TL;DR
A prominent Carl’s Jr. franchise operator in California is attempting to close 10 locations and sell dozens due to financial difficulties. The move is driven by rising costs following the $20 minimum wage law, with ongoing bankruptcy proceedings and interest from potential buyers.
A major California Carl’s Jr. franchise operator is seeking to close 10 locations and sell dozens more amid financial difficulties linked to rising operating costs and the implementation of the $20 minimum wage for fast-food workers, according to court filings and reports.
The franchisee, Friendly Franchisees Corporation, filed for Chapter 11 bankruptcy protection in April, revealing plans to reject leases at 10 underperforming restaurants. The company is attempting to find buyers for the remaining locations, with interest already expressed by prospective buyers, according to court documents and a spokesperson for National Franchise Sales.
Court filings identify 10 specific locations that may close, including sites in Tarzana, Arcadia, Covina, Pomona, Granada Hills, Reseda, Santa Rosa, Diamond Bar, Pasadena, and San Gabriel. These locations have struggled financially since California’s $20 minimum wage law for fast-food workers took effect in April 2024, with some operating at steep losses. The lead debtor, Sun Gir Inc., stated that the restaurants collectively generate over $6 million in monthly revenue but have been losing more than $600,000 each month this year, with some locations losing over $400,000 over two years.
Impact of Wage Law on Franchise Operations
This development highlights the financial strain caused by California’s recent minimum wage increase, which appears to be contributing to closures and sales of longstanding franchise locations. It reflects broader challenges faced by fast-food chains in maintaining profitability amid rising costs and declining sales, potentially signaling shifts in the California fast-food market and franchise landscape.
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California Fast-Food Market and Recent Challenges
California’s fast-food industry has been experiencing declines, with Carl’s Jr. reducing its store count from 613 locations in 2023 to 588 in 2025. Consumer spending at the chain fell by 4% last year, and the recent wage increase to $20 per hour has added financial pressure on operators, especially those with older, less profitable locations. The bankruptcy and sale efforts of this franchisee are part of a broader pattern of financial stress within the industry, driven by increased labor costs and competitive pressures.
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Unclear Details on Future Operations
It remains unclear how many of the remaining locations will stay open after the sale process, or how many will ultimately close. The timeline for the sale and the final number of closures has not been publicly disclosed, and the impact on employees at these locations is still uncertain.
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Next Steps in Franchise Sale and Closure Process
The sale process is ongoing, with interest from prospective buyers. The franchisee and sale overseers plan to finalize the sale or closure decisions in the coming months. Monitoring court filings and official statements will be essential to understand the full scope of closures and sales.
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Key Questions
How many Carl’s Jr. locations are affected?
Ten locations are confirmed to be closing, with dozens more potentially sold, according to court filings and reports.
Why are these locations closing or being sold?
The franchisee cited rising operating costs, declining sales, and the financial impact of California’s $20 minimum wage law as primary reasons for the closures and sales.
Will other Carl’s Jr. locations be affected?
According to a franchise spokesperson, this situation is specific to this franchisee’s financial circumstances and does not impact other Carl’s Jr. locations in California.
When will the closures and sales be finalized?
The process is ongoing, with no specific timeline yet announced. Final decisions are expected in the coming months as buyers are identified and negotiations conclude.
What does this mean for employees at these locations?
It is not yet clear how many employees will be affected or whether jobs will be retained at the locations that remain open or are sold.
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