Under what circumstances related to construction and franchise agreements can a Carls Jr. developer be in default?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
(7) There is a material breach by Developer of any obligation under Section 12.
(13) Developer fails or refuses to comply with any other provision of this Agreement or any requirement of the Carl's Jr.
System and does not correct the failure or refusal within 30 days (10 days for monetary defaults) after receiving written notice of default.
Except for monetary defaults, if the default cannot be corrected within 30 days, Developer shall have such additional time to correct the default as reasonably required (not to exceed 90 days) provided that Developer begins taking the actions necessary
- (12) Developer, the Development Principal, any member of the Continuity Group, any 10% Owner or any Affiliated Entity remains in default beyond the applicable cure period: (a) under any other agreement with CJR or its affiliates; (b) under any real estate lease, equipment lease, or financing instrument relating to a Franchised Restaurant; or (c) with any vendor or supplier to a Franchised Restaurant; provided that if the default is not by Developer, Developer is given written notice of the default and 30 days to cure said default.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a developer can be in default under several circumstances related to construction and franchise agreements. A material breach by the developer of any obligation under Section 12 of the agreement constitutes a default. Section 12 was not provided in the document excerpts.
Additionally, default can occur if the developer remains in default beyond the applicable cure period under any real estate lease, equipment lease, or financing instrument relating to a Franchised Restaurant. This also applies if the developer defaults with any vendor or supplier to a Franchised Restaurant. However, if the default is not by the developer, the developer is given written notice of the default and 30 days to cure said default.
Furthermore, the developer can be in default if they fail or refuse to comply with any other provision of the agreement or any requirement of the Carls Jr. system and does not correct the failure or refusal within 30 days (10 days for monetary defaults) after receiving written notice of default. Except for monetary defaults, if the default cannot be corrected within 30 days, the developer has additional time to correct the default as reasonably required, not to exceed 90 days, provided that the developer begins taking the actions necessary.