Carl’s Jr., Seeking Growth, Will Increase Franchising

In an effort to fuel expansion, Carl Karcher Enterprises Inc. said Friday that it plans to sell 57 company-owned Carl’s Jr. restaurants in Northern California to franchisees over the next two years.

Analysts said franchising will allow Carl’s to expand faster in Northern California because franchisees will pay for new construction. But the plan depends on Carl’s ability to arrange financing for its franchisees, according to a restaurant consultant.

“Our franchise strategy will greatly enhance the company’s long-term growth, spread the challenge of developing properties and raising capital, and cushion the volatility of economic cycles,” said President and Chief Operating Officer Donald F. Karcher.

All Carl’s Jr. restaurants from Lompoc north to Ukiah will be sold to franchisees. The buyers will be asked to open an additional 80 restaurants in Northern California in the next five to 10 years.

“The economic times in the restaurant industry being what they are, restaurants are trying to do all they can to keep afloat and growing,” said Janet Lowder, owner of Restaurant Management Services, a Rancho Palos Verdes consulting firm. “It’s a great opportunity to get into a franchise now, but Carl’s better have financing (for expansion) lined up for the people coming in.”

Karcher’s proportion of franchised restaurants--23%--is low by fast food industry standards, Lowder said. The company hopes to increase the proportion to 40% in the next four or five years.

Robert W. Wisely, a former marketing director for the company, already has bought a six-restaurant franchise in Northern California. Another sale is pending, the company said.

Karcher’s stock, which closed Friday unchanged at $6.50, is considered undervalued by some analysts.