reimburse us for all reasonable expenses actually incurred by us in connection with the acceptance of the new location.
You may only sell or distribute products identified by some or all of the Proprietary Marks from the Franchised Location; you may not use any other method or channel of distribution. We do not impose any geographic restrictions on your ability to solicit customers; however, see Item 13 for Internet restrictions. In addition, you must participate in all online ordering and delivery programs that we may designate from time to time and comply with the terms and conditions of such programs, including any geographic or other delivery restrictions. There are no restrictions on our ability to solicit customers, nor must we pay any compensation to you for soliciting or accepting orders. We reserve all rights to use and license the Carl's Jr. System other than those we expressly grant to you. We reserve the right to merchandise and distribute goods and services identified by the Proprietary Marks (or different proprietary marks) through any method or channel of distribution, including the Internet.
As noted in Item 1, pursuant to the Management Agreement, CKR, at all times acting on our behalf, may fulfill all of our duties and obligations under all existing and future Franchise Agreements and Development Agreements, including managing the Carl's Jr. System; marketing and offering new and renewal Franchise Agreements and Development Agreements as our franchise broker; training franchisees and their employees; and providing the required support to franchisees. Pursuant to the same Management
Agreement, CKR, also fulfills all of HR's duties and obligations under all existing and future franchise agreements and development agreements for Hardee's Restaurants, which are quick service restaurants identified in whole or in part by the name "Hardee's." Except in limited circumstances, Carl's Jr. Restaurants are not located in the same geographic area as Hardee's Restaurants. In the limited circumstances where there is overlap, HR and its franchisees may solicit or accept orders within the same area served by Restaurants operated by Carl's Jr. franchisees, and any potential conflict between the franchisees of each system will be resolved on a case by case basis. As noted in Item 1, the principal place of business of CKR and HR is the same as ours.
Source: Item 12 — TERRITORY (FDD pages 55–56)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, there are generally no restrictions on Carls Jr.'s ability to solicit customers. Specifically, Carls Jr. does not have to pay any compensation to franchisees for soliciting or accepting orders. Carls Jr. retains the right to use and license the Carl's Jr. system, including the right to market and distribute goods and services using the Proprietary Marks through any distribution method, including the internet.
Carls Jr. franchisees should be aware that while there are no explicit restrictions on Carls Jr.'s ability to solicit customers, the company does reserve significant rights regarding the use of its trademarks and distribution channels. This could potentially lead to competition between Carls Jr. and its franchisees, especially through online channels. Item 13 should be reviewed for internet restrictions.
Furthermore, Carls Jr. notes that its affiliates and their franchisees may operate businesses that sell similar goods or services and may solicit and accept orders from customers near a franchisee's business. While Carls Jr. does not anticipate conflicts between franchisees and affiliates due to their separate company status, it also states that it has no obligation to resolve any perceived conflicts that might arise. This could pose a risk to franchisees if an affiliate's business directly competes for the same customer base.
Prospective franchisees should carefully consider these factors and evaluate the potential impact of Carls Jr.'s reserved rights and the activities of its affiliates on their business. It would be prudent to discuss these issues with Carls Jr. during the due diligence process to gain a better understanding of the potential competitive landscape and any support or protections that may be available to franchisees.