Under what circumstances can CJR terminate the Development Agreement with a Carls Jr. developer without providing an opportunity to cure the issue?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to the grounds for termination that may be stated elsewhere in this Agreement, CJR may terminate this Agreement, and the rights granted by this Agreement, upon written notice to Developer without an opportunity to cure upon the occurrence of any of the following events:
(1) Developer fails to provide CJR with a fully-executed lease or sublease, or proof of purchase of the real property, for a proposed site by the applicable Property Control Date listed in Appendix B.
CJR TR Development Agreement – 5/25 Franchisee (Alpha Code) DMA/Area of Development – Number of Restaurants
(2) Developer fails to open an authorized site by the Opening Date listed in Appendix B.
(3) At any time during the Development Term, Developer fails to have open and operating the minimum number of Franchised Restaurants required by the Development Schedule.
(4) Developer begins construction of a Franchised Restaurant at a site before Developer has received a fully-executed Franchise Agreement and paid CJR the Initial Franchise Fee.
(5) Developer is insolvent or is unable to pay its creditors (including CJR); files a petition in bankruptcy, an arrangement for the benefit of creditors or a petition for reorganization; there is filed against Developer a petition in bankruptcy, an arrangement for the benefit of creditors or petition for reorganization, which is not dismissed within 60 days of the filing; Developer makes an assignment for the benefit of creditors; or a receiver or trustee is appointed for Developer and not dismissed within 60 days of the appointment.
(6) Execution is levied against Developer's business or property; suit to foreclose any lien or mortgage against the premises or equipment of any Franchised Restaurant developed hereunder is instituted against Developer and is not dismissed within 60 days; or the real or personal property of any Franchised Restaurant developed hereunder shall be sold after levy thereupon by any sheriff, marshal or constable.
(7) There is a material breach by Developer of any obligation under Section 12.
(8) Any Transfer that requires CJR's prior written consent occurs without Developer having obtained that prior written consent.
(9) CJR discovers that Developer made a material misrepresentation or omitted a material fact in the information that was furnished to CJR in connection with its decision to enter into this Agreement.
(10) Developer knowingly falsifies any report required to be furnished CJR or makes any material misrepresentation in its dealings with CJR or fails to disclose any material facts to CJR.
(11) Developer, the Development Principal, any stockholder, member, partner, director or officer of Developer, any member of the Continuity Group or any 10% Owner is convicted of, or pleads no contest to, a felony charge, a crime involving moral turpitude, or any other crime or offense that is reasonably likely, in the sole opinion of CJR, to adversely affect CJR, its affiliates, the Carl's Jr.
System.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, CJR can terminate the Development Agreement with a developer without providing an opportunity to cure under several specific circumstances. These include failing to provide a fully-executed lease or proof of real property purchase by the Property Control Date, failing to open an authorized site by the Opening Date, or failing to have the minimum required number of restaurants open and operating according to the Development Schedule. These dates are listed in Appendix B of the agreement.
Additionally, Carls Jr. can terminate the agreement without an opportunity to cure if the developer begins construction before receiving a fully-executed Franchise Agreement and paying the Initial Franchise Fee. Termination without cure is also permitted if the developer becomes insolvent, files for bankruptcy, makes an assignment for the benefit of creditors, or has a receiver or trustee appointed. Similarly, if a levy is executed against the developer's business or property, or if a suit to foreclose any lien or mortgage against the premises or equipment is instituted and not dismissed within 60 days, Carls Jr. can terminate the agreement immediately.
Further reasons for immediate termination include a material breach of any obligation under Section 12 of the agreement, any transfer that requires CJR's prior written consent occurring without that consent, or discovering that the developer made a material misrepresentation or omitted a material fact when providing information to CJR. Knowingly falsifying reports, making material misrepresentations, or failing to disclose material facts to CJR also constitute grounds for termination without cure. Finally, a conviction or plea of no contest to a felony charge or any crime that could adversely affect Carls Jr. or the Carls Jr. system by the developer, Development Principal, or certain related parties can lead to immediate termination.