Under what conditions will a Carls Jr. franchisee be considered in default under Section 21.B.(1)?

According to the 2025 Carls Jr. Franchise Disclosure Document, a franchisee will be considered in default under Section 21.B.(1) for failing to materially comply with the requirements imposed by the Franchise Agreement, the Operations and Procedures Manual (OPM), or any other written requirements. Additionally, a franchisee will be in default if they fail to carry out the terms of the Franchise Agreement in good faith. This means that Carls Jr. franchisees must adhere to all guidelines and obligations outlined in their agreements with the company.

This default can occur if the franchisee does not meet the standards set by Carls Jr. in various aspects of the business, such as operational procedures, facility maintenance, or adherence to brand standards. The reference to "good faith" implies that franchisees must act honestly and diligently in fulfilling their contractual obligations.

For a prospective Carls Jr. franchisee, this highlights the importance of thoroughly understanding all requirements outlined in the Franchise Agreement and the OPM. It also emphasizes the need to maintain open communication with Carls Jr. and to address any potential compliance issues promptly to avoid being declared in default. Franchisees should ensure they have systems in place to monitor and maintain compliance with all contractual obligations to prevent potential defaults and subsequent termination of the franchise agreement.