A major Carl’s Jr. franchisee plans to close 10 California locations and sell 49 others after filing for Chapter 11 bankruptcy protection in April, according to the Los Angeles Times. Harshad Dharod, who operates 59 Carl’s Jr. restaurants mostly in Southern California, intends to liquidate nearly all of his portfolio as part of the court-supervised process.
Dharod blamed California’s $20 minimum wage for fast food workers, which took effect in April 2024, as a key factor in the financial distress. In court filings, he said the wage increase “materially increased operating expenses” for his operations. Despite generating $6 million to $7 million in monthly revenue, his locations have been losing more than $600,000 per month this year, according to the Los Angeles Times.
The franchisee also cited declining sales and reduced marketing effectiveness as contributing factors. Dharod claimed in bankruptcy court that a lack of innovation and support from Carl’s Jr. parent company CKE Restaurants, combined with increased competition in the quick-service restaurant segment, left him unable to cover wages, rent, supplies, and insurance.
National Franchise Sales is overseeing the marketing and sale of the 49 locations across Southern and Northern California, according to the Los Angeles Times. A broker spokesperson said prospective buyers are already interested and that employees and managers typically retain their positions when franchises change ownership.
Dharod’s situation reflects broader challenges facing fast food franchisees in California. The state’s $20 minimum wage for fast food workers—which applies to chains with 60 or more locations nationwide—represents a roughly 25% increase in labor costs, according to research cited by UC Santa Cruz. While the wage went into effect in April 2024, franchisees have reported ongoing pressure from the elevated labor costs combined with price-sensitive consumers and economic uncertainty.
A spokesperson for Carl’s Jr. and CKE Restaurants said the closure and sale are specific to Dharod’s individual circumstances. “This situation is specific to this individual franchisee’s financial and business circumstances,” the spokesperson said, according to the Los Angeles Times. “This has no impact on the operations of any other Carl’s Jr. locations.”
The company employs close to 1,000 workers across the 59 locations. Some employees have previously reported being overworked and understaffed due to cost-cutting measures, and have staged walkouts to bring attention to labor concerns, according to reporting by the Los Angeles Times.
Sources
- Los Angeles Times — Confirmed franchisee name (Harshad Dharod), location count (59), bankruptcy filing (April 2026), closure/sale plans (10 close, 49 sell), monthly revenue and losses, wage and innovation complaints, CKE Restaurants statement, and broker oversight.
- Restaurant Dive — Detailed bankruptcy filing, $20 minimum wage as stated cause, sales decline attribution, and court filing information on Sun Gir subsidiary.
- QSR Magazine — Confirmed bankruptcy filing date (April 2, 2026) and franchisee details.
- UC Santa Cruz News — Documented the 25% labor cost increase from the $20 minimum wage.
