One of the largest franchise operators of Carl’s Jr. in California has filed for Chapter 11 bankruptcy, putting a sizeable multi-unit portfolio into restructuring after more than two decades of operations.
Friendly Franchisees Corporation, controlled by long-time operator Harshad Dharod, operates 65 Carl’s Jr. restaurants across California, making it one of the brand’s more significant regional franchisees. The locations are spread across key urban and suburban markets, forming roughly 10–11 percent of the chain’s footprint in the state.
The Chapter 11 filing was made through multiple affiliated entities, including Senior Classic Leasing, DFG Restaurants and Second Star Holdings, structures commonly used by large franchisees to separate operating businesses from real estate holdings.
The group has owned the restaurants since around 2000, reflecting a long-standing relationship with the brand and a typical multi-decade franchise lifecycle. Over time, the operator built a vertically integrated model combining restaurant operations and underlying property ownership, a strategy widely used among large U.S. franchisees to control occupancy costs and asset value.
While exact financials were not fully disclosed in initial filings, the company reported liabilities and assets each in the range of tens of millions of dollars, signalling a mid-to-large scale restructuring rather than a liquidation scenario.
Importantly, the filing does not immediately impact day-to-day operations. Under Chapter 11, the franchisee is expected to continue running all 65 outlets while it works on a restructuring plan that could include: debt renegotiation with lenders, potential sale of select restaurant locations, reorganisation of lease and property agreements etc.
The parent brand, Carl’s Jr., clarified that the situation is isolated to this franchisee and does not reflect system-wide performance. The chain continues to operate hundreds of locations across California and over 1,000 units in the U.S, largely through a franchise-led model.
The case underscores growing stress among large, multi-unit franchisees in the U.S., particularly those with heavy exposure to rising labour costs, inflation in food inputs, and higher interest rates impacting real estate-backed operators. Even established operators with decades-long tenure are increasingly being forced to restructure as margins tighten across the quick-service restaurant sector.
