The Carl’s Jr. franchisee bankruptcy filing that has placed 59 California restaurants in limbo belongs to Harshad Dharod, who plans to close 10 of those locations and market the remaining 49 for sale. A brokerage firm has already begun approaching potential operators for the multi-unit portfolio, though whether those sites continue trading under the Carl’s Jr. name will hinge on franchise approvals and the outcome of the Chapter 11 process.
Sun Gir Filing and the Factors Behind It
According to Restaurant Dive, Dharod filed for bankruptcy through his subsidiary Sun Gir, with the affected restaurants concentrated primarily in Southern California. In court filings, Dharod cited four factors: California’s $20-per-hour fast food minimum wage, increased operating costs, declining sales, and what he described as a lack of support and innovation from the Carl’s Jr. brand.
The $20 minimum wage, which came into force in 2024 according to the New York Post, has been cited by franchise operators across the state as a structural pressure on margins. For a group running nearly 60 quick-service sites, the compounding effect of a higher wage floor alongside softening customer traffic creates a squeeze that is difficult to absorb without either significant volume or brand-level support.
The bankruptcy filing came earlier this year, and the move to close and sell the estate follows roughly two months later, as Dharod’s company works through the Chapter 11 proceedings.
Carl’s Jr. Franchisee Bankruptcy Does Not Affect the Wider Chain
Carl’s Jr. has been clear that the financial difficulties are specific to this franchisee and do not reflect the position of the broader chain. The brand continues to operate hundreds of locations throughout California and more than 1,000 restaurants nationwide. Franchised restaurant groups are legally and operationally separate from the parent brand, and a single franchisee’s insolvency does not automatically put the wider network at risk.
That distinction matters for customers and investors assessing the health of the chain. The 49 locations being marketed represent a substantial portfolio, and interested buyers have reportedly already emerged. Should those sales complete successfully, a number of those restaurants could remain open under new ownership, provided the necessary franchise approvals are granted through the bankruptcy process.
The 10 sites earmarked for closure are a different matter. Those will shut regardless of the wider proceedings, representing a concrete reduction in Carl’s Jr. presence across the state, with Southern California bearing most of the impact.
A Wider Pattern of Franchise Pressure
Dharod’s situation is not isolated. Across the US restaurant industry, franchise operators have been filing for bankruptcy protection or announcing site rationalisation programmes as the cost environment tightens. Rising labour costs, inflation, and more cautious consumer spending have combined to erode margins that were already thin in quick-service formats.
California’s 2024 fast food minimum wage legislation has drawn particular attention because of its specificity to the sector. By targeting quick-service restaurants rather than the broader labour market, the law concentrated its effect on operators whose business model depends on high volumes and lean staffing ratios. For franchisees running large multi-site portfolios, the impact is magnified: there is no internal cross-subsidy from other sectors to cushion a wage-driven cost increase.
Dharod’s court filings frame the brand’s own conduct as a contributing factor, pointing to what he called insufficient support and innovation from Carl’s Jr. That claim is a standard line of argument in franchise insolvencies, where operators seek to distribute responsibility across the franchisor relationship. Carl’s Jr. has not publicly responded to that specific characterisation.
The Carl’s Jr. franchisee bankruptcy process now moves through the courts, with the sale of the 49-site portfolio the central commercial question. Whether those restaurants trade on under the smiling star logo, or transition to different brands under new operators, will become clearer as franchise approvals progress and buyers firm up their positions.