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A major Carl’s Jr. operator with 65 California locations has filed for Chapter 11 bankruptcy protection, highlighting growing financial pressures in the fast-food industry.

Multiple Entities Seek Court-Supervised Restructuring

Harshad Dharod, CEO of Friendly Franchisees Corporation—the group behind the restaurants—submitted filings for several affiliated companies late last week, including Sun Gir, Inc., Senior Classic Leasing, DFG Restaurants, Second Star Holdings, and Third Star Investments, according to Restaurant Business.

Sun Gir, Inc. has requested the court consolidate the cases into a single proceeding, a common move when related businesses file simultaneously. Consolidation allows the court to oversee restructuring more efficiently rather than handling each case separately. Court documents show each entity reported less than $50,000 in both assets and liabilities.

California Locations and Operational Impact

Carl’s Jr. operates over 1,000 locations nationwide, with roughly 62 percent—more than 600—located in California. The bankruptcy filings are limited to Dharod’s franchisee network and do not reflect the overall health of Carl’s Jr. or its other franchisees.

A spokesperson for Carl’s Jr. said, “We are aware that Carl’s Jr. franchisee Harshad Dharod entities and its affiliates, which independently own and operate certain Carl’s Jr. restaurants in California, have entered into a court-supervised restructuring process under Chapter 11. This situation is specific to this individual’s financial and business circumstances.”

The representative emphasized that the bankruptcy “has no impact on the operations of any other Carl’s Jr. locations” and reaffirmed the brand’s commitment to “delivering quality experiences for our guests, while driving profitable, sustainable growth for our franchisees and the brand.”

Industry Pressures and Rising Costs

The filings underscore the mounting challenges facing restaurant franchise operators, including rising labor expenses, escalating food prices, and shifting consumer spending patterns. In California, these pressures are compounded by a new law requiring fast-food workers to earn at least $20 per hour. The wage increase has forced many operators to raise menu prices, a move that risks alienating cost-conscious customers while still covering rising operational costs.

Meanwhile, Carl’s Jr. has faced declining sales. Alongside sister chain Hardee’s, the brand’s U.S. sales fell 6 percent to about $1.4 billion last year, with average sales per location dropping roughly 2.7 percent to $1.4 million, according to Technomic and Restaurant Business.

Chapter 11: A Path to Financial Stability

By filing for Chapter 11, Dharod’s companies aim to restructure their debts while continuing operations, seeking a court-supervised path to stabilize financially and protect jobs.

The filings offer a stark reminder that even established brands can feel the squeeze from labor laws, economic pressures, and evolving consumer habits—a volatile recipe for today’s fast-food landscape.