Under what conditions may CJR concentrate purchases with one or more suppliers for Carls Jr. restaurants?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
CJR may approve one or more suppliers for any goods or materials and may approve a supplier only as to certain goods or materials. CJR 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 franchised or operated by CJR or its affiliates. Approval of a supplier may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, or other criteria, and concentration of purchases, as set forth above, and may be temporary pending a further evaluation of such supplier by CJR. CJR may establish commissaries and distribution facilities owned and operated by CJR or an affiliate that CJR shall designate as an approved supplier.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, CJR (Carls Jr. Restaurants) has the authority to concentrate purchases with specific suppliers under certain conditions. This is primarily done to leverage better pricing, advertising support, or services for Carls Jr. restaurants, as well as other restaurant brands franchised or operated by CJR or its affiliates.
This concentration of purchasing power allows Carls Jr. to negotiate favorable terms with suppliers, potentially reducing costs for franchisees. It also ensures a consistent supply chain and standardized products across all Carls Jr. locations, which helps maintain brand uniformity and quality control. The approval of suppliers may depend on factors such as delivery frequency, reporting capabilities, service standards (including responsiveness to complaints), and the willingness to concentrate purchases as directed by CJR.
Carls Jr. may also establish its own commissaries and distribution facilities, operated either directly or through affiliates, designating these as approved suppliers. This gives Carls Jr. further control over the supply chain and product quality. Franchisees are obligated to purchase certain proprietary food products developed by CJR from CJR, its affiliates, or designated and licensed third parties. For all other goods, franchisees must use suppliers approved by CJR, adhering to the brand's standards and specifications.
If a franchisee wishes to use a supplier not already approved by Carls Jr., they must submit a written request for approval, or have the supplier do so. Carls Jr. has the right to inspect the supplier's facilities and require samples and specifications for testing, with the franchisee bearing the costs of inspection and testing. Carls Jr. also reserves the right to re-inspect approved suppliers and revoke approval if they fail to meet the required criteria, ensuring ongoing compliance with brand standards.