After Carls Jr. transfers its rights and obligations, does Carls Jr. retain liability for the performance of those obligations?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
F. Franchisee agrees that no past, present or future director, officer, employee, incorporator, member, partner, stockholder, subsidiary, affiliate, controlling party, entity under common control, ownership or management, vendor, service provider, agent, attorney or representative of CJR will have any liability for: (1) any obligations or liabilities of CJR relating to or arising from this Agreement; (2) any claim against CJR based on, in respect of, or by reason of the relationship between Franchisee and CJR; or (3) any claim against CJR based on any alleged unlawful act or omission of CJR. This provision does not include a release of claims arising from representations in the Carl's Jr. Franchise Disclosure Document provided to Franchisee in connection with this Agreement or any claims arising under any applicable state or federal franchise laws regulating the offer or sale of the franchise for this Agreement (including without limitation the FTC Rule on Franchising (16 C.F.R. Part 436)).
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
Based on the 2025 Carls Jr. Franchise Disclosure Document, the document does not explicitly state whether Carls Jr. retains liability after transferring its rights and obligations. However, the FDD does state that no past, present, or future director, officer, employee, etc. of CJR will have any liability for any obligations or liabilities of CJR relating to the agreement. This provision does not include a release of claims arising from representations in the Franchise Disclosure Document or any claims arising under any applicable state or federal franchise laws regulating the offer or sale of the franchise.
Item 22 outlines various contractual obligations and limitations of liability for Carls Jr. It specifies circumstances where Carls Jr. will not be held liable, such as in the administration of advertising funds or for the success of a transferee after a transfer. However, it does not directly address the scenario where Carls Jr. transfers its rights and obligations to another party and whether it remains liable for the performance of those obligations by the new party.
A prospective franchisee should seek clarification from Carls Jr. regarding the specific conditions under which the franchisor might transfer its rights and obligations, and whether Carls Jr. would retain any liability for the performance of those obligations by the new entity. This information is crucial for understanding the full scope of potential liabilities and risks associated with the franchise agreement.