**Major Carl’s Jr. Franchisee to Close Locations Amid Bankruptcy Proceedings**
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In a significant restructuring move, a prominent franchisee of the Carl’s Jr. fast-food chain is set to close 10 locations and sell an additional 49 restaurants across California. This decision follows a Chapter 11 bankruptcy filing by the franchise operator, Sun Gir Incorporated, which was initiated in early April.
Harshad Dharod, the company’s CEO, has faced mounting challenges that he attributes to both the corporate practices of Carl’s Jr. and increasing operational costs due to California’s $20 minimum wage. A representative from National Franchise Sales, the agency managing the sale, indicated that there is already substantial interest from prospective buyers for the 49 locations being sold.
Dharod’s decision to close the 10 underperforming outlets comes as part of an effort to streamline operations and manage financial difficulties. The spokesperson noted that National Franchise Sales has been engaged by the bankruptcy court to facilitate the sale and transition of the restaurants.
The spokesperson also revealed that the bulk of the affected franchises are situated in Los Angeles County, with some locations extending into Northern California. They assured that new owners typically retain existing management and staff, with managers and employees likely to continue their roles post-sale.
Sun Gir Incorporated claims to operate the largest number of Carl’s Jr. franchises in California under the banner of Friendly Franchisees Corporation. According to the company’s website, they currently oversee a total of 65 restaurants across the state.
In the Chapter 11 filing, Dharod reported that the number of creditors falls between one and 49, with liabilities estimated at $50,000 or less. The filing allows him to reorganise the company’s financial structure whilst retaining control over its operations. He has expressed frustration with Carl’s Jr., stating that the brand’s lack of support and failure to innovate have exacerbated his business struggles.
Reports indicate that over the past two years, Dharod’s locations have experienced a significant decline in revenue. Although they generated upwards of £6 million monthly in previous years, they have suffered losses exceeding £600,000 a month this year alone.
While Dharod has not publicly commented on the ongoing situation, a spokesperson for Carl’s Jr. acknowledged the impact of the bankruptcy on the franchisee. They clarified in a statement that this event is reflective of the individual financial difficulties faced by a franchise operator and does not affect the broader network of Carl’s Jr. restaurants, which continue to function as normal.
The spokesperson reaffirmed Carl’s Jr.’s commitment to support its franchisees, maintain quality customer experiences, and foster sustainable growth for the brand as a whole. However, sources have reported dissent among employees of Friendly Franchisees Corporation, which operates the locations related to Sun Gir Incorporated.
In April, staff members from Dharod’s franchisees claimed that aggressive cost-cutting measures had resulted in overwhelming workloads and unsafe conditions. Allegations of violence, including robberies at the North Hollywood location, led to employee protests over inadequate safety training and workplace support.
As the sale process moves forward, many in the industry will be watching how this situation unfolds and what it might mean for the future of the fast-food chain’s operations in California. The timeline for the sale of the 49 restaurants remains undisclosed, though it is anticipated that the transition will conclude by the end of the summer.
As Sun Gir navigates this challenging scenario, it highlights the broader pressures faced by franchise operations in a rapidly changing economic landscape, marked by increased labour costs and shifting consumer behaviour.