Under what condition can a Carls Jr. franchisee engage in activities that are otherwise restricted by the non-compete clause?

According to the 2025 Carls Jr. Franchise Disclosure Document, a franchisee can engage in activities that would otherwise violate the non-compete agreement under specific conditions. The non-compete agreement generally restricts a franchisee from operating or having an interest in a competing restaurant business during the term of the Franchise Agreement and for a period of two years after its expiration, transfer, or termination, within a specified radius of the franchised location or any existing Carls Jr. restaurant.

However, this restriction does not apply to a franchisee's existing restaurant or foodservice operations if these operations are identified in Appendix A of the Franchise Agreement. Additionally, the restriction does not apply to other restaurants operated by the franchisee that are also franchised by Carls Jr. or its affiliates. This means that a franchisee can continue to operate businesses they already own, as long as they were disclosed in Appendix A, and can also operate other restaurant franchises under the Carls Jr. umbrella without violating the non-compete clause.

In practical terms, a prospective Carls Jr. franchisee who already owns a restaurant or foodservice business needs to ensure that this business is properly documented in Appendix A of the Franchise Agreement to avoid future conflicts with the non-compete provisions. Furthermore, this exception allows franchisees to expand their portfolio within the Carls Jr. system without being penalized for violating the non-compete agreement. It is important for potential franchisees to carefully review and understand these exceptions to the non-compete clause to ensure compliance and to leverage opportunities for business diversification within the Carls Jr. franchise network.