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CARL KARCHER'S LETTER TO FRANCHISEES

 ANAHEIM, Calif., Oct. 15 /PRNewswire/ -- The following is being issued by Carl N. Karcher, founder of the Carl's Jr. fast-food empire:
 Following is the text of a letter sent today by Carl N. Karcher to all Carl's Jr. franchisees. Karcher is the founder of the Carl's Jr. fast-food chain of approximately 650 stores, of which approximately 244 are owned by franchisees. Also following is the text of a letter from William Brusslan, president of KFF Management Inc., an Arby's franchisee, to Carl Leo Karcher, a member of the board of Carl Karcher Enterprises.
 On Oct. 1, Karcher was ousted as chairman of the board of Carl Karcher Enterprises, parent company of the fast-food empire he founded 52 years ago. Karcher has charged the majority of the board of directors with blindly following the unsuccessful business strategies of Chief Executive Officer Donald E. Doyle, whose programs have failed to turn around the company's sales and earnings.
 Karcher, an industry-acknowledged leader in innovating marketing concepts, proposed a dual food marketing concept with Green Burrito, a company specializing in Mexican food, as one way to increase profits. Karcher maintains that Doyle killed the idea of a no-cost test of the dual marketing concept as part of a calculated power grab which led to Karcher's ouster two weeks ago.
 Dear Carl's Jr. Franchisee:
 Recently, Donald Doyle, president of CKE Inc., wrote to you about the Board of Directors' deliberations regarding the Green Burrito dual marketing concept and the events that led to the Board firing me from the company Margaret and I founded 52 years ago. I want to take this opportunity to set the record straight.
 The Facts:
 Mr. Doyle's position has very little to do with the Green Burrito test. It is about what I believe is his ambition to take control of Carl Karcher Enterprises where he has worked for only a few months. He is trying to get rid of and discredit anyone and anything that threatens his position at the company.
 He thinks of me as his number one threat, of course, and look what he has done. He has booted me from the chairmanship, attacked my character, dragged my name through the mud, and then even tried to humiliate me by barring me from my own office without a security escort. My years of service, hard work, and dedication to the company hardly justify such roughshod treatment. The only explanation I can think of is Mr. Doyle's thirst for power.
 But since Mr. Doyle has raised questions about the Green Burrito test, here are some things you should know. Despite what he says in his smear campaign, I would receive no financial benefit from testing Green Burrito products, except as a shareholder.
 It is true that Mr. Doyle and the Board tried to buy me off with a $16 million stock purchase. But I have always been a man of principle. If I were just looking for money, why didn't I take the Board's offer? It's because I would never sell out the company's best interests to Mr. Doyle or anyone else.
 Like you, I know what it is like to start and build a business. I know that when you go through some tough times, you need bold, innovative ideas to jump-start sales. Green Burrito products could do just that, but we will never know without a test.
 The only real explanation for Mr. Doyle's rejection of the Green Burrito test is that he feels threatened by bold ideas and creative marketers. But his plodding attempts to cut the menu and reduce costs will not be enough for Carl's Jr. to compete with giants like McDonald's and Wendy's. We need a strong strategy to lead this company into the 21st century.
 The Green Burrito Dual Marketing Concept:
 Mr. Doyle would like you to believe that he and the Board fairly considered the Green Burrito proposal. Nothing could be further from the truth. Those who supported the Green Burrito concept were not permitted to dispute management's analysis. In fact, Green Burrito representatives and my representatives were excluded from the Aug. 19 meeting in which management made its presentation -- until after the Board voted. Is that fair?
 Let me address some of the specific misinformation Mr. Doyle gave you:
 -- I believe the addition of Green Burrito menu items will increase the appeal of Carl's Jr. to consumers. But if Mr. Doyle disagrees, why is he so afraid of a limited test, especially one that costs the company nothing and could have great benefits?
 -- William Brusslan, president of KFF Management Inc., absolutely disagrees with Mr. Doyle's misstatements about the Arby's/Green Burrito test in one of his franchise's units. He also would be happy to discuss with you any questions about the test you might have. As far as he is concerned, the 82 percent annual increase in sales was a roaring success. I believe that Arby's is not interested in expanding the test because profits go to the restaurant operator, and there are very few company-owned Arby's restaurants. (See the attached letter from Bill Brusslan).
 -- William Theisen, president of Green Burrito, disagrees with CKE's estimates of the cost to retrofit a Carl's Jr. unit. What Mr. Doyle failed to tell you is that Mr. Theisen's company is willing to stand behind its cost estimates and has volunteered to cover all the cost of converting 10 units -- no matter what they are -- because he is convinced it is a sound and reasonable investment and most definitely worth the cost to test market.
 -- I have asked for, but never received, the back-up for the numbers regarding margin drops. What is Mr. Doyle trying to hide? I believe that Carl's Jr. has a strong product that stands on its own and won't be cannibalized by a dual marketing concept. If that's wrong, a test would show it.
 -- Mr. Doyle's argument about problems with expanding the concept is ridiculous. The concept was designed for low-volume units, which need the biggest boost. Why would he put the concept into a high-volume unit that is already doing fine? And since most Carl's Jr. units are in Southern California, the Green Burrito's identity outside of Los Angeles is not much of an issue. Even so, dual marketing tests in Muncie, Ind., and Mansfield, Ohio, show that Green Burrito products are a hit even in areas where Mexican food is not as popular as it is in California and the rest of the Southwestern United States.
 The Future:
 The one thing that Mr. Doyle and I do agree on is that this fight is not about personal feelings. For my part, I am trying to do what is best for all shareholders. If you have looked as sales lately and they are down, ask yourself why we are not doing this test -- especially since it is free and holds no risk to the company or to the franchisees. I am tired of hearing excuses about the economy and the competition. It is time for some entrepreneurial ideas that really can get us going -- the same kind of innovative marketing ideas that built this company and made it a consistent and much-admired leader for the last 52 years.
 Sincerely,
 Carl N. Karcher
 Dear Carl:
 Subsequent to our telephone conversation, I reviewed the Oct. 7 letter from Don Doyle to all Carl's Jr. franchisees. Carl, let me preface any comments by unequivocally stating that I never intended nor do I care to become embroiled in CKE corporate matters or controversies. My involvement was intended to champion the dual concept with Green Burrito and Carl's Jr. specifically and the addition of a second brand generally. Many months prior to the controversy between your father and the board, I had approached an employee in Carl's Jr. real estate department with an idea to convert some of your Phoenix stores to Carl's Jr./Green Burrito. This was my only motivation to become involved.
 I would like to correct the record regarding Mr. Doyle's letter. He states in item (2) that I never approached Arby's to expand the test. This is a complete fabrication. I have continuously over the past year requested, pleaded, and almost begged for permission to expand the test. I had offered to convert four additional units with different demographics so we could determine where our focus should be. The decision not to proceed was Arby's Inc. -- not mine. As a matter of fact, I am still pressuring Arby's to grant me permission.
 With reference to item (4) while the food and labor costs are higher, the incremental sales (+82 percent) tripled the unit bottom line. At the end of one year the cannibalization amounted to less than 3 percent.
 Regarding deterioration of service, at the time of the GB menu introduction we adopted the Carl's Jr. method of delivering the food to the table. The service times for the Mexican Menu mirrors Carl's Jr. current service. Our Arby's products are still delivered at the counter in under 60 seconds.
 With regard to my reluctance to retrofit a high volume unit, that was only in regard to our El Toro store, which is among the top five domestic units. The question was specifically asked whether I would consider El Toro, and my answer was "no." I would not hesitate to add a second brand to other high volume locations.
 Please understand I am not "taking on" Don Doyle, his management team, or the CKE board. I feel Green Burrito would add another dimension to many Carl's Jr. locations. I feed dual branding is necessary to add incremental day part sales, and experienced, committed management will make it work.
 Best of luck in the future and my regards to your father.
 Yours very truly,
 William Brusslan, president
 -0- 10/15/93
 /CONTACT: Steven Fink of Lexicon Communications, 310-553-3900, for Carl N. Karcher/


CO: ST: California IN: LEI SU:

JL-LS -- LA040 -- 3013 10/15/93 19:40 EDT
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Date:Oct 15, 1993
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