A popular burger chain in California is experiencing significant challenges as one of its major franchise operators decides to shut down 10 outlets and put numerous others up for sale due to escalating financial struggles.
Franchisee Harshad Dharod, who runs 59 Carl’s Jr. locations throughout California, is actively searching for buyers for most of his restaurants after seeking Chapter 11 bankruptcy protection earlier this year in April.
This development poses a risk to a substantial portion of the chain’s operations in its home state. It occurs at a time when Carl’s Jr. is grappling with rising labor expenses, dwindling customer visits, inflationary pressures, and intensified competition within the fast-food sector.
As per National Franchise Sales, a brokerage firm, Dharod intends to permanently close 10 of his locations while listing the rest for sale.
The bulk of these restaurants are situated in Southern California, where Carl’s Jr. has long been an iconic presence in the quick-service restaurant scene.
Dharod has previously attributed these financial woes to California’s $20-an-hour minimum wage for fast-food workers and has criticized what he considers a lack of innovation and support from Carl’s Jr.’s parent company, as mentioned in court filings.
Despite generating more than $6 million in monthly revenue, the franchise group has reportedly been losing more than $600,000 per month this year.
A spokesperson for Carl’s Jr. parent company CKE Restaurants stressed that the crisis is specific to the franchisee rather than the wider brand.
The company, which made headlines last year for hiring TikTok star Alix Earle as the face of its Super Bowl campaign, is facing another major setback after one of its largest franchise operators moved to shut down 10 restaurants
‘This situation is specific to this individual franchisee’s financial and business circumstances,’ the parent company said. ‘This has no impact on the operations of any other Carl’s Jr. locations.’
Still, the bankruptcy represents one of the most significant challenges facing the chain in California in recent years.
Carl’s Jr. traces its roots back to 1941 when founder Carl Karcher launched a hot dog cart at the corner of Florence and Central avenues in Los Angeles.
That modest operation grew into one of the West Coast’s most recognizable fast-food brands, famous for its charbroiled burgers, oversized sandwiches and the smiling yellow star logo that became synonymous with California burger culture.
The chain expanded rapidly throughout the 1960s and 1970s and became known for menu staples including the Famous Star, Western Bacon Cheeseburger and California-inspired offerings such as the Cali XL.
Today, Carl’s Jr. operates hundreds of locations across the US and internationally, though its strongest presence remains in California.
However, the chain’s footprint has been shrinking. Franchise disclosure documents show Carl’s Jr. had 613 California locations in 2023, compared with 588 in 2025.
The financial turmoil has been accompanied by labor unrest. Fast-food workers and union organizers have staged protests at some Carl’s Jr. locations, alleging chronic understaffing and unsafe working conditions.
The Carl’s Jr. closures have also become a flashpoint in the ongoing debate over California’s landmark $20 minimum wage law for fast-food workers
Employees have claimed they regularly face aggressive customers, robberies and even physical assaults while working.
Among the incidents cited by labor groups were reports of workers being punched by customers, threatened with kitchen equipment and robbed while on duty.
Some workers also alleged they were forced to work with inadequate staffing levels and insufficient cleaning and safety supplies.
The company has not publicly addressed many of the specific allegations.
The Carl’s Jr. closures have also become a flashpoint in the ongoing debate over California’s landmark $20 minimum wage law for fast-food workers.
Supporters argue higher wages are essential in a state with one of the nation’s highest costs of living.
Critics counter that rising labor expenses are putting enormous pressure on franchise operators already dealing with inflation, weaker consumer spending and higher food costs.
Court filings from Dharod’s company stated the wage increase had ‘materially increased operating expenses,’ contributing to the financial distress.
Today, Carl’s Jr. operates hundreds of locations across the US and internationally, though its strongest presence remains in California
The financial turmoil has been accompanied by labor unrest. Fast-food workers and union organizers have staged protests at some Carl’s Jr. locations, alleging chronic understaffing and unsafe working conditions
The franchisee also cited declining sales, reduced marketing effectiveness and increased competition in the burger market.
Industry data suggests Carl’s Jr. has struggled to attract customers as consumers become more selective about where they spend their money.
Circana data showed spending at Carl’s Jr. fell 4 percent in 2025.
National Franchise Sales said there has already been interest from potential buyers, raising hopes that many of the restaurants could remain open under new ownership.
In franchise sales, employees and managers often retain their jobs when locations change hands.
But for now, the future of dozens of Carl’s Jr. restaurants remains uncertain as the bankruptcy process unfolds.
For a chain that helped define California fast food for generations, the prospect of more closures represents a significant blow – and a stark reminder of the challenges facing restaurant operators across the Golden State.
Dharod said in court filings: ‘Business has become particularly difficult over the last two years,’ citing rising labor costs, weaker sales and what he described as a lack of innovation from the franchisor.
Carl’s Jr. parent company CKE Restaurants said: ‘This situation is specific to this individual franchisee’s financial and business circumstances. This has no impact on the operations of any other Carl’s Jr. locations.’
