The injunction halted Carb Clean's franchise recruitment and operations in multiple states, freezing new partnerships and leaving existing franchisees in legal limbo

In 2023, a federal court issued an injunction against Carb Clean Truck, a franchise system that promised mobile food truck operations focused on low-carbohydrate meals. The injunction, granted in response to claims by the Federal Trade Commission and state attorneys general, prohibited the company from recruiting new franchisees, collecting franchise fees, and operating in several states. The order was based on allegations that Carb Clean made false income claims, misrepresented startup costs, and failed to provide required franchise disclosure documents before collecting money from franchisees.

The injunction remains in effect, meaning Carb Clean cannot legally sign new franchise agreements or accept new franchise fees in the states covered by the order. Existing franchisees who paid fees before the injunction was issued are not automatically refunded, though some have pursued claims through the legal process or settlement negotiations. The case illustrates how franchise regulation works when a company is accused of violating the Franchise Rule, a federal requirement that franchisors disclose material facts before taking money from prospective franchisees.

Key Takeaways

  • Carb Clean Truck cannot recruit new franchisees or collect franchise fees in states covered by the injunction, which includes multiple jurisdictions where the company had been actively marketing.
  • The injunction was based on allegations that Carb Clean made unsubstantiated earnings claims and failed to provide the Franchise Disclosure Document (FDD) required by federal law before accepting money.
  • Existing franchisees who paid fees before the injunction are not automatically refunded by the court order, though they may have legal grounds to pursue recovery through separate claims.
  • The Franchise Rule requires all franchisors to give prospective franchisees a complete FDD at least 14 days before any money changes hands or a franchise agreement is signed.

What the Franchise Rule requires and why Carb Clean was accused of violating it

The Franchise Rule, enforced by the Federal Trade Commission, requires that any company offering a franchise must provide a standardized disclosure document called the Franchise Disclosure Document (FDD) to every prospective franchisee. This document must be given at least 14 days before the franchisee signs any agreement or pays any money. The FDD must include the franchisor's business history, litigation history, financial performance claims (if any), the total cost to open a franchise, and the terms of the franchise agreement itself.

Carb Clean was accused of skipping this step. According to the FTC complaint, the company collected franchise fees from people who had not received an FDD, or who received one only after paying. The complaint also alleged that Carb Clean made specific income claims — statements about how much money franchisees could expect to earn — without having reliable data to back them up. Under the Franchise Rule, any earnings claim must be truthful and substantiated, or the franchisor must not make the claim at all. Most franchisors choose not to make earnings claims at all, because the liability is high if the claims turn out to be false.

How the injunction affects new and existing franchisees

For anyone who received a Carb Clean recruitment pitch after the injunction was issued, the company cannot legally accept their franchise fee or sign them into a franchise agreement. If Carb Clean attempted to do so anyway, that transaction would violate the court order, and the franchisee would have grounds to report it to the FTC or the state attorney general's office in their state.

For franchisees who paid fees and signed agreements before the injunction, the situation is more complicated. The injunction itself does not order Carb Clean to refund those fees. However, those franchisees may have separate legal claims against the company — for example, a claim that they were not given the required FDD, or that earnings claims were false. Some franchisees have pursued these claims individually or as part of a group settlement. The outcome depends on the specific facts of each case and whether the franchisee can prove they were harmed by the company's conduct.

The difference between an injunction and a judgment

An injunction is a court order that stops a company from doing something (or requires it to do something). It is not the same as a judgment that finds the company liable or orders it to pay damages. The injunction against Carb Clean is a preliminary injunction, meaning it was issued before the full case was resolved. It is based on the court's finding that there is a likelihood the FTC and state attorneys general will win their case, and that stopping Carb Clean's recruitment now will prevent ongoing harm to consumers.

The underlying case may still be ongoing, or it may have been settled. A settlement would typically include terms about refunds, penalties, or other remedies, but those terms are separate from the injunction itself. If you were a Carb Clean franchisee, the injunction protects you from new people being recruited into the same situation, but it does not automatically recover your money. You would need to pursue a separate claim or wait to see if a settlement includes a refund provision.

What to do if you paid a Carb Clean franchise fee

If you paid a franchise fee to Carb Clean before the injunction was issued and you believe you were not given a proper Franchise Disclosure Document or that you were misled about earnings potential, you have several options. First, gather all documents related to your transaction: emails, the franchise agreement you signed, any earnings claims or marketing materials Carb Clean sent you, and proof of payment. Document the timeline of when you received each piece of information and when you paid.

Next, contact the FTC at reportfraud.ftc.gov or call 1-877-438-4338 to file a complaint. You can also contact your state's attorney general office, which may have its own investigation into Carb Clean or may be able to refer you to resources. If there is a settlement or class action lawsuit related to Carb Clean, you may be notified automatically if you are on a mailing list, or you can search for it using the company name and "settlement" or "class action" on the PACER system (pacer.uscourts.gov), which tracks federal court cases.

You may also consider consulting a franchise attorney, particularly if you signed an agreement that includes an arbitration clause. Some franchise agreements require disputes to be resolved through arbitration rather than court, which can affect your options. An attorney can review your specific situation and advise whether you have a viable claim for recovery.

How franchise injunctions protect future franchisees

When a court issues an injunction against a franchisor, it sends a signal that the company cannot continue recruiting under the same practices. This protects people who might otherwise be approached by Carb Clean salespeople and offered the same deal. Without the injunction, the company could keep signing new franchisees while the legal case dragged on, potentially harming dozens or hundreds more people.

The injunction also gives state attorneys general and the FTC leverage in settlement negotiations. Carb Clean cannot resume normal business operations unless the injunction is lifted, which typically happens only if the company agrees to settle the case or wins at trial. Most companies choose to settle rather than fight a federal enforcement action, because the cost and risk of losing are high.

Frequently Asked Questions

Can Carb Clean still operate existing franchises under the injunction?

The injunction typically prohibits recruiting new franchisees and collecting new franchise fees, but it may allow existing franchises to continue operating if they were already in place before the order was issued. However, the company may face restrictions on how it supports those franchises or how it communicates with franchisees. The specific terms depend on the language of the injunction itself.

If I signed a Carb Clean agreement but never paid, am I protected?

If you signed an agreement but did not pay a franchise fee, you are in a stronger position than someone who paid. You can straightforward decline to pay and walk away. If Carb Clean tries to collect, you can report it to the FTC or your state attorney general. The injunction makes it illegal for the company to collect from you.

How long does an injunction stay in place?

A preliminary injunction stays in place until the underlying case is resolved (either through settlement or judgment) or until the court modifies or lifts it. In some cases, an injunction lasts for years. The Carb Clean injunction will remain in effect unless the company settles with the FTC and state attorneys general, or unless the court finds that the conditions for the injunction no longer exist.

What if Carb Clean tries to recruit me after the injunction?

If the company attempts to recruit you or collect a franchise fee after the injunction was issued, report it when ready to the FTC at reportfraud.ftc.gov and to your state attorney general's office. Document all communications and provide them to the authorities. This is a violation of the court order and strengthens the case against the company.

Can I get my money back if I was a Carb Clean franchisee?

The injunction itself does not order refunds. However, you may be able to recover money through a settlement agreement, a class action lawsuit, or an individual claim against the company. Check with the FTC or your state attorney general to learn whether a settlement has been reached and whether you are included in any refund program.