Under what circumstances will the undersigned be required to reimburse Carls Jr. for costs and expenses related to the Guarantee?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. If CJR brings an action to enforce this Guarantee in a judicial proceeding or arbitration, the prevailing party in such proceeding shall be entitled to reimbursement of its costs and expenses, including, but not limited to, reasonable accountants', attorneys', attorneys' assistants' and expert witness fees, cost of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses, whether incurred prior to, in preparation for or in contemplation of the filing of any such proceeding. In any judicial proceeding, these costs and expenses shall be determined by the court and not by a jury.
- D. If CJR utilizes legal counsel (including in-house counsel employed by CJR or its affiliates) in connection with any failure by the undersigned to comply with this Guarantee, the undersigned shall reimburse CJR for any of the above-listed costs and expenses incurred by it.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the undersigned (Guarantors) may be required to reimburse Carls Jr. for costs and expenses related to the Guarantee under specific circumstances.
The Guarantors will be responsible for reimbursing Carls Jr. for costs and expenses if Carls Jr. utilizes legal counsel due to the Guarantor's failure to comply with the Guarantee. These costs and expenses can include those incurred by in-house counsel employed by Carls Jr. or its affiliates. This means that if the Guarantor breaches any terms of the Guarantee, leading Carls Jr. to seek legal assistance, the Guarantor will bear the financial burden of Carls Jr.'s legal expenses.
Additionally, if Carls Jr. brings an action to enforce the Guarantee in a judicial proceeding or arbitration, the prevailing party is entitled to reimbursement of costs and expenses. These costs encompass a wide range of items, such as reasonable accountants', attorneys', attorneys' assistants' and expert witness fees, the cost of investigating and proving facts, court costs, other litigation expenses, and travel and living expenses. These expenses can be incurred before, during the preparation for, or in anticipation of filing any such proceeding. It is explicitly stated that in any judicial proceeding, the court, rather than a jury, will determine these costs and expenses.
These provisions ensure that Carls Jr. is protected financially if it needs to take legal action to enforce the Guarantee due to non-compliance by the Guarantors. The Guarantors should be aware of these financial responsibilities and ensure they fully understand and comply with the terms of the Guarantee to avoid incurring these costs.