Risk Score
Pending analysis
Investment Range
$1,486,000 - $3,176,500
Franchise Fee
$15,000
Total US Locations
1,063
Business Summary
Carl's Jr. Restaurants LLC franchises quick service restaurants that offer a limited menu of breakfast, lunch, and dinner. The menu features charbroiled 100% Black Angus Thickburger sandwiches, Hand-Breaded Chicken Tenders, Made from Scratch Biscuits, and other quick-serve items.
Corporate History
Carl's Jr. Restaurants LLC, a Delaware limited liability company, was organized on January 30, 2013, and began operating and offering franchises for Carl's Jr. Restaurants on April 1, 2013. Its predecessor, Carl Karcher Enterprises, Inc., was incorporated in California on February 7, 1966, and operated Carl's Jr. Restaurants from 1966. Carl Karcher Enterprises, Inc. also offered Carl's Jr. franchises from 1984. in March 2013, Carl Karcher Enterprises, Inc. converted to Carl Karcher Enterprises LLC. In April 2013, Carl Karcher Enterprises LLC assigned its existing franchise agreements, real estate assets, and company-owned restaurant operations to Carl's Jr. Restaurants LLC as part of a financing transaction.
Financial Overview
Investment Range
$1,486,000 - $3,176,500
Franchise Fee (Low)
$15,000
Franchise Fee (High)
$25,000
Royalty %
4%
Marketing %
6%
Equipment Costs (Low)
$500,500
Equipment Costs (High)
$788,700
Working Capital
$205,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Carl's Jr. Restaurants LLC's financial statements show inflationary pressures on labor and commodity prices impacted its results in fiscal years 2023 and 2024. The company is trying to manage these costs through menu price increases and changes in product mix, but notes that competitive pressures and consumer spending might limit their ability to fully recover these costs. A military conflict in the Middle East, starting in October 2023, has also negatively affected international Hardee's markets, and its ongoing nature could further impact the business. The company's combined consolidated balance sheets show a members' deficit. Despite these factors, the independent auditors have provided an unqualified opinion, meaning the financial statements present the company's financial position fairly in all material respects, indicating no substantial doubt about its ability to continue as a going concern.
Financing Details
Carl's Jr. Restaurants LLC does not offer any direct or indirect financing to franchisees, nor does it guarantee any of their notes, leases, or obligations. Franchisees are responsible for securing their own financing.
Performance Metrics
Total US Locations
1,063
Franchised Units
1,014
Corporate Units
49
Avg Square Footage
2,700
Franchising Since
1984
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
6
Litigation Summary
Carl's Jr. Restaurants LLC has been involved in six disclosed legal actions. One significant case, settled in October 2022, involved a Canadian developer and franchisee alleging deficient disclosures and breach of contract, which resulted in Carl's Jr. Restaurants LLC paying $5,500,000. Two other cases, settled in April 2019, were class action lawsuits in Washington and Colorado, brought by former franchisee employees. These alleged anti-trust violations due to non-solicitation/no-hire provisions in franchise agreements. Carl's Jr. Restaurants LLC settled these, agreeing to pay small amounts and remove the clauses from relevant state agreements. Additionally, Carl's Jr. Restaurants LLC's affiliate, Arby's, settled multi-state actions in March 2019 concerning similar non-solicitation clauses without monetary payment. Another affiliate, Dunkin' Brands, also settled multi-state actions in March 2019 regarding "no-poaching" provisions, denying wrongdoing. In September 2020, Dunkin' Brands settled a New York lawsuit concerning cyberattacks, agreeing to pay $650,000 and implement security measures. Carl's Jr. Restaurants LLC clarifies that the litigation involving its affiliates has no direct impact on its brand or alleged unlawful conduct by Carl's Jr. Restaurants LLC itself.
Bankruptcy History
Carl's Jr. Restaurants LLC has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew their Carl's Jr. franchise, franchisees must provide timely notice of their intent to renew, be in good standing with Carl's Jr. Restaurants LLC and its affiliates, and not be in default of any agreements. They must also ensure they are not in default on any leases or financing instruments related to the restaurant or with any vendors. Franchisees need to have the right to possess the restaurant location for the new renewal term and must remodel and modernize the restaurant to meet Carl's Jr. Restaurants LLC's current standards. Additionally, they are required to pay a renewal fee and sign a general release of claims against Carl's Jr. Restaurants LLC. Finally, franchisees must sign Carl's Jr. Restaurants LLC's then-current franchise agreement, which may have different terms, including new royalty and advertising fees.
Training & Support Program
Franchisor Assistance
Carl's Jr. Restaurants LLC provides franchisees with pre-opening assistance, including site selection guidelines, consultation, and evaluation, as well as prototypical plans for restaurant construction and reviews of architectural plans. Carl's Jr. Restaurants LLC also furnishes its confidential Operating Procedures Manual (OPM) and provides initial training for up to 8 employees. For the first two restaurants, an All-Star Team provides opening training support, though franchisees reimburse the costs. During operation, Carl's Jr. Restaurants LLC collects and manages advertising funds, provides local advertising guidelines, and may modify the brand's system, including menus, equipment, and decor, which franchisees must adopt. Ongoing support includes periodic advice and consultation on operations, inspections to ensure compliance, and access to an e-learning management system called Star University for employee training (for a fee). Franchisees must also participate in Carl's Jr. Restaurants LLC's online ordering, delivery, and loyalty programs, for which they pay a Digital Tech Fee.
Initial Training Hours
328
Training Location
In-restaurant training, designated training facilities in Anaheim, CA or Franklin, TN, and online through Star University.
Ongoing Support
Carl's Jr. Restaurants LLC provides ongoing assistance to its franchisees through various methods. This includes periodic advice and consultation on restaurant operations, new developments, techniques, and improvements in areas like design, management, food preparation, and sales promotion. This consultation can be delivered through visits from representatives, printed or electronic materials, meetings, seminars, phone, or email. Carl's Jr. Restaurants LLC also conducts regular inspections and evaluations of the restaurants to ensure compliance with quality standards. Additionally, franchisees have access to the Star University e-learning management system for continuous employee training. Carl's Jr. Restaurants LLC also provides guidelines for local advertising and may require participation in customer satisfaction and quality assurance programs like secret shoppers and customer surveys.
Franchise Requirements
Ideal Candidate Profile
Carl's Jr. Restaurants LLC seeks franchisees who can designate an approved Operating Principal to oversee the daily operations of the restaurant. This Operating Principal must hold at least a 10% equity interest in the franchisee entity, be approved by Carl's Jr. Restaurants LLC, and commit full-time efforts to supervising the restaurant's activities, residing within a reasonable driving distance. The Operating Principal must also successfully complete the Franchise Management Training Program (FMTP) and any additional required training. For multi-unit developers, a Development Principal is required, and for franchisees operating in multiple geographic markets, a Multi-Unit Manager may also be needed, each with similar full-time commitment, approval, and training requirements. Candidates undergo a Discovery Day meeting for evaluation and may be required to complete a 10-Day Operations Overview if they hold 10% or more interest in the franchisee entity.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Territory Size Requirements
Carl's Jr. Restaurants LLC does not grant an exclusive territory under the Franchise Agreement. For Development Agreements, the Development Territory is mutually agreed upon, considering density and the number of restaurants to be developed. Boundaries can be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks, or other similar descriptions. The size may range from a portion of a metropolitan area to a county or a state in less densely populated areas. Carl's Jr. Restaurants LLC reserves the right to operate and license other Carl's Jr. restaurants or other types of restaurants, as well as merchandise products through other channels, including the Internet, within the Development Territory, with specific exceptions for non-traditional locations.
Staffing Notes
Carl's Jr. Restaurants LLC requires each franchised restaurant to be supervised on-site at all times by an Operating Principal, Multi-Unit Manager, General Manager, or Site Manager, all of whom must meet Carl's Jr. Restaurants LLC's training qualifications. Franchisees must employ at least one General Manager and a sufficient number of Shift Leaders (at least 6 for initial training) who have successfully completed the Franchise Management Training Program (FMTP). If the required trained personnel fall below this minimum, franchisees have 30 days to hire and enroll replacements in the FMTP. Carl's Jr. Restaurants LLC emphasizes that franchisees are solely responsible for hiring, training, supervising, and compensating their employees, ensuring they maintain high service standards and appearance as outlined in the Operating Procedures Manual (OPM).