A major Carl’s Jr. franchisee, Friendly Franchisees Corporation led by Harshad Dharod, is set to close 10 restaurants and sell 49 others across California after filing for Chapter 11 bankruptcy protection earlier this year [1]. The company, which claims to be the largest California-based Carl’s Jr. franchisee and has acquired at least 65 locations since 2000, has faced significant financial strain due to rising operating costs and California’s $20-per-hour fast-food minimum wage [1]. Bankruptcy filings indicate that Dharod’s restaurants generated over $6 million in monthly revenue but were losing more than $600,000 per month in 2026 [1].
Dharod attributed the financial difficulties not only to increased labor costs but also to what he described as a lack of support and innovation from Carl’s Jr. corporate leadership [1]. Additional challenges cited by employees included understaffing, workplace injuries, and violent encounters with customers [1]. Despite these setbacks, a Carl’s Jr. spokesperson emphasized that the restructuring is specific to Dharod’s operations and will not impact other Carl’s Jr. locations [1].
Interest from prospective buyers has already been reported by brokerage firm National Franchise Sales, suggesting that if the locations are sold, operations could continue with minimal disruption, as employees and managers often remain in place during franchise ownership transitions [1].
The company’s Chapter 11 filing and subsequent restructuring highlight the pressures facing franchise operators in California’s fast-food sector, particularly in the context of rising labor costs and operational challenges [1].
CONCLUSION
The planned closure and sale of dozens of Carl’s Jr. locations by its largest California franchisee underscores the financial pressures facing fast-food operators in the state. While the restructuring is expected to be limited to Dharod’s operations, the situation highlights broader industry challenges related to rising costs and labor issues.