Under what circumstances will the Carls Jr. agreement automatically terminate?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of this Agreement:
- A. Developer shall have no further right to develop or open Franchised Restaurants in the Development Territory, except that Developer shall be entitled to complete and open a Franchised Restaurant for which a Franchise Agreement has been fully executed. Termination or expiration of this Agreement shall not affect Developer's right to continue to operate Franchised Restaurants that were open and operating as of the date this Agreement terminated or expired.
- B. The limited exclusive rights granted Developer in the Development Territory shall terminate and CJR shall have the right to operate or license others to operate Carl's Jr. Restaurants anywhere in the Development Territory.
- C. Developer promptly shall return to CJR all materials and information furnished by CJR or its affiliates, except materials and information furnished with respect to a Franchised Restaurant under development for which there is an effective Franchise Agreement or a Franchised Restaurant which is open and operating pursuant to an effective Franchise Agreement.
- D. Developer and all persons and entities subject to the covenants contained in Section 12 shall continue to abide by those covenants and shall not, directly or indirectly, take any action that violates those covenants.
- E. Developer immediately shall pay CJR and its affiliates all sums due and owing CJR or its affiliates pursuant to this Agreement.
- F. CJR shall retain the Development Fee, including any remaining (unused) balance on account with CJR.
- G. Developer shall furnish CJR, within 30 days after the effective date of termination or expiration, evidence (certified to be true, complete, accurate and correct by an authorized officer of Developer) satisfactory to CJR of Developer's compliance with Sections 14.A. through 14.E.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
Based on the 2025 Carls Jr. Franchise Disclosure Document, the excerpts provided discuss obligations upon termination or expiration of the Development Agreement, but do not explicitly state the conditions under which the agreement will automatically terminate. The document outlines the developer's responsibilities upon termination, such as ceasing development in the territory (with exceptions for already executed agreements), returning materials to CJR, abiding by covenants, paying outstanding sums, and providing evidence of compliance. It also mentions that CJR retains the development fee.
While the excerpts detail what happens after termination, they do not specify the events that trigger automatic termination. The excerpts focus on the developer's obligations and CJR's rights following the end of the agreement, rather than the causes leading to it. The excerpts also mention conditions under which CJR can operate or license others to operate Carls Jr. Restaurants in the Development Territory after the agreement terminates or expires.
To fully understand the circumstances leading to automatic termination, a prospective Carls Jr. franchisee should carefully review the entire Franchise Disclosure Document, specifically looking for sections detailing termination clauses, default conditions, and any performance metrics that could trigger termination if not met. It would be prudent to consult with a franchise attorney to clarify these conditions and their implications.
Therefore, the FDD excerpts do not provide a comprehensive list of conditions that would lead to automatic termination of the Carls Jr. agreement. A prospective franchisee should seek clarification from the franchisor and legal counsel to fully understand the termination terms.