Under what circumstances will the Carls Jr. program incentives be terminated following written notice to the franchisee?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2. Other Development Incentive Programs. Franchisee acknowledges and agrees that, by signing this Addendum, it will not be entitled, with respect to the Franchised Restaurant, to any other incentive that have been or may be offered by CJR.
- 3. 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 Franchise 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.
- 4. Effect of Termination. If this Addendum is terminated during the first three years of the Franchised Restaurant's operation under the Franchise Agreement, 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 be terminated 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 outlined in the Development Agreement or Franchise Agreement.
Additionally, the program incentives will be terminated if the franchisee, or any of their affiliates, receives a written notice of default during the first three years of the restaurant's operation under the Franchise Agreement. This default 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.
If the Addendum is terminated during the first three years of the Franchised Restaurant's operation under the Franchise Agreement, the royalty fee and APO for the Franchised Restaurant will immediately revert to the applicable amounts set forth in the Franchise Agreement.