A major Carl's Jr. franchisee who filed for Chapter 11 bankruptcy protection in April now plans to shutter 10 more restaurants in California and put the rest of his locations on the market, marking the latest contraction for a fast-food brand born in the state it once dominated.
Harsbad Dharod's company operates 59 Carl's Jr. restaurants across California, most of them concentrated in the southern part of the state. National Franchise Sales, the firm handling the listings, said the operator will close 10 locations outright and seek buyers for the remainder, the New York Post reported. Interest from potential buyers has already materialized, the firm said.
The closures follow a Chapter 11 filing by Dharod's subsidiary, Sun Gir Inc., which blamed California's $20-an-hour fast-food minimum wage for worsening the franchise group's financial distress. In court filings, Dharod stated that the wage hike "materially increased operating expenses." He also pointed to weaker sales, reduced marketing effectiveness, and what he described as a lack of innovation from Carl's Jr.'s parent company.
The numbers tell a stark story. Dharod's franchise group generates more than $6 million in monthly revenue, and has still been losing more than $600,000 per month this year. When a business that large cannot cover its costs, the math eventually forces the kind of decisions Dharod is now making.
SKE Restaurants, the parent company of Carl's Jr., moved quickly to contain the damage to the broader brand. A spokesperson said the situation "is specific to this individual franchisee's financial and business circumstances" and insisted it "has no impact on the operations of any other Carl's Jr. locations."
That reassurance may be technically accurate, but it sidesteps the wider pattern. Franchise disclosure documents reviewed by the DailyMail show Carl's Jr. had 613 California locations in 2023. By 2025, that number had dropped to 588, a net loss of 25 restaurants in the chain's home state in just two years.
And the bleeding is accelerating. A separate New York Post report from late May detailed how Sun Gir Inc. and affiliated entities had put 49 California Carl's Jr. restaurants up for sale as part of the bankruptcy process, citing the $20 minimum wage alongside significant operating expenses, rent and royalty pressures, and other business headwinds. Now, 10 more locations face outright closure on top of those already on the block.
California's fast-food minimum wage law, which pushed hourly pay to $20, was sold as a victory for workers. Proponents in Sacramento promised better lives for low-wage employees. What they did not promise, and what franchisees like Dharod are now living, is the cascade of closures, layoffs, and bankruptcies that follow when government mandates outpace what the market can bear.
Dharod's court filings make the connection explicit. The wage hike, he said, "materially increased operating expenses." That language is dry, legal, and precise. Translated into plain English, it means the state made it too expensive to keep the doors open.
He is not alone in that assessment. Across California's fast-food landscape, operators have cut hours, raised prices, and closed locations since the wage law took effect. The policy's architects in the state legislature have yet to reckon with the growing body of evidence that their intervention is shrinking the very industry they claimed to be helping.
None of this means the $20 wage is the sole cause of Dharod's troubles. He himself cited weaker sales and what he characterized as insufficient support and innovation from Carl's Jr.'s corporate parent. But the wage mandate sits at the center of the financial squeeze, and it is the one factor no franchisee can negotiate, absorb, or work around.
Carl's Jr. traces its roots to 1941, when founder Carl Karcher launched a hot dog cart at Florence and Central avenues in Los Angeles. From that modest start, the chain grew into one of the West Coast's most recognizable fast-food brands. For decades, it was synonymous with California car culture and big, unapologetic burgers.
Now the chain is contracting in the state where it was born. The drop from 613 to 588 California locations between 2023 and 2025 was already a warning sign. The Dharod bankruptcy, and the prospect of dozens more restaurants either closing or changing hands, suggests the decline is picking up speed.
SKE Restaurants insists the problem is isolated. But when a single franchisee operating 59 locations goes bankrupt and cites the state's own labor law as a primary driver, the problem is not isolated. It is systemic. The franchisee is simply the first domino large enough to make noise when it falls.
Several questions hang over the situation. Which 10 locations will close, and when? How many employees stand to lose their jobs? Will buyers step forward for the remaining restaurants, or will more closures follow? And will any of the potential buyers be willing to operate under the same cost structure that drove Dharod into bankruptcy court?
National Franchise Sales says interest from buyers already exists. But interest and signed deals are different things, and any buyer will face the same $20 minimum wage, the same rent pressures, and the same competitive environment that crushed Dharod's margins.
California's political class has spent years telling voters that mandating higher wages carries no serious trade-offs. The closures, the bankruptcies, and the shrinking restaurant counts say otherwise. Every shuttered location means lost jobs, not just for the workers Sacramento claimed to champion, but for managers, suppliers, and the small-business owners who built their livelihoods around a franchise model that the state has now made unworkable for some.
Carl's Jr.'s parent company can distance itself from one franchisee's bankruptcy. It cannot distance itself from the math. If the cost of doing business in California keeps rising by government fiat, the chain will keep shrinking in the state that gave it life.
When a business founded on a Los Angeles street corner in 1941 can no longer afford to operate in Los Angeles, the policy failure belongs to the people who wrote the law, not the people who tried to keep the grills running.