Additional Coverage:
- Major burger franchisee to sell 49 restaurants blaming $20 minimum wage in California (themirror.com)
A Carl’s Jr. franchisee based in California has initiated the liquidation of nearly 50 restaurant locations and announced the closure of 10 additional outlets following a Chapter 11 bankruptcy filing.
Sun Gir Inc., a subsidiary of Friendly Franchisees Corporation and the franchisee in question, is spearheading the bankruptcy process. The company filed for bankruptcy protection in April, attributing its financial distress largely to California’s increased minimum wage for the fast-food sector, which reached $20 per hour in 2024. This wage hike significantly raised operating costs, according to the franchisee’s CEO, Harshad Dharod.
In addition to higher labor expenses, Dharod cited a decline in sales driven by what he described as diminished marketing effectiveness and a lack of innovation from the franchisor. Increased competition within the quick-service restaurant industry and executive turnover at the franchisor level further contributed to operational difficulties.
Despite these challenges, a Carl’s Jr. spokesperson emphasized that the bankruptcy concerns are isolated to this specific franchisee and do not affect the broader network of Carl’s Jr. restaurants. The company reaffirmed its commitment to maintaining quality service and supporting sustainable growth for all franchisees and the brand as a whole.
National Franchise Sales has been engaged to manage the sale of the 49 restaurants, with reports indicating that there is already buyer interest. Meanwhile, Sun Gir Inc. plans to continue operations for some locations, using cash collateral to meet payroll for approximately 1,000 employees as well as to cover rent, insurance, and other obligations during the restructuring process.
Currently, Sun Gir Inc. operates 65 Carl’s Jr. locations throughout California, with Dharod having acquired these restaurants in 2000. Carl’s Jr. as a brand boasts over 1,000 restaurants nationwide, more than 600 of which are in California. In 2025, the brand’s average unit volume was estimated at $1.4 million, with some franchisees reportedly achieving profits and sales exceeding the brand average.