Under what conditions can Carls Jr. terminate the Development Agreement with cause?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section In Development Agreement | Summary |
|---|---|---|
| f. Termination by us with cause | Section 13 | We may terminate upon default, which includes, but is not limited to, remaining in default beyond any applicable cure period under any agreement with us or our affiliates, including any Franchise Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. can terminate the Development Agreement with cause if the franchisee defaults. This includes remaining in default beyond any applicable cure period under any agreement with Carls Jr. or its affiliates, including any Franchise Agreement.
This means that if a franchisee fails to meet their obligations, such as payment schedules or operational standards, and does not correct the issue within the given timeframe outlined in their agreements, Carls Jr. has the right to terminate the Development Agreement. This is a standard clause in most franchise agreements, designed to protect the brand and ensure all franchisees adhere to the established standards.
Prospective franchisees should carefully review all agreements, including the Development Agreement and Franchise Agreement, to understand their obligations and the potential consequences of failing to meet them. Understanding the cure periods and what constitutes a default is crucial to maintaining a good standing with Carls Jr. and avoiding termination of the agreement.