A major fast-food franchise operator with dozens of restaurant locations across California is now fighting to stay afloat after filing for Chapter 11 bankruptcy protection earlier this spring. The filing marks another sign of growing financial strain across the restaurant franchise industry as operators battle rising labor costs, inflation, and slower consumer spending.
Large Carl’s Jr. operator files Chapter 11
Friendly Franchisees Corporation, one of the largest Carl’s Jr. franchisees in California, filed for Chapter 11 bankruptcy protection on April 2, 2026, through the U.S. Bankruptcy Court for the Central District of California.
The company operates approximately 65 Carl’s Jr. restaurants throughout California. Founder and CEO Harshad Dharod acquired the locations in 2000 after previously operating Jack in the Box restaurants.
Rising costs blamed for financial troubles
According to court filings reported on April 8, Dharod said California’s $20 fast-food minimum wage law significantly increased operating expenses for the company. The wage increase took effect in April 2024 and applied to large fast-food chains statewide.
The franchisee also cited declining sales, increased competition, reduced marketing effectiveness, and operational challenges tied to leadership turnover at the franchisor level. Sun Gir, one of the affiliated entities, reportedly posted a $2 million loss during the first three months of 2026.
What happens next
Carl’s Jr. representatives said the bankruptcy is limited to this franchise group and does not affect other franchisees or the broader brand. Carl’s Jr.’s representatives said the closure…”has no impact on the operations of any other Carl’s Jr. locations and we remain committed to delivering quality experiences for our guests, while driving profitable, sustainable growth for our franchisees and the brand.”
The filing adds to a growing wave of restaurant franchise bankruptcies in 2026, including operators tied to Popeyes, Applebee’s, and Hardee’s.
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