Under the Carls Jr. Development Agreement, is there a renewal term for the agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
CJR hereby grants to Developer, subject to the terms, conditions, provisions and limitations of this Agreement, the right to develop Franchised Restaurants in the Development Territory during the Development Term. The Development Term begins on the date this Agreement is signed by CJR and terminates on the first to occur of: (1) the date that the last Franchised Restaurant required by the Development Schedule in attached Appendix B opens for business; or (2) the date that the last Franchised Restaurant was required to be opened pursuant to the Development Schedule. There is no renewal term for this Agreement. Each Franchised Restaurant shall be located in the Development Territory at a specific location accepted by CJR.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the Development Agreement does not have a renewal term. The Development Term begins when the agreement is signed by CJR and ends when the last restaurant required by the Development Schedule opens or when the date the last restaurant was required to open according to the Development Schedule occurs, whichever comes first.
This means that a developer's rights to develop Carls Jr. restaurants in a specific territory are limited to the initial term defined in the agreement. Once that term expires, the developer has no guaranteed right to continue developing restaurants in that territory under the same agreement.
This lack of renewal term is a significant point for prospective developers to consider. They should carefully evaluate the Development Schedule and ensure they can meet the required development milestones within the initial term. If a developer anticipates needing more time or wants the security of a longer-term agreement, this would need to be negotiated upfront, as there is no provision for automatic renewal.