CALIFORNIA — Harshad Dharod filed for Chapter 11 bankruptcy protection in April 2026 and plans to close 10 and sell 49 Carl’s Jr. locations in California. His company, Sun Gir Inc., a subsidiary of his Friendly Franchisees Corporation, cited California’s $20 minimum wage and insufficient support from the franchisor as key factors in its financial distress.

Dharod, CEO and Founder of Friendly Franchisees Corporation, told the bankruptcy court that his business had deteriorated over the past two years, leaving him unable to cover wages, rent, supplies, and insurance. “Harshad Dharod blamed California’s $20 minimum wage and lack of support and innovation from Carl’s Jr. for his stores’ financial struggles,” according to court records.

Sun Gir Inc.’s bankruptcy filing noted that despite generating more than $6 million in monthly revenue in 2026, the company lost over $600,000 each month. The $20 minimum wage law, enacted in 2024, “materially increased operating expenses,” the filing stated. It also cited reduced marketing effectiveness and a lack of innovation at the franchisor level as contributing factors, along with failures to pay rent, royalties, and other franchise-related charges on time.

To keep operating during the bankruptcy process, Dharod sought and received court permission to use daily cash flow to meet essential expenses. The company will use cash collateral to pay approximately 1,000 employees, rent, insurance, and obligations under its franchise and lease agreements.

National Franchise Sales will oversee the sale of the 49 Carl’s Jr. locations across Southern and Northern California. A spokesperson for the firm said it has already received interest from prospective buyers and noted that when franchises change hands, employees and managers typically retain their positions.

A spokesperson for Carl’s Jr. and parent company CKE Restaurants said Dharod’s situation stems from his specific financial and business circumstances and does not affect other Carl’s Jr. locations. Some employees at Dharod’s outlets reported being overworked and understaffed, with several walkouts staged in recent months over working conditions. Workers at a North Hollywood location described incidents of robberies and physical assaults, saying the company declined to provide safety training.

A National Bureau of Economic Research study estimated that California’s fast-food minimum wage increase led to the loss of 18,000 jobs in the sector since April 2024. Researchers Jeffrey Clemens, Olivia Edwards, and Jonathan Meer wrote, “Our median estimate translates into a loss of 18,000 jobs in California’s fast-food sector relative to the counterfactual.”