Carl’s Jr. stores closing in franchisee bankruptcy? See a list of locations that have been identified as burdensome

Christopher Zara

Tue, May 19, 2026 at 8:55 AM EDT 4 min read

After filing for bankruptcy several weeks ago, a large franchisee that operates dozens of Carl’s Jr. restaurants in California is planning to cut loose some of its underperforming locations, according to newly filed court documents.

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Sun Gir Incorporated, the lead debtor in a group of affiliated Chapter 11 cases that were filed in early April, has asked for court permission to reject the leases on at least three Carl’s Jr. locations in the Los Angeles area.

As of this week, the restaurants appeared to still be open. But they have been operating at a substantial negative cashflow for the franchisee, as documented in three separate dockets filed in federal court for California’s Central District.

Sun Gir says the underperforming restaurants are burdensome, and that they impose financial losses on the franchisee “without providing sufficient economic benefit,” the filings reveal.

The filings do not explicitly say that the restaurants will close, although that would be the typical outcome for a court-approved lease rejection. The franchisee has stated in the filings that it wants to focus on its more profitable locations as part of a restructuring.

In a separate filing, Sun Gir said that it has hired National Franchise Sales (NFS), a business brokerage firm, to help it sell some of its Carl’s Jr. locations, but it did not specify which ones.

The details of that process are still being worked out, with bids expected to be due in July and an auction potentially scheduled for August.

It’s unclear how many jobs could be lost as part of the restructuring or any resulting closures. Sun Gir and its affiliates own 59 Carl’s Jr. restaurants in California. Together, they employ roughly 1,000 employees.

The debtors are all affiliated with Friendly Franchisees Corporation (FFC), in La Palma, California, which is not directly named in the bankruptcy cases.

FFC and its general counsel did not respond to requests for comment about the fate of the Carl’s Jr. stores.

Why did this Carl’s Jr. franchise go bankrupt?

In court documents, Sun Gir Incorporated cited a number of factors that have contributed to its Chapter 11 bankruptcy.

Carl’s Jr. restaurants within its portfolio have faced increased competition, rising operating costs, and diminishing sales, all of which have added up to “financial distress.”