A major Carl’s Jr. franchisee that operates 65 locations across California has filed for Chapter 11 bankruptcy protection. Multiple companies owned by Harshad Dharod, chief executive of Friendly Franchisees Corporation, submitted filings late last week. The entities include Sun Gir, Inc., Senior Classic Leasing, DFG Restaurants, Second Star Holdings and Third Star Investments.
Sun Gir, Inc. has asked the court to consolidate the cases into a single proceeding, a routine move when related businesses file simultaneously, according to Restaurant Business. Each entity reported less than $50,000 in both assets and liabilities in court documents. The franchisee aims to restructure its debts while continuing to operate under court supervision.
A spokesperson for Carl’s Jr. said the bankruptcy is isolated to this specific franchisee and does not reflect the overall health of the brand or its other locations. “This situation is specific to this individual’s financial and business circumstances,” the representative stated. “This has no impact on the operations of any other Carl’s Jr. locations.”
The filing adds to growing signs of strain among restaurant franchise operators nationwide, many grappling with rising labour costs and higher food prices. In California, pressure is heightened by a new law requiring fast-food workers to earn at least $20 an hour, forcing operators to raise menu prices and making it harder to attract customers. Carl’s Jr. itself has seen declining performance: alongside sister chain Hardee’s, US sales dropped 6 per cent to about $1.4 billion last year, while average sales per location fell 2.7 per cent to roughly $1.4 million, according to Technomic.
