Under what circumstances will the Carls Jr. incentive program terminate following written notice to the franchisee?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4. Termination of Program Incentives. This Addendum and the Program will terminate following written notice to Franchisee if:
- A. Franchisee fails to open the Franchised Restaurant on or before 120 days after the contractual opening date pursuant to the terms of the Franchisee's Development Agreement; or
- B. Franchisee or any affiliate of Franchisee receives, during the first three years of operation of the Franchised Restaurant under the Franchise Agreement, a written notice of default under any agreement between Franchisee or any affiliate of Franchisee and CJR or any affiliate of CJR and fails to cure the default within the applicable cure period, if any.
- 5. Effect of Termination. If this Addendum is terminated the royalty fee and APO for the Franchised Restaurant will immediately revert to the applicable amounts set forth in the Franchise Agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the development incentive program will terminate following written notice to the franchisee under specific circumstances. These circumstances include failure to open the franchised restaurant on or before 120 days after the contractual opening date as per the terms of the Franchisee's Development Agreement.
Additionally, the incentive program will terminate if the franchisee or any of their affiliates receives a written notice of default during the first three years of operating the franchised restaurant under the Franchise Agreement. This default notice must be related to any agreement between the franchisee (or their affiliate) and Carls Jr. (or its affiliates). The termination occurs if the franchisee fails to correct the default within the applicable cure period, if any such period is provided.
Upon termination of the addendum, the royalty fee and Advertising Production Obligation (APO) for the franchised restaurant will immediately revert to the amounts specified in the original Franchise Agreement. This means the franchisee will lose the benefits of the incentive program and will be subject to the standard royalty and APO terms.