Under what conditions can Carls Jr. approve a supplier or distributor?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
roducts, you must use only our secret recipe products and purchase them from us, our affiliate or a source designated by us. For the fiscal year ended January 27, 2025, neither our affiliates nor us received any revenue from the sale of these products to our franchisees.
We may approve one or more suppliers or distributors for any products, equipment (including computer/cash register system as noted below), goods or materials, and we may approve a supplier or distributor only as to certain goods or materials. We may concentrate purchases with one or more suppliers to obtain lower prices and/or the best advertising support and/or services for any group of Carl's Jr. Restaurants or any other group of restaurants operated or franchised by CJR or our affiliates. Although you are not required to lease a location from us or an affiliate, we must consent to your selection of the site for your Carl's Jr. Restaurant. If you lease the Restaurant premises from a third party landlord, you must sign the Franchise Lease Addendum attached as Appendix G to the Franchise Agreement.
Approval of a supplier or a distributor may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, sanitation standards, facility standards, insurance and other quality assurance requirements or other criteria, and concentration of purchases, as set forth above, and such approval may be temporary pending a further evaluation of the supplier by us. A fee not to exceed our actual costs of reviewing the supplier or distributor and auditing the facility, if needed, may be charged by us and must be paid by you. We may establish commissaries and distribution facilities owned and operated by us or an affiliate that we will designate as an approved supplier.
One or more of our officers may own nominal interests in certain of our approved suppliers which are publicly traded companies or through investment funds.
We and our affiliates may receive fees, payments, commissions, field-of-use license royalties or other consideration from approved suppliers based on sales to franchisees, from promotional allowances and volume discounts. We and our affiliates may use all amounts received from approved suppliers, distributors or third parties, whether or not based on your and/or other franchisees' actual or prospective dealings with them, without restriction for any purposes we or our affiliates deem appropriate. Finally, we and our affiliates provide supply chain, quality assurance, distribution and logistics services for the franchise system. These services include negotiating with suppliers and distributors who will sell and distribute goods to our franchisees, designating one or more distributors to service our franchisees, and managing distribution logistics. As a result, we and our affiliates reserve the right to recover our costs related to performing these services by collecting a per-case distribution fee for all cases sold by an approved supplier to our franchisees and from other logistics-related programs.
We may charge non-approved suppliers reasonable testing and/or inspection fees.
If you propose to purchase any goods or materials (that you are not required to purchase from CJR, an affiliate of CJR or a designated supplier) from a supplier that we have not previously approved, you must submit to us a written request for such approval, or you must request that the supplier do so.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 37–41)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. may approve one or more suppliers or distributors for any products, equipment, goods, or materials. However, such approval may be limited to specific goods or materials. Carls Jr. may concentrate purchases with select suppliers to potentially secure lower prices, better advertising support, or enhanced services for any group of Carls Jr. restaurants.
If a franchisee wishes to use a supplier not already approved by Carls Jr., they must submit a written request for approval, or the supplier can do so. As a condition of approval, Carls Jr. has the right to inspect the supplier's facilities and require the submission of information, specifications, and samples for testing. The franchisee may be charged a fee to cover the reasonable cost of the inspection and the actual cost of the test. A facility audit may also be required. Carls Jr. will notify the franchisee within 60 days regarding the approval decision.
Carls Jr. may grant tentative approval for an alternative supplier, but the franchisee must submit a $1,500 deposit to cover the inspection costs. The franchisee will be responsible for any additional expenses related to the facility inspection, which must occur before final approval. The approval of a supplier may also depend on factors such as the frequency of delivery, reporting capabilities, standards of service, and the number of suppliers already approved. Approvals may be temporary, pending further evaluation. Carls Jr. may periodically require re-testing and facility audits at the franchisee's expense to ensure continued compliance with specifications and standards. Carls Jr. will provide written notice if any approvals are revoked.
Approval of a supplier or distributor may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, sanitation standards, facility standards, insurance and other quality assurance requirements or other criteria, and concentration of purchases. A fee not to exceed Carls Jr.'s actual costs of reviewing the supplier or distributor and auditing the facility, if needed, may be charged to the franchisee.