Carl's Jr. Franchisee Files Bankruptcy, Closing Stores

Harshad Dharod's Friendly Franchisees Corporation, a significant Carl's Jr. operator in California, is undergoing a major restructuring after filing for Chapter 11 bankruptcy in April. The company intends to close 10 restaurants and sell 49 others, putting almost its entire footprint of 59 locations up for sale.

This operator, which had expanded to at least 65 Carl's Jr. locations since 2000, cited California's $20 per hour fast-food minimum wage, effective in 2024, as a key driver of sharply increased operating expenses. Additional contributing factors mentioned include a sales downturn, perceived ineffectiveness in the franchisor's marketing, a lack of innovation, and escalating competition.

While employees have reported issues like understaffing and workplace violence, the franchisee's claims about the wage law's impact are part of an ongoing debate. Carl's Jr. has stated that this restructuring is unique to Dharod's operations and not indicative of broader issues within the chain.

The company, operating through several affiliated entities, is seeking to combine its bankruptcy cases for efficiency. About 1,000 workers are employed across the 59 affected restaurants. National Franchise Sales is managing the sale, with early interest reported from potential buyers, suggesting many of these Carl's Jr. locations are likely to remain operational under new ownership.