Carrols Corp · 10-K · For 12/31/95

Filed On 4/1/96   ·   SEC File 1-06553   ·   Accession Number 17927-96-4

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SECURITIES AND EXCHANGE COMMISSION                              
Washington, D.C.  20549                                         

FORM 10-K                                                       

Annual Report Pursuant to Section 13 or 15 (d) of               
the Securities Exchange Act of 1934                             

For Fiscal Year Ended December 31, 1995                         

Commission File Number 1-6553                                   

CARROLS CORPORATION                                             
(Exact name of Registrant as specified in its charter)          

Delaware                                        16-0958146                      
(State or other jurisdiction of (I.R.S. Employer                                
incorporation or organization)  Identification No.)                             

968 James Street, Syracuse, New York          13203                             
(Address of principal executive office) (Zip Code)                              

(315) 424-0513                                                  
(Registrant's telephone number, including area code)            

Securities registered pursuant to Section 12(b) of the Act:   None              

Securities registered pursuant to Section 12(g) of the Act:                     

11-1/2% Senior Notes Due  2003                                  
(Title of Class)                                                

   Indicate  by  check  mark  whether the Registrant (1) has filed all
reports required to be filed by                                                 
Section 13 or 15(d) of the Securities  Exchange  Act  of  1934  during  the     
preceding 12 months (or for                                                     
such shorter period that the Registrant was required to file such reports),     
and (2) has been subject to                                                     
such filing requirements for the past 90 days.   Yes _ x        No___           

   The   aggregate   market   value   of  the  voting  stock  held  by
non-affiliates of the Registrant:   No                                          
voting stock is held by non-affiliates.                                         

      The number of shares outstanding of  each  of  the  Registrant's
classes of common stock, as of                                                  
March 15, 1996:  10.                                                            

Documents Incorporated by Reference:  None.                                     

Page 1 of 53                                                                    

PART I                                                          

ITEM 1. BUSINESS                                                                

RECENT DEVELOPMENTS                                                             

   On March  6,  1996, Atlantic Restaurants, Inc. (the <o^>Buyer<o">),
Carrols Holdings Corporation                                                    
(<o^>Holdings<o">),   Carrols    Corporation    (the   <o^>Company<o">   or     
<o^>Carrols<o">) and certain selling shareholders of                            
Holdings  (the  <o^>Selling  Shareholders<o">) entered  into  a  Securities     
Purchase Agreement (the                                                         
<o^>Agreement<o">).  Pursuant  to  the  Agreement  and  subject  to certain     
conditions precedent described                                                  
below, Buyer will acquire between 95% and 100% of the outstanding shares of     
common stock,                                                                   
including securities that are convertible, exercisable or exchangeable into     
shares of common stock, of                                                      
Holdings  (the  <o^>Securities<o">).   Holdings is the owner of all of  the     
issued and outstanding capital stock of                                         
Carrols.                                                                        

   Assuming  all of the Securities are  acquired  by  the  Buyer,  the
aggregate purchase price                                                        
therefor will be approximately  $86,500,000  (the  <o^>Purchase Price<o">).     
In accordance with the Agreement,                                               
the Purchase Price is subject to adjustment in the event  (i)  that certain     
liabilities of Carrols and                                                      
Holdings as at March 31, 1996 exceed specified targeted levels or (ii) of a     
delay in the Closing.  The                                                      
Purchase Price shall be paid in cash.                                           

   It  is  anticipated  that,  at the closing of the transaction  (the
<o^>Closing<o">), the Buyer will elect a new                                    
Board of Directors of Holdings and Holdings  will  elect  a  new  Board  of     
Directors of Carrols.  Such new                                                 
board  will  include  Alan  Vituli  and  Daniel  T. Accordino who will also     
continue to serve Holdings and                                                  
Carrols in their present positions.                                             

   The parties anticipate that the Closing will occur in April 1996 if
all of the conditions precedent                                                 
to the Closing will have occurred by such time, including (i) obtaining the     
consent of Burger King                                                          
Corporation  and (ii) additional conditions to Closing  set  forth  in  the     
Agreement.  The purchase and sale                                               
of certain outstanding  options,  representing  3.2% of the Securities on a     
fully-diluted basis (excluding                                                  
for  this  purpose  the Warrants defined in note j in  Item  12),  will  be     
consummated on or about January 6,                                              
1997.                                                                           

   The consummation  of the transactions contemplated by the Agreement
(the <o^>Change of                                                              
Control Transaction<o">)  will constitute a <o^>change of control<o"> under     
the Indenture, dated as of August 17,                                           
1993 (the <o^>Indenture<o">),  among  Carrols,  Holdings and Marine Midland     
Bank, N.A., as trustee, governing                                               
CarrolsAE $110 million aggregate principal amount (currently $108.5 million     
outstanding) of 11-1/2%                                                         
Senior Notes Due 2003 (the <o^>Notes<o">).  In accordance  with  the  terms     
and conditions of the Indenture,                                                
upon  a  <o^>change  of control<o">, each holder of the Notes will have the     
right to require Carrols to                                                     
repurchase all or any part of such holderAEs Notes at a repurchase price in     
cash equal to 101% of the                                                       
principal amount of the  Notes  being  repurchased (plus accrued and unpaid     
interest, if any).  See                                                         
<o^>ManagementAEs  Discussion  and  Analysis  of  Financial  Condition  and     
Results of Operations-Liquidity                                                 
and Capital Resources<o">.                                                      

HISTORICAL DEVELOPMENT                                                          

   Carrols was incorporated in 1968  and  through  1976  its principal
business was the operation of                                                   
fast  food  hamburger  restaurants  under the name Carrols Restaurants  and     
movie theaters under the                                                        
name  CinemaNational.  In 1976, as a result  of  growing  competition  from     
larger and  better recognized                                                   
national fast food restaurant  chains,  Carrols  became  a   franchisee  of     
Burger King Corporation ("BKC")                                                 
and began converting its  restaurants to Burger King restaurants and ceased     
operating and franchising                                                       
restaurants  under  the name of Carrols Restaurants. In order to facilitate     
the  financing of the                                                           
conversion of these restaurants, Carrols disposed of a  substantial portion     
of its movie theater assets.                                                    

   In 1969, Carrols offered its common stock through an initial public
offering. The Company's                                                         
shares were listed for trading on the New York Stock  Exchange in 1983.         

   The Company was  acquired  in  December 1986 (the "Acquisition") by
Holdings, a corporation                                                         
formed to effect the Acquisition by Mr.  Alan  Vituli  and other members of     
the Company's current senior                                                    
management,  a private investor group and certain institutional  investors.     
As a result of the Acquisition,                                                 
Carrols became  a wholly-owned subsidiary of Holdings and, as a result, the     
shares of common stock                                                          
of Carrols ceased  trading.  In March 1992, Mr. Vituli, who was Chairman of     
the Board of the Company                                                        
from the time of the  Acquisition  in  December  1986,  was also elected to     
serve as Chief Executive                                                        
Officer.  Mr. Daniel T. Accordino was appointed President of the Company in     
February 1993.  In                                                              
January  1995,  the  Company entered into three-year employment  agreements     
with Messrs. Vituli and                                                         
Accordino.  See  "Executive Compensation -- Employment Agreements".             

   At the time of  the  Acquisition, the Company owned 138 Burger King
restaurants and a food                                                          
distribution business. In August  1990,  the  Company sold the distribution     
business to Burger King                                                         
Distribution  Services  (BKDS),  a   division  of BKC.   Carrols  currently     
purchases substantially all of its                                              
requirements for foodstuffs and paper and packaging products from ProSource     
Services Corporation                                                            
("ProSource"),  the  successor  to BKDS, pursuant to  a  five  year  supply     
agreement which was entered                                                     
into  on  April  1,  1994  and  which  expires   on  March  31,  1999.  See     
"Business--Supplies and Distribution."                                          

   Since the Acquisition, Carrols has expanded its operations from 138
Burger King restaurants to                                                      
220 as of March 15, 1996. During this period, Carrols built 31 restaurants,     
purchased 63 restaurants                                                        
and  disposed  of  or closed twelve restaurants. See  "Business--Restaurant     
Locations."  Since October                                                      
1992, the Company has  acquired 52 Burger King restaurants through the 1992     
acquisition of ten                                                              
Burger  King  restaurants  for  a  purchase  price  of  approximately  $7.4     
million, the 1993 acquisition of 18                                             
Burger King restaurants   for  a  purchase  price  of  approximately  $10.5     
million, the 1994 acquisition of 22                                             
restaurants  in  three  separate transactions for a total purchase price of     
approximately $11.6 million, the                                                
acquisition of one restaurant in 1995 and one in 1996.                          

   On August 17, 1993,  the  Company  consummated  a  refinancing (the
"Refinancing") that repaid                                                      
all  outstanding  amounts  under  the  then existing senior secured  credit     
facility, senior subordinated                                                   
notes and subordinated debentures.  Under  the terms of the refinancing and     
the Company's present                                                           
outstanding indebtedness, (including capital  lease  obligation)  scheduled     
debt amortization                                                               
requirements  range from under $1.0 million to $3.6 million per year  until     
2000.  The Refinancing                                                          
included the issuance  of  $110.0  million  aggregate  principal  amount of     
11-1/2% Senior Notes due 2003                                                   
and  the concurrent closing of a new $25.0 million senior secured revolving     
credit facility (the "Senior                                                    
Secured  Credit  Facility")  which  replaced  the Company's existing senior     
secured credit facility with the                                                
same lender.    On December 20, 1994, Carrols amended certain provisions of     
the Senior Secured                                                              
Credit Facility which included an increase in the  maximum  amount  of  the     
revolver to the original $25.0                                                  
million,  elimination  of  the  scheduled  annual reductions in the maximum     
revolver available and a                                                        
reduction in the interest rate.  As part of  the  amendment,  an additional     
$5.0 million credit facility was                                                
added to the existing $25.0 million facility, which additional facility was     
secured by the 22 Burger King                                                   
restaurants acquired during 1994.                                               

COMPANY OPERATIONS                                                              

   General. Since 1976, the Company's principal business has  been the
operation of Burger King                                                        
restaurants.  The Company is the largest independent Burger King franchisee     
in the United States. As                                                        
of March 15, 1996,  the  Company  operated,  as franchisee, 220 Burger King     
restaurants, of which 200                                                       
are free-standing restaurants and 20 are located in retail shopping centers     
or specialty stores.  Carrols                                                   
currently  operates  Burger  King  restaurants  in  nine  Northeastern  and     
Midwestern states and one                                                       
Southeastern state.                                                             

   Carrols' Burger King restaurants are typically  open  seven  days a
week from 7:00 a.m. to 11:00                                                    
p.m.  Substantially  all  of  Carrols'  Burger  King  restaurants  offer  a     
breakfast menu and the traditional                                              
Burger  King  menu for lunch and dinner.   A standard, free-standing Burger     
King restaurant building                                                        
typically has an  area  of  approximately  3,000 square feet with a seating     
capacity of approximately 90,                                                   
drive-thru  service  and  adjacent  parking  areas.   Smaller  Burger  King     
facilities are utilized in retail                                               
shopping  centers.   In  Carrols'  free-standing  Burger King  restaurants,     
greater than 50% of sales are                                                   
generally generated through drive-thru windows. Carrols  leases most of its     
restaurant properties,                                                          
although  it  owns  the  land  and  buildings  on which 18 restaurants  are     
located. See "Properties."                                                      

   Burger   King.     There  are  approximately  7,900   Burger   King
restaurants worldwide making BKC                                                
the second largest fast food hamburger operation.  BKC has been franchising     
since 1954 and has                                                              
expanded to locations in all  50  states,  the   District  of  Columbia and     
approximately 54 foreign                                                        
countries.                                                                      

   Burger  King  restaurants  are fast food restaurants of distinctive
design which serve a limited                                                    
menu of moderately-priced foods and  offer efficient and rapid service. The     
Company believes that                                                           
convenience, quality of food, price/value  and  speed  of  service  are the     
primary competitive advantages                                                  
of  Burger  King  restaurants.  Burger  King  restaurants appeal to a broad     
spectrum of consumers.                                                          

   Burger King restaurants feature flame-broiled hamburgers, which are
an integral part of the                                                         
Burger King identity, and several widely-known,  trademarked  products, the     
most popular being the                                                          
Whopper<<  sandwich,  which  is  a  large,  flame-broiled  hamburger  on  a     
five-inch toasted bun garnished                                                 
with  combinations  of  mayonnaise,  lettuce, onions, pickles and tomatoes.     
The basic menu of all Burger                                                    
King restaurants consists of hamburgers,  cheeseburgers, chicken sandwiches     
and filets, fish                                                                
sandwiches,  french  fried potatoes, salads,  various  breakfast  products,     
shakes, desserts, soft drinks,                                                  
milk and coffee. From  time  to  time, other promotional items are added to     
the menu for limited periods.                                                   
BKC continually seeks to develop new  products and concepts as it endeavors     
to enhance the menu                                                             
and service of Burger King restaurants.                                         

   Franchise  Agreements.  Each of Carrols'  Burger  King  restaurants
operates under a separate                                                       
Franchise Agreement from BKC. The Franchise Agreements require, among other     
things, that all                                                                
restaurants be of standardized design  and  be  operated  in  a  prescribed     
manner, including utilization of                                                
the  standard Burger King menu. The Franchise Agreements generally  provide     
for an initial term of 20                                                       
years  and have an initial fee of $40,000.  A Successor Franchise Agreement     
may be granted by                                                               
Burger King  for  an additional 20 year term, provided the restaurant meets     
the then-current BKC                                                            
operating standards  and  the  Company is not in default under the relevant     
Franchise Agreement.                                                            
Currently, the Successor Franchise Agreement fee is $25,000 per restaurant,     
which fee is expected to                                                        
increase to $40,000.  In addition  to  this  fee,  in  order  to  obtain  a     
Successor Franchise Agreement, a                                                
franchisee  is  typically  required  to  make  capital  improvements to the     
subject restaurant to bring the                                                 
restaurant up to BKC's then-current design standards. The  amount  of  such     
capital expenditures will                                                       
vary  widely  depending  upon the magnitude of the required changes and the     
degree to which the                                                             
Company has made interim changes  to  the  restaurant. Although the Company     
estimates that a                                                                
substantial  remodeling  can  cost  in excess of  $250,000,  the  Company's     
average remodeling cost over                                                    
the past five years has been approximately  $140,000  per  restaurant.  The     
Franchise Agreements are                                                        
non-cancelable except for failure to abide by the terms thereof.                

   Carrols  believes  that it enjoys a good relationship with BKC, and
believes that it will satisfy                                                   
BKC's normal Successor Franchise  Agreement policies and, accordingly, that     
Successor Franchise                                                             
Agreements  will be granted in due course  by  BKC  at  expiration  of  the     
existing Franchise Agreements.                                                  
Historically, BKC has granted Successor Franchise Agreements for all of the     
Restaurants sought by                                                           
the Company.                                                                    

   In addition to the initial franchise fee, franchisees currently pay
to BKC a monthly royalty of 3-                                                  
1/2% of the gross  revenues from their Burger King restaurants. Burger King     
operators currently also                                                        
contribute 4% of monthly  gross revenues from their Burger King restaurants     
to fund BKC's national                                                          
and  regional  advertising. BKC  engages  in  substantial  advertising  and     
promotional activities and other                                                
efforts to maintain  and enhance the nationwide Burger King system. Carrols     
supplements BKC's                                                               
marketing   with  local  advertising   and   promotional   campaigns.   See     
"Business--Business Strategy" and                                               
"Advertising and Promotion."                                                    

   The franchisee of a new restaurant must also purchase the requisite
equipment, seating,                                                             
signage and pay  various  other costs to open a new Burger King restaurant.     
The Company estimates                                                           
that  the  average  cost  for  a   standard  free-standing  restaurant  are     
approximately $240,000 (excluding                                               
the  cost  of  the  building,  land  and site  improvements).  The  Company     
estimates that the  aggregate cost                                              
of constructing a free-standing restaurant  and  the  cost of land and site     
improvements range from                                                         
$650,000 to $1,000,000 (or higher) depending upon building  type, land cost     
and site work.                                                                  

   The BKC Franchise Agreement does not grant any franchisee exclusive
rights to a defined                                                             
territory.  The  Company  believes that BKC generally seeks to ensure  that     
newly granted franchises do                                                     
not materially adversely affect  the  operations  of  existing  Burger King     
restaurants.                                                                    

   The  Company  is  required  to  obtain  BKC's consent prior to  the
acquisition or development of                                                   
new  Burger  King  restaurants.   BKC  has the right of  first  refusal  to     
purchase any Burger King restaurant                                             
which the Company wishes to acquire from  other  franchisees.  In addition,     
BKC's prior consent is                                                          
required for the sale by the Company of any of its restaurants.  Since  the     
Acquisition, BKC has                                                            
consented to all of the Company's proposed acquisitions.                        

   Management   Structure;   Staffing;   Training.  Substantially  all
executive management, finance,                                                  
marketing  and  operation  support  functions  are conducted  centrally  at     
Carrols' Syracuse, New York                                                     
headquarters.  The  Company  currently  has  three vice  president-regional     
directors and a regional                                                        
director who are responsible for the operations  of  all  CarrolsAE  Burger     
King restaurants in their                                                       
respective  regions. Three of the regional directors have been employed  by     
Carrols for over 20 years.                                                      
There are 28 district supervisors who report to the regional directors. The     
district supervisors have                                                       
responsibility  for an average of eight restaurants and are responsible for     
direct supervision of the                                                       
day-to-day operations  of  the restaurants. Typically, district supervisors     
previously served as restaurant                                                 
managers  at  one of Carrols'  restaurants.  Both  regional  directors  and     
district supervisors are                                                        
compensated with  a  fixed  salary  plus  an incentive bonus based upon the     
performance of the                                                              
restaurants under their supervision.                                            

   A typical Carrols' Burger King restaurant  is  staffed  with hourly
employees, who are supervised                                                   
by a salaried manager and two or three salaried assistant managers.             

   Carrols provides both classroom and in-restaurant training  for its
salaried and hourly personnel,                                                  
in  addition  to  training  programs provided by BKC. Carrols believes that     
training and management                                                         
development are integral to its success.                                        

   Control  Systems. Financial  and  management  control  of  Carrols'
restaurants is facilitated by the                                               
use of a computerized  back office point of sale  system which integrates a     
personal computer and                                                           
point of sale equipment to electronically communicate data from each of the     
Company's restaurants to                                                        
Carrols'  centralized management information system on a daily basis. Sales     
reports, payroll data, food                                                     
and labor cost analyses and other operating information for each restaurant     
are also available daily to                                                     
the restaurant manager,  who  is  expected  to  react  quickly to trends or     
situations in his or her restaurant.                                            
The daily information is accumulated for weekly operating  reports covering     
significant restaurant                                                          
performance indicators for each restaurant. These reports are  monitored by     
each management level                                                           
from  district supervisor through senior management. Carrols believes  that     
these systems materially                                                        
enhance its ability to control and manage its restaurant operations.            

   Factors  Affecting  the  Company's Operations. Carrols' business is
affected by various                                                             
conditions such as automobile usage, inclement weather, gasoline prices and     
road construction.                                                              
Weather conditions can be particularly  severe  in  the Northeast where the     
Company operates a                                                              
significant  number  of  its  Burger  King restaurants.  Historically,  the     
Company's business has also been                                                
affected by changes in local and national  economic conditions, demographic     
trends and consumer                                                             
spending habits, tastes, and concerns about the nutritional quality of fast     
food.                                                                           

   Site  Selection. The Company believes  that  the  location  of  its
restaurants is very important to its                                            
success.  New development  sites  are  evaluated  based upon accessibility,     
visibility, costs, surrounding                                                  
traffic   patterns,   competition  and  demographic  characteristics.   The     
Company's senior management,                                                    
based upon analyses prepared  by  its  real  estate  professionals  and its     
operations personnel,                                                           
determines  the acceptability of all acquisition and new development sites.     
See "Business--Business                                                         
Strategy."                                                                      

RESTAURANT LOCATIONS                                                            

   The following table sets forth the locations of the 220 Burger King
restaurants in Carrols'                                                         
system at March 15, 1996.                                                       

NEW YORK (98)                                                                   
OHIO (66)                                                                       
MAINE (3)                                                                       

Greater Albany (14)                                                             
Greater Akron (11)                                                              
Augusta (1)                                                                     

Auburn (1)                                                                      
Alliance (2)                                                                    
Bangor (2)                                                                      

Amsterdam (1)                                                                   
Archbold (1)                                                                    

Greater Binghamton (6)                                                          
Ashland (1)                                                                     

Boonville (1)                                                                   
Bowling Green (3)                                                               
MASSACHUSETTS (2)                                                               

Buffalo (1)                                                                     
Bryan (1)                                                                       

Catskill (1)                                                                    
Greater Canton (11)                                                             
North Andover (1)                                                               

Cobleskill (1)                                                                  
Greater Cleveland (10)                                                          
Billerica (1)                                                                   

Cortland (1)                                                                    
Defiance (1)                                                                    

Fulton (1)                                                                      
Findlay (2)                                                                     

Glens Falls (2)                                                                 
Fostoria (1)                                                                    
NEW JERSEY (2)                                                                  

Gloversville (2)                                                                
Fremont (1)                                                                     

Hamilton (1)                                                                    
Hartville (1)                                                                   

Herkimer (1)                                                                    
Lima (2)                                                                        
Franklin (1)                                                                    

Hudson (1)                                                                      
Mansfield (6)                                                                   
Newton (1)                                                                      

Kingston (3)                                                                    
Medina (1)                                                                      

Middletown (2)                                                                  
Mentor (1)                                                                      

New City (1)                                                                    
New Philadelphia (2)                                                            
CONNECTICUT (1)                                                                 

Newburgh (3)                                                                    
Ottawa (1)                                                                      

Niagara Falls (1)                                                               
Streetsboro (1)                                                                 
Westport (1)                                                                    

Norwich (1)                                                                     
Tiffin (1)                                                                      

Oneonta (2)                                                                     
Van Wert (1)                                                                    

Oswego (1)                                                                      
Wapakoneta (1)                                                                  
VERMONT (1)                                                                     

Peekskill (1)                                                                   
Wooster (2)                                                                     

Plattsburgh (3)                                                                 
Wauseon (1)                                                                     
Rutland (1)                                                                     

Poughkeepsie (2)                                                                

Port Jervis (1)                                                                 

Greater Rochester (14)                                                          
MICHIGAN (15)                                                                   

Rome (2)                                                                        

Greater Syracuse (18)                                                           
Ann Arbor (3)                                                                   

Schodack (1)                                                                    
Battle Creek (4)                                                                

Greater Utica (4)                                                               
Kalamazoo (4)                                                                   

Watertown (2)                                                                   
Jackson (3)                                                                     

Yorktown Heights (1)                                                            
Washtenaw (1)                                                                   

NORTH CAROLINA (24)                                                             
PENNSYLVANIA (8)                                                                

Greater Asheville (9)                                                           
Bradford (1)                                                                    

Durham (7)                                                                      
East Stroudsburg (1)                                                            

Forest City (1)                                                                 
Lebanon (1)                                                                     

Hendersonville (2)                                                              
Reading (4)                                                                     

Marion (1)                                                                      
Tamaqua (1)                                                                     

Morganton (1)                                                                   

Raleigh (2)                                                                     

Shelby (1)                                                                      

ADVERTISING AND PROMOTION                                                       

   As a Burger King franchisee, a significant portion of the Company's
advertising and                                                                 
promotional  programs  are  established  and  coordinated  by  BKC  through     
regional and national                                                           
advertising  campaigns.   Carrols   supplements   BKC's   advertising   and     
promotional activities with local                                               
advertising  and  promotions,  including  purchasing additional television,     
radio and print advertising.                                                    
Carrols also utilizes promotional programs,  such  as combination meals and     
discounted prices, targeted                                                     
to  its  customers,  thereby  enabling  Carrols to create  a  flexible  and     
directed marketing program.                                                     

   Most  BKC franchisees and BKC are  required  to  contribute  4%  of
monthly gross revenues from                                                     
restaurant operations  to  an  advertising  fund,  utilized  by BKC for its     
advertising and promotional                                                     
programs  and  public  relations  activities.   BKC's  advertising programs     
consist of national campaigns                                                   
and  local  advertising  which  supplements  the national campaigns.  BKC's     
advertising campaigns are                                                       
generally  carried  on  television,  radio and in  circulated  print  media     
(national and regional newspapers                                               
and magazines). Carrols believes that  one of the major advantages of being     
a Burger King franchisee                                                        
is the leverage it realizes from the marketing power of BKC.                    

SUPPLIES AND DISTRIBUTION                                                       

   As a Burger King franchisee, Carrols is required to purchase all of
its foodstuffs, paper and                                                       
packaging from BKC-approved suppliers. Other non-food items such as kitchen     
utensils, equipment                                                             
maintenance tools and other supplies may  be  purchased  from  any suitable     
source provided such                                                            
items  meet  BKC  product uniformity standards.  On April 1, 1994,  Carrols     
entered into a new supply                                                       
agreement  with its  supplier,  ProSource.   Pursuant  to  that  agreement,     
Carrols is required to obtain                                                   
substantially  all  of  its  foodstuffs (other than bread products), paper,     
promotional premiums and                                                        
packaging  from  ProSource.  The  supply  agreement  with  ProSource  is  a     
five-year agreement which                                                       
expires  on March  31, 1999. The Company believes that ProSource's services     
are competitive with                                                            
alternatives available  to  the  Company.    Carrols  purchases  its  bread     
products from local bakeries. See                                               
"Business--Historical Development."                                             

   There  are  other  BKC-approved supplier/distributors which compete
with ProSource. Carrols                                                         
believes that it would be able  to substitute another supplier if ProSource     
were unable, for any reason,                                                    
or chose not to continue to service the Company.                                

   All BKC-approved suppliers  are required to purchase all foodstuffs
and supplies from                                                               
BKC-approved manufacturers and purveyors. BKC is responsible for monitoring     
quality control and                                                             
supervision of these manufacturers and  purveyors.  See  "Business--Quality     
Assurance."                                                                     

   BKC  monitors all BKC-approved manufacturers and purveyors  of  its
foodstuffs.  BKC regularly                                                      
visits these manufacturers  and  purveyors  to  observe  the preparation of     
foodstuffs and run various                                                      
tests to ensure that only high quality foodstuffs are sold  to BKC-approved     
suppliers and distributors. In                                                  
addition,  BKC coordinates and supervises audits of approved suppliers  and     
distributors to determine                                                       
continuing product  specification  compliance and ensure that manufacturing     
plant and distribution                                                          
center standards are met.                                                       

QUALITY ASSURANCE                                                               

   All Burger King franchisees,  including Carrols, operate subject to
a comprehensive regimen of                                                      
quality assurance and health standards set by BKC, as well as standards set     
by Federal, state and                                                           
local  governmental  laws and regulations.  These  standards  include  food     
preparation rules regarding,                                                    
among  other  things,  minimum   cooking   temperatures,   sanitation   and     
cleanliness. In addition, BKC has                                               
set  maximum  time standards for holding unsold prepared food; for example,     
unsold sandwiches are                                                           
discarded  ten  minutes  after  preparation  and  unsold  french  fries are     
discarded seven minutes after                                                   
preparation. The "conveyor belt" cooking system utilized in all Burger King     
restaurants, which is                                                           
calibrated  to  carry  hamburgers  through  the  flame broiler at regulated     
speeds, helps ensure that                                                       
standardized cooking times and temperatures are met.                            

   Carrols, through its regional directors and  district  supervisors,
closely supervises the operation                                                
of  all  of its restaurants to help ensure that standards and policies  are     
followed and that product quality,                                              
customer service  and  cleanliness  of  the restaurants are maintained. BKC     
conducts unscheduled                                                            
periodic inspections of each Burger King  restaurant  throughout the Burger     
King system.                                                                    

BUSINESS STRATEGY                                                               

   The Company's primary business strategy is to expand its operations
through the acquisition                                                         
and construction of additional Burger King restaurants  while enhancing the     
quality of operations and                                                       
competitive  position  of  its  existing Burger King restaurants.   Carrols     
believes the size of the nationwide                                             
Burger King system will continue  to  present  opportunities  for selective     
growth through acquisitions. In                                                 
addition, Carrols believes that the number of markets in which  the Company     
operates will provide                                                           
opportunities  for  construction  of  new  restaurants. The ability of  the     
Company to expand through the                                                   
acquisition  and  construction  of additional Burger  King  restaurants  is     
subject to, among other things, the                                             
availability of financing and obtaining the consent of BKC.                     

GOVERNMENT REGULATION                                                         

   Carrols  is  subject  to various  Federal,  state  and  local  laws
affecting its business, including                                               
various health, sanitation, fire and safety standards. Newly constructed or     
remodeled restaurants are                                                       
subject  to  state and local building  code  and  zoning  requirements.  In     
connection with the remodeling                                                  
and alteration of the Company's restaurants, the Company may be required to     
expend funds to meet                                                            
certain  Federal,   state  and  local  regulations,  including  regulations     
requiring that remodeled or altered                                             
restaurants be handicap  accessible. The Company is also subject to Federal     
and state environmental                                                         
regulations, although  such  regulations  have not had a material effect on     
the Company's operations.                                                       

   The Company is subject to the Fair  Labor Standards Act and various
state laws governing                                                            
such  matters  as  minimum wage requirements, overtime  and  other  working     
conditions and citizenship                                                      
requirements. A significant  number of the Company's food service personnel     
are paid at rates related                                                       
to  the  Federal minimum wage and  increases  in  the  minimum  wage  could     
increase the Company's                                                          
labor costs.                                                                    

   The Company believes that it is operating in substantial compliance
with applicable laws and                                                        
regulations governing its operations.                                           

COMPETITION                                                                     

   The  fast  food  industry  is  highly  competitive.  In each of its
markets, Carrols' restaurants                                                   
compete with a large number of national and regional restaurant  chains, as     
well as locally-owned                                                           
restaurants,   offering  low-priced  and  medium-priced  fare.  Convenience     
stores, grocery store                                                           
delicatessens  and   food  counters,  cafeterias  and  other  purveyors  of     
moderately priced and quickly                                                   
prepared foods also compete  with  the  Company.  In the Company's markets,     
McDonald's, Wendy's                                                             
and  Hardee's  provide the most significant competition.  Carrols  believes     
that national brand name                                                        
identification is  a  significant  competitive  advantage  in the fast food     
business. The Company's largest                                                 
competitor  is  McDonald's. The Company believes that product  quality  and     
taste, convenience of                                                           
location, speed of  service, menu variety, and price are the most important     
competitive factors in the                                                      
fast food restaurant industry.                                                  

EMPLOYEES                                                                       

   At December 31, 1995, Carrols employed approximately 7,500 persons;
approximately 100                                                               
were  administrative  personnel   and   7,400   were  restaurant  operating     
personnel. None of Carrols'                                                     
employees  is  covered  by collective bargaining agreements.  Approximately     
6,800 of the restaurant                                                         
operating personnel at December  31, 1995 were part-time employees. Carrols     
believes that its                                                               
employee relations are satisfactory.                                            

ADDITIONAL RESTAURANT CONCEPTS                                                  

   Taco Cabana. Carrols is a  party  to  an  agreement  dated June 20,
1994, as amended on                                                             
February 16, 1996 (the "Taco Cabana Agreement") with T.C. Management, Inc.,     
an affiliate of Taco                                                            
Cabana,  Inc., under which Carrols has the exclusive right to develop  Taco     
Cabana restaurants in                                                           
North Carolina,  South  Carolina,  and  the Tidewater and Richmond areas of     
Virginia.  Taco Cabana,                                                         
Inc.,  is a publicly traded company which  operates  quick-service  Mexican     
patio cafe restaurants. As of                                                   
December  31,  1995,  Taco  Cabana  owned  and  operated  106  Taco  Cabana     
restaurants and franchised                                                      
27 Taco Cabana restaurants.                                                     

   The  Taco  Cabana  Agreement requires Carrols to develop three Taco
Cabana restaurants                                                              
during the first year, six Taco  Cabana restaurants during the second year,     
and eight Taco Cabana                                                           
restaurants during each of the next  three   years  in  order to retain the     
entirety of its territory under the                                             
agreement.   Carrols  has  the ability to maintain the exclusive  right  to     
develop in its assigned territory                                               
provided it continues to develop Taco Cabana restaurants in accordance with     
the formula set forth in                                                        
the Taco Cabana Agreement.  Failure to comply with the formula would result     
in a reduction or                                                               
elimination of its exclusive  territorial  rights.   Upon  execution of the     
Taco Cabana Agreement, Carrols                                                  
paid  a  non-refundable  fee  of  $250,000, which will be credited  against     
development and license fees                                                    
for  the  first five Taco Cabana restaurants  developed  by  Carrols.   The     
development and license fee for                                                 
the first ten  Taco  Cabana  restaurants to be opened by Carrols is $50,000     
per restaurant, thereafter the                                                  
development and license fee is $25,000 per restaurant.                          

   The Taco Cabana Agreement,  as  amended,  provides  that  the first
three restaurants required to                                                   
be developed are not required to be open until thirty months after February     
16, 1996.  Accordingly, no                                                      
Taco  Cabana  Restaurants  are  required to be open until August 1998.   To     
date, no Taco Cabana                                                            
restaurants have been built by Carrols.                                         

   Pollo Tropical. Carrols is a party to an agreement dated January 1,
1995, as amended June                                                           
30, 1995, (the "Pollo Tropical  Agreement")  with Pollo Franchise, Inc., an     
affiliate of Pollo Tropical, Inc.,                                              
under  which  Carrols  has the exclusive right to  develop  Pollo  Tropical     
restaurants in certain specified                                                
regions of Ohio and Kentucky.   Pollo Tropical is a publicly traded company     
which operates a chain of                                                       
quick service restaurants  featuring  grilled  marinated  chicken.   As  of     
December 31, 1995, Pollo Tropical                                               
had  42  restaurants  systemwide, of which 36 were Company owned and 6 were     
franchised.                                                                     

   The Pollo Tropical  Agreement  requires  Carrols  to  develop three
Pollo Tropical restaurants                                                      
during the first 18 months, six  Pollo Tropical restaurants during the next     
12 months, and eight Pollo                                                      
Tropical restaurants during each of the next three years in order to retain     
the entirety of its territory                                                   
under the agreement.  Carrols maintains the exclusive right to  develop  in     
its assigned territories                                                        
provided it continues to develop restaurants in accordance with the formula     
set forth in the Pollo                                                          
Tropical  Agreement.   Failure to comply with the formula would result in a     
reduction or elimination of its                                                 
exclusive territorial rights.   Upon  the  execution  of the Pollo Tropical     
Agreement, Carrols paid a non-                                                  
refundable fee of $110,000, which will be credited against  franchise  fees     
for the first five Pollo Tropical                                               
restaurants  developed  by  Carrols.   The  license fee for the first three     
Pollo Tropical restaurants is                                                   
$30,000  per  restaurant,  thereafter  the  license   fee  is  $15,000  per     
restaurant.                                                                     

   The   Pollo  Tropical  Agreement,  as  amended,  provides   for   a
commencement date of January 1,                                                 
1996.  Accordingly,  no  restaurants  are  required  to be opened under the     
Pollo Tropical Agreement until                                                  
July 1, 1997.  To date, no Pollo Tropical restaurants  have  been  built by     
Carrols.                                                                        

   In  addition  to the territories of Ohio and Kentucky, Carrols  has
certain limited options to develop                                              
Pollo Tropical restaurants  in  the  State of Michigan (other than Detroit)     
and Toronto, Canada.                                                            

ITEM 2. PROPERTIES                                                              

   The Company owns the approximately  20,000  square foot building at
968 James Street,                                                               
Syracuse,  New  York,  in  which  its executive offices are  located.  This     
building houses all of the                                                      
Company's administrative operations  (except  for  those conducted at three     
small regional offices) and                                                     
is adequate for future expansion.  The Company is the beneficial owner of a     
160,000 square foot                                                             
warehouse building in Liverpool, New York.  The warehouse  is  not  used in     
the current operations of                                                       
the  Company and is under contract dated December 29, 1995, to be sold  for     
$1,300,000.                                                                     
In addition                                           
to  the  above, at March 15, 1996 the Company owned or leased the following     
properties:                                                                     

Owned                                                                           
Leased                                                                          
Leased                                                                          

Land;                                                                           
Land;                                                                           
Land;                                                                           

Owned                                                                           
Owned                                                                           
Leased                                                                          

Building                                                                        
Building                                                                        
Building                                                                        
Total                                                                           

Burger King restaurants                                                         
18                                                                              
16                                                                              
186(a)                                                                          
220                                                                             

Excess properties:                                                              

Leased to others                                                            
1                                                                             
--                                                                              
6                                                                               
7                                                                           

Available for sale or lease                                                 
5(b)                                                                          
--                                                                              
--                                                                          
5                                                                           

Total properties                                                                
24                                                                              
16                                                                              
192                                                                             
232                                                                             

(a)     Includes  20  restaurants  located  in  mall  shopping  centers  or     
specialty locations.                                                            

(b)     The  Company  has  entered  into a Contract of Sale dated February,     
1996 for the sale of                                                            
land known as Albemarle Road, Charlotte,  North  Carolina,  for  a purchase     
price of                                                                        
$540,000.   The  Company  anticipates  the closing will occur in mid-April,     
1996.  The                                                                      
Company has also entered into a Contract  of  Sale, dated February 14, 1996     
for the sale                                                                    
of land known as 108 East Main Street, Endicott,  New  York, for a purchase     
price of                                                                        
$88,500.  The Company anticipates the closing will occur in June of 1996.       

   Most  of  the  Company's  leases are coterminous with  the  related
Franchise Agreements. The                                                       
Company believes that it generally  will  be  able to renew at commercially     
reasonable rates the leases                                                     
whose terms expire prior to the subject Franchise Agreements.                   

   Most  leases require the Company, as lessee,  to  pay  utility  and
water charges, premiums on                                                      
insurance and real  estate  taxes.   Certain leases also require contingent     
rentals based upon a                                                            
percentage of gross sales that exceed specified minimums.                       

ITEM 3. LEGAL PROCEEDINGS                                                       

   The Company is not a party to  any  pending legal proceeding which,
in management's belief,                                                         
will have a material adverse effect on the Company's  results of operations     
or financial condition, nor to                                                  
any other pending legal proceedings other than ordinary, routine litigation     
incidental to its business.                                                     

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     

Not applicable.                                                                 

PART II                                                         

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER           
MATTERS                                                                         

   There  is  no established trading market for the  Company's  common
equity, since 100% of its                                                       
common stock (10 shares) is owned by Holdings.                                  

   Cash dividends  per share were paid during 1994 and 1995 by Carrols
to Holdings as follows:                                                         

January, 1994                                                                   
$237,301.10                                                                     

April, 1994                                                                     
20,000.00                                                                     

July, 1994                                                                      
20,000.00                                                                     

October, 1994                                                                   
20,000.00                                                                     

January, 1995                                                                   
20,000.00                                                                     

April, 1995                                                                     
20,000.00                                                                     

June, 1995                                                                      
3,672.00                                                                    

July, 1995                                                                      
20,000.00                                                                       

   See  discussion  of   dividend   restriction  in  <o^>ManagementAEs
Discussion and Analysis of Financial                                            
Condition and Results of Operations -- Liquidity and Capital Resources.         

ITEM 6.  SELECTED FINANCIAL DATA                                                

CARROLS CORPORATION AND SUBSIDIARIES-SUMMARY OF SELECTED FINANCIAL DATA         

                                      YEARS ENDED DECEMBER 31,

1995__                                                            
1994__                                                              
1993__                                                                
1992__                                                                
1991__                                                                

(52 weeks)                                                                    
(52 weeks)                                                                    
(52 weeks)                                                                      
(53 weeks)                                                                      
(52 weeks)                                                                      

                                                         (Dollars   in
thousands except for per share data and restaurants)                            
OPERATING RESULTS:                                                              

Revenues                                                                    
$   226,458                                                                     
$  204,254                                                                      
$  171,634                                                                      
$  156,413                                                                      
$  146,634                                                                      

Income (loss) before taxes, extraordinary loss                              
and cumulative effect of change in accounting                           

principle                                                               
5,100                                                         
(1,666)                                                           
(4,408)                                                           
(1,262)                                                           
(4,919)                                                           

(Provision) benefit for taxes                                               
9,826                                                         
(165)                                                       

Extraordinary loss on extinguishment of                                     

debt                                                                    

(4,883)                                                           

Cumulative effect of change in accounting                                   

for post-retirement benefits                                            
_________                                                                       
_________                                                                       
_________                                                                       
(1,037)                                                           
_________                                                                       

Net income (loss)                                                           
$     14,926                                                                    
$     (1,831)                                                                   
$     (9,291)                                                                   
$     (2,299)                                                                   
$     (4,919)                                                                   

PER SHARE OF COMMON STOCK:                                                      

Income (loss) before taxes, extraordinary loss                              
and cumulative effect of change in accounting                           

principle                                                               
$   510,000                                                                     
$ (166,600)                                                                     
$ (440,800)                                                                     
$ (126,200)                                                                     
$ (491,900)                                                                     

(Provision) benefit for taxes                                               
982,600                                                               
(16,500)                                                              

Extraordinary loss on extinguishment of                                     

debt                                                                    

(488,300)                                                                 

Cumulative effect of change in accounting                                   

for post-retirement benefits                                            
_________                                                                       
_________                                                                       
_________                                                                       
(103,700)                                                                 
_________                                                                       

Net income (loss)                                                           
$1,492,600                                                                      
$ (183,100)                                                                     
$ (929,100)                                                                     
$ (229,900)                                                                     
$ (491,900)                                                                     

Dividends Declared                                                          
$     63,672                                                                    
$   297,301                                                                     
$  273,960                                                                      
$    20,010                                                                     
$    40,000                                                                     

OTHER DATA:                                                                     

Total assets                                                                
$   135,064                                                                     
$   125,319                                                                     
$  119,735                                                                      
$  115,900                                                                      
$  115,592                                                                      

Long-term debt                                                              
116,375                                                               
120,680                                                               
114,197                                                                 
91,245                                                              
88,541                                                              

Capital lease obligations                                                   
3,301                                                         
3,966                                                         
4,603                                                           
5,436                                                           
6,002                                                           

Total long-term debt and capital lease                                      

obligations                                                             
119,676                                                               
124,646                                                               
118,800                                                                 
96,681                                                            
94,543                                                              

Common stockholderAEs deficit                                               
(12,916)                                                            
(27,208)                                                            
(22,404)                                                              
(10,383)                                                            
(7,884)                                                           

Burger King restaurants in operation:                                       

At end of period                                                        
219                                                     
219                                                       
195                                                         
177                                                     
165                                                       

Annual weighted average                                                 
218.6                                                         
206.8                                                           
184.5                                                             
168.7                                                         
163.8                                                           

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND         
RESULTS OF OPERATIONS                                                           

RESULTS OF OPERATIONS                                                           

   General.   The  following  table  sets  forth  for  the years ended
December 31, 1995, 1994 and                                                     
1993  certain consolidated financial data for the Company, expressed  as  a     
percentage of sales:                                                            

PERCENTAGE OF SALES                                                             

YEARS ENDED DECEMBER 31,                                                        

1995                                                                            
1994                                                                            
1993                                                                            

Sales                                                                           
100.0%                                                                          
100.0%                                                                          
100.0%                                                                          

Other income                                                                    
.1                                                                            
.2                                                                            
.3                                                                            

Cost of sales                                                                   
28.1                                                                            
28.4                                                                            
28.3                                                                            

Restaurant wages and related expenses                                           
29.1                                                                            
29.4                                                                            
30.2                                                                            

Other restaurant operating expenses                                             
20.2                                                                            
20.8                                                                            
20.6                                                                            

Depreciation and amortization                                                   
5.0                                                                             
5.5                                                                             
7.1                                                                             

Administrative expenses                                                         
4.7                                                                             
4.6                                                                             
4.7                                                                             

Advertising expense                                                             
4.3                                                                             
4.3                                                                             
4.6                                                                             

Interest expense                                                                
6.4                                                                             
7.1                                                                             
7.3                                                                             

Loss on closing restaurants and other                                           

.9                                                                            

Income (loss) before taxes and                                                  

extraordinary item                                                      
2.3                                                                             
(.9)                                                                            
(2.6)                                                                           

(Provision) benefit for taxes                                                   
4.3                                                                             
(.1)                                                                            

1995 COMPARED TO 1994                                                           

   Sales.   Sales for the year ended December 31, 1995 increased $22.3
million, or 11.0%, as                                                           
compared to the year  ended  December  31,  1994.   The Company operated an     
average of 219 Burger                                                           
King restaurants for the year ended December 31, 1995  as  compared  to 207     
for 1994.  Average unit                                                         
sales  increased  4.9%  when  comparing  1995 to 1994.  Sales at comparable     
restaurants, the 187 units                                                      
operating for the entirety of the compared periods, increased $7.1 million,     
or 3.8%.  Net restaurant                                                        
selling prices increased approximately 0.5%  from fewer discount promotions     
in 1995.                                                                        

   Cost of Sales.  Cost of sales (food and  paper  costs) for the year
ended December 31, 1995                                                         
increased in dollars due to higher sales.  Cost of sales as a percentage of     
sales decreased 0.3% from                                                       
1994 to 1995 as a result of the effect of net restaurant selling prices and     
decreases in various                                                            
commodity costs, especially beef, partially offset by the  introduction  of     
larger-sized meat patties in                                                    
certain sandwiches.                                                             

   Restaurant  Wages  and  Related  Expenses.   Restaurant  wages  and
related expenses                                                                
decreased  from   29.4%  of sales to 29.1% of sales when comparing the year     
ended December 31,                                                              
1994 to 1995.  The effect  of  increased  selling  prices,  lower workersAE     
compensation cost and lower                                                     
health  insurance cost were the principal reasons for the lower  percentage     
in 1995.                                                                        

   Other  Restaurant  Operating  Expenses.  Other restaurant operating
expenses increased by                                                           
$3.2 million but decreased 0.6% as a percentage  of sales for 1995 compared     
to 1994.  The increase                                                          
in dollars was caused primarily by expenses associated  with  the operation     
of the additional restaurants                                                   
during the most recent year when compared to the prior year.  The effect of     
higher sales on the fixed                                                       
element of some expenses like utilities, real estate taxes, linen  and some     
repair and maintenance                                                          
costs  was the primary reason for the decrease in the percentage from  1994     
to 1995.                                                                        

   Depreciation   and  Amortization.   Depreciation  and  amortization
remained relatively equal to the                                                
year ended December 31,  1994.   Additional  depreciation  and amortization     
from new and acquired                                                           
restaurants  were  offset by assets becoming fully depreciated  during  the     
last two years.                                                                 

   Administrative   Expenses.    Supervision   and  training  expenses
associated with operating                                                       
additional restaurants were the principal cause of increased administrative     
expenses during the year                                                        
ended December 31, 1995 as compared to 1994.                                    

   Advertising Expense.  An increase in advertising payments to Burger
King Corporation of $0.9                                                        
million (based on sales levels) was the principal cause  of the increase in     
advertising expense when                                                        
comparing 1995 to 1994.                                                         

   Interest Expense.  Average interest rates and average loan balances
remained relatively the                                                         
same in 1995 and 1994.                                                          

   (Provision)  Benefit  for Taxes.  The income tax benefit  reflected
during the twelve months                                                        
ended December 31, 1995, resulted  from  the  elimination  of the valuation     
allowance for the net                                                           
deferred income tax asset which arises substantially from the  availability     
of tax loss carryforwards.  A                                                   
review   of  current  and  expected  future  pre-tax  earnings  based  upon     
historical earnings adjusted for                                                
recent acquisitions,  led to the conclusion that it is more likely than not     
that the Company will realize the                                               
entire benefit of the net deferred income tax asset at December 31, 1995 of     
$10,061,000.                                                                    

1994 COMPARED TO 1993                                                           

   Sales.  Sales for  the year ended December 31, 1994 increased $32.8
million, or 19.2%, as                                                           
compared to the year ended December  31,  1993.   The  Company  operated an     
average of 207 Burger                                                           
King  restaurants for the year ended December 31, 1994 as compared  to  185     
for 1993.  Average unit                                                         
sales increased  6.8%  when  comparing  1994  to 1993.  Sales at comparable     
restaurants, the 170 units                                                      
operating for the entirety of the compared periods, increased $7.9 million,     
or 5.1%.  Net restaurant                                                        
selling  prices  were  down  approximately  0.7%,  resulting  from  a  7.0%     
reduction in menu prices offset by                                              
a  6.3%  increase  from  fewer  discount promotions in 1994.   The  pricing     
changes reflect the value menu                                                  
pricing strategy adopted nationally  by  BKC  near  the  end  of 1993 which     
prices a sandwich, drink and                                                    
fries  as  a  meal  for  less  than the prices of the individual items  and     
correspondingly reduces price-off                                               
promotion activity.                                                             

   Cost of Sales.  Cost of  sales  (food and paper costs) for the year
ended December 31, 1994                                                         
increased in dollars due to higher sales.  Cost of sales as a percentage of     
sales increased 0.1% from                                                       
1993  to 1994 as a result of the effect of  lower  net  restaurant  selling     
prices, partially offset by                                                     
decreases in various commodity costs, especially beef.                          

   Restaurant  Wages  and  Related  Expenses.   Restaurant  wages  and
related expenses                                                                
decreased  from  30.2%  of  sales to 29.4% of sales when comparing the year     
ended December 31,                                                              
1993  to  1994.   Productive  labor  efficiencies  realized  from  improved     
technology utilized in operating the                                            
drive-thru windows at the restaurants and the effect of higher sales on the     
fixed component of                                                              
restaurant wages more than offset  the  effects of lower restaurant selling     
prices and increased wage                                                       
rates.                                                                          

   Other Restaurant Operating Expenses.   Other  restaurant  operating
expenses increased by                                                           
$7.2  million  and  by  0.2% as a percentage of sales for 1994 compared  to     
1993.  The increase in dollars                                                  
was caused primarily by expenses  associated  with  the  operation  of  the     
additional restaurants during                                                   
the  most  recent  year when compared to the prior year.  Increased expense     
for replacement of                                                              
employee  uniforms was  the  major  cause  of  the  0.2%  increase  in  the     
percentage when comparing                                                       
1994 to 1993.                                                                   

   Depreciation   and  Amortization.   Depreciation  and  amortization
decreased by $0.9 million when                                                  
comparing the year ended December 31, 1994 to 1993.  The effect from assets     
becoming fully                                                                  
depreciated during the last  two  years  was partially offset by additional     
depreciation and amortization                                                   
from new and acquired restaurants.                                              

   Administrative  Expenses.   Expenses   associated   with   acquired
restaurants and those arising                                                   
from improved restaurant operating performance were the principal cause  of     
increased administrative                                                        
expenses during the year ended December 31, 1994 as compared to 1993.           

   Advertising Expense.  An increase in advertising payments to Burger
King  Corporation of $1.3                                                       
million  (based on sales levels) was partially offset by decreases in other     
forms of promotional activities                                                 
of $0.5 million when comparing 1994 to 1993.                                    

   Interest Expense.  An increase in average loan balances outstanding
was the principal cause                                                         
for interest  expense  to increase $2.0 million for the year ended December     
31, 1994 compared to 1993.                                                      

   Loss on Closing  Restaurants and Other.  The charge of $1.8 million
during the year ended                                                           
December 31, 1994 represents  a  $1.3  million  loss  from  the anticipated     
closing of certain restaurants                                                  
and  the  write  down  of  approximately  $0.5  million  to  estimated  net     
realizable value of an unused                                                   
warehouse.   The  charge  includes  a  write down of the related restaurant     
operating assets to net                                                         
realizable value and accrual of lease termination costs.                        

LIQUIDITY AND CAPITAL RESOURCES                                                 

   The operating activities of the  Company during 1995 provided $16.6
million of cash.  The net                                                       
income of $14.9 million is after recognizing  a  deferred  tax  benefit  of     
$10.1 million and depreciation and                                              
amortization  of  $11.3  million.   Operating cash also  was provided by an     
increase in accounts payable                                                    
of $1.4 million due principally to increased operations.                        

   Capital spending during 1995  of $8.5 million included $3.1 million
for the acquisition of one                                                      
Burger  King  restaurant  in  Ohio  and  the   construction   of  four  new     
restaurants.  The balance of the                                                
spending  went  toward restaurant capital maintenance and remodeling.   The     
Company completed 15                                                            
remodelings in 1995.                                                            

   During 1995,  $4.4  million  was  drawn  down  under the CompanyAEs
acquisition loan with Heller                                                    
Financial,  Inc.  and a sale and leaseback of one restaurant  property  was     
completed for $0.9 million.                                                     
$7.2 million was paid  down  on the revolving line of credit portion of the     
Senior Secured Credit Facility                                                  
and $1.5 million of the Senior  Notes  were  purchased.   Dividends  of $.6     
million were paid to Holdings                                                   
for  the payment by Holdings of regular quarterly preferred stock dividends     
of $0.2 million each.                                                           

   At December 31, 1995, the Company had $21.9 million available under
its Senior Secured                                                              
Credit  Facility  after  reserving  $1.4  million  for  a  letter of credit     
guaranteed by the Senior Secured Credit                                         
Facility.   While  interest  is  accrued monthly, payments of approximately     
$6.2 million for interest on the                                                
Notes are made each February 15th and August 15th thus creating semi annual     
cash needs.  The                                                                
Company believes that future cash  flow from operations together with funds     
available under the Senior                                                      
Secured  Credit  Facility  will be sufficient  to  meet  all  interest  and     
principal payments under its                                                    
indebtedness,  fund  the  maintenance   of  property  and  equipment,  fund     
restaurant remodeling required                                                  
under the Franchise Agreements and meet required  payments  in  respect  of     
HoldingsAE Preferred Stock                                                      
(subject  to  the  terms  of  the  Indenture  and the Senior Secured Credit     
Facility) for at least the next                                                 
twelve months.  The balance will provide funds for future acquisitions.         

   The  CompanyAEs  loan  agreements  impose  limitations  on  certain
restricted payments, which                                                      
include  dividends.    The   ability  to make such restricted  payments  is     
dependent upon either earnings or                                               
proceeds from the issuance of new capital  stock.   As  of  March  27, 1996     
dividends on the Preferred                                                      
Stock  were  current;  however,  based on current limitations on restricted     
payments, payment of the                                                        
dividend scheduled to become due on  March 31, 1996  will not be made until     
such payments are                                                               
permitted.  As more fully explained in  Note 7 to the financial statements,     
the dividend rate is increased                                                  
if dividend payments by Holdings are not made within specific time periods.     

   Consummation  of  the Change of Control  Transaction  described  in
<o^>Business--Recent                                                            
Developments<o"> will constitute  a  <o^>change  of  control<o">  under the     
Indenture governing the Senior Notes.  In                                       
accordance  with  the  terms  and  conditions  of  the  Indenture,  upon  a     
<o^>change of control<o">, each holder of                                       
Senior Notes will have the right to require the Company (within a 30-60 day     
period, as determined by                                                        
the  Company,  following such a change of control) to repurchase all or any     
part of such holderAEs Senior                                                   
Notes at a repurchase  price  in cash equal to 101% of the principal amount     
of the Senior Notes being                                                       
repurchased  (plus accrued and unpaid  interest,  if  any).   In  light  of     
current market conditions, the                                                  
Company does not  anticipate  that  a  significant  number  of  Senior Note     
holders will exercise their                                                     
repurchase   rights.   To  the  extent  that  such  repurchase  rights  are     
exercised, the Company expects to                                               
finance  the aggregate  repurchase  amount  through  borrowings  under  the     
revolving line of credit portion                                                
of its Senior  Secured  Credit  Facility,  and/or, to the extent necessary,     
through additional debt financing                                               
on a pari passu basis with the Senior Notes.                                    

INFLATION                                                                       

   While inflation can have a significant impact on food, paper, labor
and other operating costs,                                                      
the Company has historically been able to minimize  the effect of inflation     
through periodic price                                                          
increases,  and  believes it will be able to offset future  inflation  with     
price increases, if necessary.                                                  

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             

   The Index  to  Financial Statements attached hereto is set forth in
Item 14.                                                                        

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING             
AND FINANCIAL DISCLOSURE                                                        

   This item is omitted  as  there  have  been  no  disagreements with
respect to accounting and                                                       
financial disclosure.                                                           

PART III                                                        

ITEM 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT              

DIRECTORS AND EXECUTIVE OFFICERS                                                

The Company's Directors and executive officers are:             

NAME                                                                            
AGE                                                                             
POSITION WITH THE COMPANY                                                       

Alan Vituli                                                                     
54                                                                              
Chairman of the Board, Chief Executive Officer                                  

Daniel T. Accordino                                                             
45                                                                              
President, Chief Operating Officer and Director                                 

Richard V. Cross                                                                
60                                                                              
Executive Vice President - Finance, Treasurer and                               
Director                                                                

M. Bruce Adelberg                                                               
59                                                                              
Director                                                                        

Franklin Glasgall                                                               
63                                                                              
Director                                                                        

Joseph A. Zirkman                                                               
35                                                                              
Vice President, General Counsel and Secretary                                   

Richard H. Liem                                                                 
42                                                                              
Vice President--Financial Operations                                            

Paul P. Drotar                                                                  
49                                                                              
Vice President--Corporate Controller                                            

David R. Smith                                                                  
46                                                                              
Vice President--Regional Director                                               

James E. Tunnessen                                                              
41                                                                              
Vice President--Regional Director                                               

Michael A. Biviano                                                              
39                                                                              
Vice President--Regional Director                                               

   The  Board  of  Directors  consists  of five board members.   Peter
Weidhorn resigned from the                                                      
Board on November 29, 1995; Mr. Weidhorn has not  yet  been replaced on the     
Board.  Upon                                                                    
consummation of the Change of Control Transaction, it is  anticipated  that     
the Board of Directors of the                                                   
Company  will be reconstituted but that Alan Vituli and Daniel T. Accordino     
will continue to serve the                                                      
Company as Directors and in their present positions.                            

   Certain  biographical  information  regarding each current Director
and executive officer of the                                                    
Company is set forth below:                                                     

   Mr. Vituli has been Chairman of the Board of Carrols since 1986 and
Chief Executive Officer                                                         
since  March  1992.  He is also a director and Chairman  of  the  Board  of     
Holdings. Mr. Vituli is also                                                    
general partner of Morgan  Ventures  III,  a  limited  partnership ("Morgan     
Ventures"), which is the record                                                 
owner  of  1,100,000  shares  of  voting  common  stock  of  Holdings.  See     
"Principal Stockholders."                                                       
Between  1983  and  1985,  Mr. Vituli was employed by Smith Barney,  Harris     
Upham & Co., Inc. as a                                                          
senior vice president responsible for real estate  transactions. For the 17     
years prior to joining Smith                                                    
Barney, Mr. Vituli was associated  with  the  accounting  firm of Coopers &     
Lybrand, first as an employee                                                   
and the last ten years as a partner. Among the positions held by Mr. Vituli     
at Coopers & Lybrand was                                                        
national director of mergers and acquisitions. Prior to joining  Coopers  &     
Lybrand, Mr. Vituli was                                                         
employed  in  a  family  owned  restaurant  business.  Mr. Vituli currently     
serves as a Director on the Board                                               
of Directors of Pollo Tropical, Inc.                                            

   Mr. Accordino has been President, Chief  Operating  Officer  and  a
Director of Carrols since                                                       
February    1993.    Prior   thereto,   he   served   as   Executive   Vice     
President--Operations of Carrols from                                           
December 1986 and as Senior  Vice  President  from April 1984. He is also a     
Director of Holdings. From                                                      
1979  to  April  1984  he  was  Vice President responsible  for  restaurant     
operations of the Company,                                                      
having previously served as the Company's  Assistant Director of Restaurant     
Operations. Mr.                                                                 
Accordino has been employed by the Company for over 20 years.                   

   Mr. Cross is a Director and Executive  Vice  President--Finance and
Treasurer of Carrols. He                                                        
has  served as a Director since 1981, Executive Vice President  since  1986     
and Treasurer from 1981.                                                        
From 1984  through 1986, Mr. Cross was Senior Vice President of Carrols. He     
is also a Director of                                                           
Holdings. Prior  to  1984,  Mr.  Cross was Vice President and Controller of     
Carrols for more than five                                                      
years. Mr. Cross has been employed by the Company for over 20  years.           

   Mr. Adelberg was appointed  a Director of Carrols in December 1992.
He is also a Director of                                                        
Holdings. Since April 1989, Mr. Adelberg  has  been  the  principal  of MBA     
Research Group, an                                                              
institutional  investment  research group. For the 11 years preceding April     
1989, he was employed by                                                        
Merrill Lynch, Pierce, Fenner & Smith, an investment banking firm, where he     
was vice president of                                                           
New York institutional sales.   Mr.  Adelberg currently serves on the Board     
of Directors of Comstock                                                        
Partners Strategy Fund, Inc. and Pallet Management System, Inc.                 

   Mr. Glasgall was appointed a Director  of  Carrols  Corporation  in
December 1992. He is also a                                                     
Director  of Holdings. Mr. Glasgall has been a real estate consultant since     
1991. From 1974 through                                                         
1990 he was  vice president--real estate for Restaurant Associates Corp., a     
national restaurant, food                                                       
service and retail chain.                                                       

   Mr. Zirkman became Vice President and General Counsel of Carrols in
January 1993. He was                                                            
appointed Secretary  of  the  Company  in  February  1993. Prior to joining     
Carrols, Mr. Zirkman was an                                                     
associate with the New York City law firm of Baer Marks & Upham for six and     
one-half years.                                                                 

   Mr. Liem became Vice President--Financial Operations  in  May 1994.
Prior  to joining Carrols                                                       
Mr.  Liem  was  a  Senior  Audit  Manager with the accounting firm of Price     
Waterhouse.  Mr. Liem was                                                       
with Price Waterhouse for ten and one-half years.                               

   Mr. Drotar has been Vice President--Corporate Controller of Carrols
since April 1984. He was                                                        
Assistant Controller from June 1982  through  April  1984, having served as     
Manager of Restaurant                                                           
Accounting from December 1980 to June 1982. Mr. Drotar has been employed by     
the Company for                                                                 
over 20 years.                                                                  

   Mr. Smith is Vice President--Regional Director  of  Carrols. He has
been Regional Director of                                                       
Operations  since 1984, having served as District Supervisor from  1975  to     
1984. Mr. Smith has been                                                        
employed by the Company for over 20  years.                                     

   Mr. Tunnessen  is  Vice President--Regional Director of Carrols. He
has been Regional Director                                                      
of Operations since August 1988,  having served as District Supervisor from     
1979 to August 1988. Mr.                                                        
Tunnessen has been employed by the Company for over 20 years.                   

   Mr. Biviano is Vice President--Regional Director of Carrols. He has
been Regional Director of                                                       
Operations since October 1989, having  served  as  District Supervisor from     
December 1983 to October                                                        
1989. Mr. Biviano has been employed by the Company for over 20 years.           

   The Board of Directors currently has four committees: the Executive
Committee, of which                                                             
Messrs. Vituli, Accordino and Cross are members; the  Finance Committee, of     
which Messrs. Vituli and                                                        
Cross  are members; the Compensation Committee, of which  Messrs.  Adelberg     
and Glasgall are                                                                
members;  and  the  Audit Committee, of which Messrs. Adelberg and Glasgall     
are members.                                                                    

   All  Directors  hold  office  until  the  next  annual  meeting  of
stockholders or until their successors                                          
have been elected  and qualified. The executive officers of the Company are     
chosen by the Board and                                                         
serve at its discretion.                                                        

   All non-employee  Directors  of the Company receive a fee of $6,000
per annum and also                                                              
receive $500 for each Board of Directors meeting attended and $500 for each     
committee meeting                                                               
attended. All Directors are reimbursed for all reasonable expenses incurred     
by them in acting as                                                            
Directors, including as members of any committee of the Board of Directors.     

   As  permitted  under  the Delaware  General  Corporation  Law,  the
Company's Restated                                                              
Certificate of Incorporation provides  that  a Director of the Company will     
not be personally liable to the                                                 
Company or its stockholders for monetary damages  for breach of a fiduciary     
duty owed to the                                                                
Company or its stockholders. By its terms and in accordance  with  the laws     
of the State of Delaware,                                                       
however,  this  provision  does  not eliminate or limit the liability of  a     
Director of the Company (i) for any                                             
breach  of  the  Director's  duty  of  loyalty   to  the  Company  or   its     
stockholders, (ii) for an act or omission                                       
committed  in bad faith or involving intentional misconduct  or  a  knowing     
violation of law, (iii) for any                                                 
transaction from which the Director derived an improper personal benefit or     
(iv) for an improper                                                            
declaration of dividends or purchase of the Company's securities.               

   The  Company's  Restated Certificate of Incorporation provides that
the Company shall                                                               
indemnify its Directors and  officers  to  the  fullest extent permitted by     
Delaware law.                                                                   

   All  of  the  holders of the voting common stock  of  Holdings  are
subject to the terms of a                                                       
stockholders  agreement   dated   December   22,  1986  (the  "Stockholders     
Agreement"). The Stockholders                                                   
Agreement requires the Board of Directors of Holdings  to  consist  of  six     
directors, four of whom are                                                     
designated  by Morgan Ventures and two of whom are designated by a majority     
of the shares held by a                                                         
group of named  individuals, including Messrs. Accordino, Cross, Drotar and     
Smith.  Upon                                                                    
consummation of the  Change  of  Control Transaction, the provisions of the     
StockholdersAE Agreement                                                        
will cease to apply.                                                            

ITEM 11.        EXECUTIVE COMPENSATION                                          

   The following tables set forth  certain  information  for the years
ended December 31, 1995,                                                        
1994 and 1993 for the Chief Executive Officer and the next four most highly     
compensated                                                                     
executive officers of the Company who were serving as executive officers at     
December 31, 1995                                                               
whose annual compensation exceeded $100,000.                                    

SUMMARY COMPENSATION TABLE                                                      

ANNUAL COMPENSATION                                                             

LONG TERM                                                                 
COMPENSATION                                                                    
AWARDS                                                                          

NAME AND PRINCIPAL                                                              
POSITION                                                                        

YEAR                                                                            

SALARY                                                                          

BONUS                                                                           
NUMBER OF                                                                       
SECURITIES                                                                      
UNDERLYING                                                                      
OPTIONS                                                                         

Alan Vituli                                                                     
Chairman of the Board                                                           

1995                                                                            

$352,632                                                                        

$245,000                                                                        

20,000                                                                          

and Chief Executive                                                             
1994                                                                            
300,430                                                                         
81,000                                                                          
----------                                                                      

Officer                                                                         
1993                                                                            
292,118                                                                         
----------                                                                      
100,000                                                                         

Daniel T. Accordino                                                             

1995                                                                            

250,751                                                                         

150,322                                                                         

10,000                                                                          

President, Chief                                                                
1994                                                                            
226,216                                                                         
60,891                                                                          
----------                                                                      

Operating Officer                                                               
1993                                                                            
206,516                                                                         
----------                                                                      
25,000                                                                          

and Director                                                                    

Richard V. Cross                                                                
1995                                                                            
161,522                                                                         
80,262                                                                          
5,000                                                                           

Executive Vice                                                                  
1994                                                                            
156,378                                                                         
42,106                                                                          
--------                                                                        

President--Finance,                                                             
1993                                                                            
155,936                                                                         
----------                                                                      
8,000                                                                           

Treasurer and Director                                                          

Joseph A. Zirkman                                                               

1995                                                                            

105,249                                                                         

41,995                                                                          

3,000                                                                           

Vice President,                                                                 
1994                                                                            
95,890                                                                          
24,303                                                                          
--------                                                                        

General Counsel and                                                             
Secretary                                                                       
1993                                                                            
85,711                                                                          
15,000                                                                          
5,000                                                                           

Richard H. Liem                                                                 
1995                                                                            
93,092                                                                          
37,153                                                                          
3,000                                                                           

Vice President ,                                                                
1994                                                                            
57,552                                                                          
15,423                                                                          
10,000                                                                          

Financial Operations                                                            
1993                                                                            
--------                                                                        
--------                                                                        
--------                                                                        

OPTIONS/SAR GRANTS IN YEAR ENDED DECEMBER 31, 1995                            

POTENTIAL REALIZABLE                                  

                                                        · Enlarge/Download Table

                                                                                            POTENTIAL REALIZABLE      
                                                                                            VALUE   AT ASSUMED        
                                                                                            ANNUAL RATE OF            
                                                                                            STOCK PRICE               
                                                                                            APPRECIATION              
                               INDIVIDUAL GRANTS                                            FOR OPTION TERM(a)        
____________________________________________________________________________________        __________________________

                   NUMBER OF       % OF TOTAL                                                                         
                   SECURITIES      OPTIONS/SAR                                                                        
                   UNDERLYING      GRANTED TO      EXERCISE OR                                                        
                   OPTIONS/SAR     EMPLOYEES IN    BASE PRICE      EXPIRATION                                         
NAME               GRANTED(b)      1995            ($/SHARE)       DATE                 5%        10%                 

                                                                                                                      
Alan Vituli           20,000          20.8%          $6.12         March 31, 2005  $76,976     $195,074               
Daniel T. Accordino   10,000          10.4%           6.12         March 31, 2005   38,488       97,537               
Richard V. Cross       5,000           5.2%           6.12         March 31, 2005   19,244       48,768               
Joseph A. Zirkman      3,000           3.1%           6.12         March 31, 2005   11,546       29,261               
Richard H. Liem        3,000           3.1%           6.12         March 31, 2005   11,546       29,261               

   (a)  Potential  realizable value is based on an assumption that the
price of HoldingsAE Common                                                      
shares appreciate at 5% and  10%  annually  (compounded)  from  the date of     
grant until the end of                                                          
the  ten  year  option  term.  These calculations are based on requirements     
promulgated by the                                                              
Securities  and  Exchange Commission  and  are  not  intended  to  forecast     
possible future appreciation                                                    
of the stock price.                                                             

   (b)  Options  set forth in this table were granted under HoldingsAE
1993 Employee Stock                                                             
Option and Award Plan administered  by  HoldingsAE  Compensation  Committee     
which is comprised                                                              
entirely  of  members  of  the Board of Directors who are not employees  of     
Holdings or the Company.                                                        
The Compensation Committee determines  the  number of options to be granted     
to each individual,                                                             
and members of the Compensation Committee are  not  eligible to participate     
in the Plan.  Pursuant                                                          
to the terms of the Award Agreement under which the options  set  forth  on     
the table have been                                                             
granted,  such options vest at the rate of 20% per year commencing on April     
1, 1996 and such                                                                
vesting is  contingent  upon  continued  employment  with  Holdings  or the     
Company.  Upon termination                                                      
of  employment  with the Company, only those options which have then vested     
may be exercised.                                                               
Such vested options  must  generally  be  exercised  within three months of     
termination of                                                                  
employment.                                                                     

DESCRIPTION OF PLANS                                                            

   Employee  Savings  Plan.  In  1979, Carrols adopted  two  identical
savings plans, qualified as                                                     
profit-sharing plans, for its salaried  employees, permitting participating     
employees to make annual                                                        
contributions. On December 31, 1994, Carrols  merged  the  two plans into a     
single plan, the Carrols                                                        
Corporation  Corporate  Employee  Savings  Plan  (the "Savings Plan").   In     
accordance with the                                                             
Savings  Plan, Carrols matches up to $1,060 of an employee's  contributions     
by contributing $0.50                                                           
for each dollar  contributed by the employee. Employees are fully vested in     
their own contributions;                                                        
employees become vested  in  Carrols' contributions beginning in the fourth     
year of service, and are                                                        
fully vested after seven years of service or upon retirement at age 65 with     
five years' service, death,                                                     
permanent or total disability or termination. Benefits may be paid out upon     
the occurrence of any of                                                        
the foregoing events in a single  cash  lump  sum, in periodic installments     
over not more than 15                                                           
years  or in the form of an annuity. The employee's  contributions  may  be     
withdrawn at any time,                                                          
subject   to   restrictions  on  future  contributions.  Carrols'  matching     
contributions may be withdrawn                                                  
under certain conditions  of  financial necessity or hardship as defined in     
the Savings Plan.                                                               

   Bonus Plans. Carrols has  cash  bonus plans designed to promote and
reward excellent                                                                
performance by providing employees with incentive  compensation. Key senior     
management                                                                      
executives of each operating division can be eligible  for bonuses equal to     
varying percentages of                                                          
their  respective  annual  salaries  determined by the performance  of  the     
Company and the division.                                                       

   1993 Employee Stock Option and  Award  Plan.  On December 14, 1993,
Holdings and its                                                                
shareholders adopted the 1993 Employee Stock Option  and  Award  Plan  (the     
"1993 Option Plan")                                                             
pursuant  to which Holdings may grant "Incentive Stock Options" (as defined     
under Section 422 of                                                            
the  Internal   Revenue   Code),   non-statutory  stock  options  or  stock     
appreciation rights (the foregoing                                              
collectively   "Awards")   to   certain   employees,   including   district     
supervisors, division heads and                                                 
officers  of  Holdings  and its subsidiaries.   The  1993  Option  Plan  is     
designed to advance the interests                                               
of Holdings and the Company by providing an additional incentive to attract     
and retain qualified and                                                        
competent persons through  the  encouragement  of  stock ownership or stock     
appreciation rights in                                                          
Holdings.                                                                       

   The  1993 Option Plan permits Holdings' Compensation  Committee  to
grant, from time to                                                             
time, options to purchase an aggregate of up to 750,000 shares of Holdings,     
including, without                                                              
limitation, the  amount  of  shares  in respect to which stock appreciation     
rights are granted.  The                                                        
vesting periods for awards and the expiration  dates  for exercisability of     
Awards granted under the                                                        
1993 Option Plan shall be determined by the Compensation  Committee  of the     
Board of Directors;                                                             
however,  all  shares  granted  under  options must be purchased within ten     
years from the date of the                                                      
grant.  The Compensation Committee is authorized to grant options under the     
1993 Option Plan to                                                             
all  eligible employees of Holdings and the  Company,  including  executive     
officers and directors                                                          
(other  than  outside  Directors).   The  1993  Option  Plan  provides that     
Incentive Stock Options shall                                                   
not  be  granted  to  any  person  owning  directly  or indirectly (through     
attribution under Section 424(d)                                                
of  the Internal Revenue Code) at the date of the grant,  stock  possessing     
more than 10% of the total                                                      
combined  voting  power  of  all classes of stock of Holdings as defined in     
Internal Revenue Code                                                           
Section 422 (or of any subsidiary  of  Holdings [each as defined in Section     
424 of the Internal                                                             
Revenue Code] at the date of grant) unless  the option price of such option     
is at least 110% of the                                                         
fair market value of the shares subject to such  option  on  the  date  the     
option is granted, and such                                                     
option  by  its terms is not exercisable after the expiration of five years     
from the date such option is                                                    
granted.   As  of  March  15,  1996,  options to purchase 225,400 shares of     
common stock at $4.00 per                                                       
share  and  options  to  purchase 93,400 shares  at  $6.12  per  share  are     
outstanding under the 1993                                                      
Option Plan.  The option price  per share is determined by the Compensation     
Committee of the                                                                
Board of Directors; however, in no  event  shall the option price per share     
of any option intended to                                                       
qualify as an Incentive Stock Option be less  than the fair market value of     
the common stock on the                                                         
date such option is granted.                                                    

   The Company in its sole discretion may  lend  money to an optionee,
guarantee a loan from                                                           
a third party to an optionee, or otherwise assist an optionee to obtain the     
cash necessary to                                                               
exercise all or a portion of an option granted hereunder  or to pay any tax     
liability of the optionee                                                       
attributable to such exercise.  If the exercise price is paid  in  whole or     
part with the optionee's                                                        
promissory  note,  such  note  shall  (i)  provide for full recourse to the     
maker, (ii) be collateralized by the                                            
pledge  of the Shares that the optionee purchases  upon  exercise  of  such     
option, (iii) bear interest at                                                  
the prime  rate  of  the  Company's principal lender or in its absence, the     
prime rate charged by                                                           
Citibank, N.A., and (iv) contain  such other terms as the Board in its sole     
discretion shall reasonably                                                     
require.  If stock appreciation rights are granted, upon vesting of a stock     
appreciation right, the                                                         
employee may elect in writing during  a  30  day  period  designated by the     
Committee each year to                                                          
receive  a  distribution  of  the value of a portion or all of  his  vested     
interest. Distribution to an                                                    
employee of stock appreciation  rights  amounts  shall be made in cash in a     
lump sum or by interest                                                         
bearing  notes  payable over no more than five years  commencing  within  a     
reasonable time after the                                                       
Committee's receipt  of  the  optionee's election to receive such payments.     
Awards may not be                                                               
transferred by the optionee otherwise  than  by will or the laws of descent     
and distribution, and each                                                      
option  or  stock  appreciation  right  shall  be exercisable,  during  the     
optionee's lifetime only by the                                                 
optionee.                                                                       

   Upon consummation of the Change of Control Transaction, the vesting
and exercisability of                                                           
all Awards and options (except for those granted  to  Alan  Vituli) granted     
under the 1993 Option Plan                                                      
will be accelerated and all such Awards and options (except those  held  by     
Alan Vituli) will be sold to                                                    
the Buyer.  The options held by Alan Vituli will be sold to the Buyer on or     
about January 6, 1997.  In                                                      
addition, the foregoing plan will be terminated.                                

   It  is  intended  that  a  new  stock  option  plan will be adopted
promptly after the consummation                                                 
of  the  Change of Control Transaction.  See <o^>Employment  Agreements<o">     
below.                                                                          

   1994  Directors'  Stock  Option  Plan.   On  April  1, 1994 Carrols
Holdings Corporation adopted                                                    
the  1994  Directors'  Stock  Option  Plan  (the "Directors' Option  Plan")     
pursuant to which Carrols                                                       
Holdings Corporation may grant to each non-employee  director stock options     
to purchase common                                                              
stock of Holdings.  The Directors' Option Plan is designed  to  advance the     
interests of Holdings by                                                        
providing  an  incentive  to  attract  and  retain  qualified  non-employee     
directors of Holdings and to                                                    
foster  the  commonality  of  their  interest  with  those  of  the general     
shareholders.                                                                   

   The Directors' Option Plan permits Holdings to grant options to the
non-employee directors                                                          
to purchase an aggregate of up to 100,000 shares of Holdings common  stock.     
Under the Directors'                                                            
Option  Plan, each non-employee director received an initial grant of 5,000     
options on April 1, 1994,                                                       
and will  receive  an  additional  grant of 1,000 shares on the anniversary     
date of each year of service                                                    
as a director.  Each option granted  under the Directors' Option Plan vests     
and is exercisable equally                                                      
over a three-year period from the date  of  the grant.  The expiration date     
of all options is ten years                                                     
from the date of grant of such option.  The exercise  price  of the options     
granted under the Directors'                                                    
Option Plan is the "fair market value" (as defined in the Directors' Option     
Plan) of the share                                                              
underlying such option at the date such option is granted.  As of March 15,     
1996, options to                                                                
purchase  10,000  shares of  stock at $4.00 per share and 2,000  shares  at     
$6.12 per share have                                                            
been granted and are outstanding under the Directors' Option Plan.              

   Upon consummation of the Change of Control Transaction, the vesting
and exercisability of                                                           
all options granted  under  the DirectorsAE Option Plan will be accelerated     
and all such options will be                                                    
sold to the Buyer.  In addition, the foregoing plan will be terminated.         

   Employment Agreements.   In  January 1995, the Company entered into
an employment                                                                   
agreement with Alan Vituli to serve as  the  Company's  Chairman  and Chief     
Executive Officer.  The                                                         
employment  agreement is for an initial term of three years, commencing  on     
January 1, 1995 and                                                             
expiring on December  31,  1997  and  automatically  renews  for successive     
one-year terms unless                                                           
terminated by the Company or Mr. Vituli upon written notice to  be provided     
not less than 90 days                                                           
before  a scheduled expiration date.  Pursuant to the employment agreement,     
Mr. Vituli will receive                                                         
a base salary  of  $350,000  for  the  first year of the term, which amount     
shall be subject to a                                                           
consumer price index increase for the second   and third years of the term.     
Beginning in 1998,  the                                                         
base salary for each year thereafter will be increased  in  accordance with     
the recommendation of                                                           
the  Compensation  Committee  of the Board of Directors.  Pursuant  to  the     
employment agreement,                                                           
Mr. Vituli will participate in  the Executive Bonus Plan of the Company and     
the Employee Stock                                                              
Option and Award Plan.  The employment  agreement  also  provides  that the     
Company will provide a                                                          
split-dollar  life  insurance policy on the life of Mr. Vituli providing  a     
death benefit of $1,500,000                                                     
payable to an irrevocable trust designated by Mr. Vituli.                       

   In January 1995,  the  Company entered into an employment agreement
with Daniel T.                                                                  
Accordino to serve as the Company's  President and Chief Operating Officer.     
The employment                                                                  
agreement is for an initial term of three  years,  commencing on January 1,     
1995 and expiring on                                                            
December  31, 1997 and automatically renews for successive  one-year  terms     
unless terminated by                                                            
the Company  or  Mr.  Accordino upon written notice to be provided not less     
than 90 days before a                                                           
scheduled expiration date.   Pursuant  to  the  employment  agreement,  Mr.     
Accordino will receive a                                                        
base  salary of $250,000 for the first year of the term, which amount shall     
be subject to a consumer                                                        
price index increase for the second and third years of the term.  Beginning     
in 1998, the base salary                                                        
for  each  year  thereafter  will  be  increased  in  accordance  with  the     
recommendation of the                                                           
Compensation  Committee  of  the  Board  of  Directors.   Pursuant  to  the     
employment agreement, Mr.                                                       
Accordino  will  participate in the Executive Bonus Plan of the Company and     
the Employee Stock                                                              
Option and Award Plan.   The  employment  agreement  also provides that the     
Company will provide a                                                          
split-dollar life insurance policy on the life of Mr. Accordino providing a     
death benefit of $1,000,000                                                     
payable to an irrevocable trust designated by Mr. Accordino.                    

   Upon consummation of the Charge of Control Transaction, the Company
will enter into                                                                 
Amended and Restated Employment Agreements with Alan Vituli  and  Daniel T.     
Accordino,                                                                      
respectively,  upon  terms  and  conditions  substantially similar to their     
current agreements except that,                                                 
in lieu of the current stock option plans maintained  by  Holdings  (all of     
which will be terminated) a                                                     
new stock option plan will be developed pursuant to which employees of  the     
Company will be                                                                 
eligible  to  be awarded options to purchase up to 9.09% of the outstanding     
common stock of                                                                 
Holdings on a fully-diluted  basis.   Messrs.  Vituli  and  Accordino  will     
receive 36% and 24%,                                                            
respectively, of the options available in such pool.                            

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND             
MANAGEMENT                                                                      

PRINCIPAL STOCKHOLDERS                                                          

   The  following tables set forth the number and percentage of shares
of voting common stock                                                          
of the Company and of Holdings beneficially owned, as of March 15, 1995, by     
(i) each Director of                                                            
the Company who  owns  shares  of  such  voting  common  stock,  (ii)  each     
executive officer of the                                                        
Company included in the Summary Compensation Table above, (iii) all persons     
known by the                                                                    
Company  to  be the beneficial owners of more than 5% of the shares of such     
voting common stock                                                             
and (iv) all executive officers and Directors of the Company as a group.        

CARROLS' COMMON STOCK                                           

NAME OF  NUMBER OF SHARES       PERCENT OF                                      
BENEFICIAL OWNER        BENEFICIALLY OWNED        SHARES                        

Carrols Holdings Corporation    10      100%                                    
968 James Street                                                                
Syracuse, New York 13203                                                        

                                              HOLDINGS'  COMMON  STOCK
(a)                                                                             

                        NUMBER OF SHARES
                                          BENEFICIALLY        PERCENT OF
NAME OF BENEFICIAL OWNER                        OWNED(b)           SHARES(b)    

Alan Vituli(c)(m)                              1,152,294            49.8%       
Alan Vituli Charitable Remainder Trust(d)        306,827            13.6        
Richard V. Cross(e)(m)                           230,190            10.1        
Daniel T. Accordino(f)(m)                        240,048            10.5        
Joseph A. Zirkman(g)                               8,600              .4        
Richard H. Liem(h)                                 2,600              .1        
Citicorp Venture Capital, Ltd.(i)                959,388            30.6        
Deemer Corp (j)                                  488,111            17.7        
World Equity Partners, L.P.(k)                   234,668             9.4        
M. Bruce Adelberg(l)                               3,667              .2        
Franklin Glasgall(l)                               3,667              .2        
Directors and executive officers                                                
of Carrols as a group                                                         
(11 persons)(m)(n)                            1,717,723            72.9       

   (a)   Upon  consummation  of the Change of Control Transaction, the
Buyer will acquire                                                              
beneficial ownership of substantially  all of the outstanding securities of     
Holdings.                                                                       

   (b)  As used in this table, "beneficial  ownership"  means the sole
or shared power to vote, or                                                     
to direct the voting of, a security, or the sole or shared investment power     
with respect to a security                                                      
(i.e.,  the  power  to  dispose  of,  or  to  direct the disposition of,  a     
security). For purposes of this table, a                                        
person  is  deemed  as of any date to have "beneficial  ownership"  of  any     
security that such person                                                       
has the right to acquire  within 60 days after such date.  As calculated in     
this table, the percent of                                                      
shares is the percent of each beneficial owner's shares to the total shares     
of Holdings' common                                                             
stock outstanding plus the  shares to which only that person has a right to     
acquire within 60 days.                                                         

   (c)  Includes 1,100,000 shares of Holdings voting common stock held
of record by Morgan                                                             
Ventures,  over which shares Mr.  Vituli,  as  general  partner  of  Morgan     
Ventures, exercises voting and                                                  
investment power.  Of  the  shares  held  of record by Morgan Ventures, Mr.     
Vituli effectively owns                                                         
715,040  shares  through his ownership interest  in  Morgan  Ventures.  Mr.     
Vituli disclaims beneficial                                                     
ownership of all but such 384,960 shares held of record by Morgan Ventures.     
Also includes 8,294                                                             
shares of Holdings  common  stock subject to currently exercisable warrants     
and 44,000 shares of                                                            
HoldingsAE  voting common stock  subject  to  currently  exercisable  stock     
options.  The address of Mr.                                                    
Vituli is c/o  Carrols  Corporation,  968  James Street, Syracuse, New York     
13203.                                                                          

   (d)  Shares are in the name of the Alan Vituli Charitable Remainder
Trust of which the                                                              
trustee  is  Nancy Vituli and Alan Vituli is an  income  beneficiary.   The     
address of Nancy Vituli is 799                                                  
Park Avenue, New York, New York 10021.                                          

   (e)  Includes 4,200 shares of Holdings' voting common stock subject
to currently exercisable                                                        
stock options  and  1,368  shares  of  Holdings  common  stock  subject  to     
currently exercisable                                                           
warrants.   The  address of Mr. Cross is c/o Carrols Corporation, 968 James     
Street, Syracuse, New                                                           
York 13203.                                                                     

   (f)  Includes  2,426 shares of Holdings voting common stock subject
to currently exercisable                                                        
warrants and 12,000 shares  of  Holdings'  voting  common  stock subject to     
currently exercisable                                                           
stock  options.. The address of  Mr. Accordino is c/o Carrols  Corporation,     
968 James Street,                                                               
Syracuse, New York 13203.                                                       

   (g)  Includes 1,600 shares of Holdings' voting common stock subject
to currently exercisable                                                        
stock options.                                                                  

   (h)  Includes 600 shares of Holdings voting common stock subject to
currently exercisable                                                           
stock options.                                                                  

   (i)   Includes 740 shares of Holdings Class B Convertible Preferred
Stock issued to Citicorp                                                        
Venture Capital,  Ltd.,  an  affiliate  of  World Equity Partners, L.P., in     
connection with the financing of                                                
the  Acquisition which are currently convertible  into  870,588  shares  of     
Holdings' non-voting common                                                     
stock,  which are, in turn, convertible at any time into an equal number of     
shares of Holdings voting                                                       
common stock.  The  address  for Citicorp Venture Capital, Ltd. is 399 Park     
Avenue, New York, New                                                           
York 10043.                                                                     

   (j)     Includes    currently     exercisable     warrants     (the
<o^>Warrants<o">), for the purchase of 441,177                                  
shares of Holdings voting common stock at $0.97 per share and 46,934 shares     
of Holdings voting                                                              
common  stock  at  $1.00  per  share.  The  address  for Deemer Corporation     
(<o^>Deemer<o">) is 276 Fifth                                                   
Avenue, New York, New York 10001.  Holdings has the option  to purchase the     
Warrants from                                                                   
Deemer  for $5.1423 per warrant if exercised before November 1,  1997,  and     
$5.1628 if exercised                                                            
after November  1,  1997.   The option expires on November 2, 2000.  Deemer     
purchased the                                                                   
Warrants from Heller Financial,  Inc.,  on  November 2, 1995 for the sum of     
$2,500,000 and borrowed                                                         
the purchase price from Holdings which loan was  secured  by  a  collateral     
pledge of the shares of                                                         
Deemer and the Warrants.                                                        

   (k)   Includes  currently  exercisable  warrants,  issued  to World
Equity Partners, L.P., an                                                       
affiliate  of  Citicorp  Venture Capital, Ltd., for the purchase of 234,668     
shares of Holdings voting                                                       
common stock at $1.00 per  share.  The  address  for World Equity Partners,     
L.P. is 399 Park Avenue,                                                        
New York, New York 10043.                                                       

   (l)  Includes 3,667 shares of Holdings' voting common stock subject
to currently exercisable                                                        
options.                                                                        

   (m)  Morgan Ventures, Messrs. Cross and Accordino  and  certain  of
the Company's other                                                             
shareholders  have  entered  into  the  Stockholders Agreement which, among     
other things, prohibits                                                         
the transfer of the subject shares (except for certain permitted transfers)     
and grants Holdings and                                                         
certain  holders  of Holdings voting and non-voting  common  stock  certain     
rights to  acquire the                                                          
shares of a stockholder who wishes to sell shares to a third party.             

   (n)  Includes  79,332  shares  of  Holdings'  voting  common  stock
subject to currently                                                            
exercisable  options  and  12,088  shares  of  Holdings voting common stock     
subject to currently                                                            
exercisable warrants.                                                           

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                 

None                            

ITEM 14.        EXHIBITS,  FINANCIAL STATEMENT SCHEDULES,  AND  REPORTS  ON     
FORM                                                                            
8-K                                                                             

(a)     Financial Statements                    

     CARROLS CORPORATION AND SUBSIDIARIES:
Page                                  

                   Opinion        of       Independent       Certified
F-1                                   
Public Accountants              

Financial Statements:           

                   Consolidated             Balance             Sheets
F-2 to                                
F-3                                   

                   Consolidated      Statements     of      Operations
F-4                                                   

                   Consolidated       Statements        of        Cash
F-5 to                                                
Flows                           
F-6                                   

                   Notes        to        Consolidated       Financial
F-7 to                                                
Statements                      
F-17                                  

(b)     Financial Statement Schedules           

Schedule                Description                                             
Page                                  

     CARROLS CORPORATION AND SUBSIDIARIES:

II                      Valuation       and       Qualifying       Accounts     
F-18                                  

           Schedules  other  than  those  listed  are  omitted for the
reason that they are not                                                        
required,  not  applicable,  or  the required information is shown  in  the     
financial statements or notes                                                   
thereto.                                                                        

           Separate financial  statements of the Company are not filed
for the reasons that (1)                                                        
consolidated statements of the Company  and  its  consolidated subsidiaries     
are filed and (2) the                                                           
Company is primarily an operating Company and all subsidiaries  included in     
the consolidated                                                                
financial  statements  filed  are  wholly-owned,  and  indebtedness of  all     
subsidiaries included in the                                                    
consolidated financial statements to any person other than the Company does     
not exceed 5% of                                                                
the total assets as shown by the Consolidated Balance Sheet at December 31,     
1995.                                                                           

       (c)     Exhibits Required by Item 601 of Regulation S-K

EXHIBIT                                                                         
NUMBER                                                                          

DESCRIPTION                                                                     
INCORPORATION BY REFERENCE TO                                                   
THE FOLLOWING INSTRUMENTS                                                       
PREVIOUSLY FILED WITH THE                                                       
SECURITIES AND EXCHANGE                                                         
COMMISSION                                                                      

2.1                                                                             
Purchase and Sale Agreement dated                                               
February 10, 1994 between Carrols                                               
Corporation, as Purchase, and KIN                                               
Restaurant, Inc., as Seller                                                     

Exhibit 2.1 to the CompanyAEs 1994 Annual                                       
Report on Form 10-K                                                             

2.2                                                                             
Purchase and Sale Agreement dated                                               
April 18, 1994 among Carrols                                                    
Corporation, as Purchaser, and Riva                                             
Development Corporation and John                                                
Riva, as Seller                                                                 

Exhibit 2.2 to the CompanyAEs 1994 Annual                                       
Report on Form 10-K                                                             

2.3                                                                             
Purchase and Sale Agreement dated                                               
May 31, 1994 among Carrols                                                      
Corporation, as Purchaser, and                                                  
Michael P. Jones and Donald M.                                                  
Cepiel, Sr., and the corporations listed                                        
therein                                                                         

Exhibit 2.3 to the CompanyAEs 1994 Annual                                       
Report on Form 10-K                                                             

2.4                                                                             
Securities Purchase Agreement dated                                             
March 6, 1996, among Atlantic                                                   
Restaurants, Inc., Carrols Holdings                                             
Corporation, Carrols Corporation and                                            
Certain Selling Shareholders,                                                   
excluding exhibits and schedules                                                

Exhibit 2.1 to the CompanyAEs current report                                    
on Form 8-K dated March 21, 1996                                                

2.5                                                                             
Deferred Securities Purchase                                                    
Agreement dated March 6, 196 among                                              
Atlantic Restaurants, Inc., Alan Vituli                                         
and Pryor, Cashman, Sherman &                                                   
Flynn                                                                           

Exhibit 2.2 to the CompanyAEs current report                                    
on Form 8-K dated March 21, 1996                                                

3.1                                                                             
Restated Certificate of Incorporation                                           
Exhibit 3.(3)(a) to the CompanyAEs 1987                                         
Annual Report on Form 10-K                                                      

3.2                                                                             
Restated By-laws                                                                
Exhibit 3.(3)(b) to the CompanyAEs 1987                                         
Annual Report on Form 10-K                                                      

4.1                                                                             
Indenture dated as of August 17, 1993                                           
among Holdings, the Company and                                                 
Marine Midland Bank, N.A.                                                       
Exhibit 4.1 to Amendment No. 3 to the                                           
CompanyAEs Registration Statement on Form                                       
S-1 (Number 3365100) filed August 10,                                           
1993                                                                            

EXHIBIT                                                                         
NUMBER                                                                          

DESCRIPTION                                                                     
INCORPORATION BY REFERENCE TO                                                   
THE FOLLOWING INSTRUMENTS                                                       
PREVIOUSLY FILED WITH THE                                                       
SECURITIES AND EXCHANGE                                                         
COMMISSION                                                                      

10.1                                                                            
First Amended and Restated Loan                                                 
Security and Preferred Stock                                                    
Purchase Agreement by and among                                                 
Carrols Merger Corporation and                                                  
Carrols Holdings Corporation, as                                                
<o^>Borrower<o"> and Heller Financial, Inc.,                                    
as <o^>Lender<o"> dated December 22, 1986                                       

Exhibit 10.1 to the CompanyAEs 1987 Annual                                      
Report on Form 10-K                                                             

10.2                                                                            
Form of Stockholders Agreement by                                               
and among Carrols Holdings                                                      
Corporation, Morgan Ventures Limited                                            
Partnership and certain Shareholders                                            

Exhibit 10.2 to the CompanyAEs 1987 Annual                                      
Report on Form 10-K                                                             

10.3                                                                            
Second Amended and Restated Loan                                                
and Security Agreement by and                                                   
among Carrols Corporation and                                                   
Carrols Holdings Corporation, as                                                
<o^>Borrower<o"> and Heller Financial, Inc.,                                    
as <o^>Lender<o"> dated as of September                                         
15, 1992                                                                        

Exhibit 10.15 to the CompanyAEs 1992                                            
Annual Report on Form 10-K                                                      

10.4                                                                            
Senior Subordinated Credit                                                      
Agreement dated as of September 15,                                             
1992 between Carrols Corporation,                                               
Carrols Holdings Corporation and                                                
World Subordinated Debt Partners,                                               
L.P.                                                                            

Exhibit 10.17 to the CompanyAEs Annual                                          
Report on Form 10-K                                                             

10.5                                                                            
Third Amended and Restated Loan                                                 
and Security Agreement by, and                                                  
among Carrols Corporation and                                                   
Carrols Holdings Corporation, as                                                
<o^>Borrower<o"> and Heller Financial, Inc.,                                    
as <o^>Lender<o"> dated as of August 9,                                         
1993                                                                            

Exhibit 10.19 to Amendment No. 2 to the                                         
CompanyAEs Form S-1 Registration                                                
Statement filed on August 4, 1993                                               

EXHIBIT                                                                         
NUMBER                                                                          

DESCRIPTION                                                                     
INCORPORATION BY REFERENCE TO                                                   
THE FOLLOWING INSTRUMENTS                                                       
PREVIOUSLY FILED WITH THE                                                       
SECURITIES AND EXCHANGE                                                         
COMMISSION                                                                      

10.6                                                                            
First Amendment to Third Amended                                                
and Restated Loan and Security                                                  
Agreement by and among Carrols                                                  
Corporation and Carrols Holdings                                                
Corporation, as Borrower<o"> and Heller                                         
Financial, Inc., as <o^>Lender<o"> dated                                        
October 27, 1993                                                                

The CompanyAEs 1993 Annual Report on                                            
Form 10-K                                                                       

10.7                                                                            
Second Amendment to Third                                                       
Amended and Restated Loan and                                                   
Security Agreement by and among                                                 
Carrols Corporation and Carrols                                                 
Holdings Corporation, as <o^>Borrower<o">                                       
and Heller Financial, Inc., as <o^>Lender<o">                                   
dated March 11, 1994                                                            

The CompanyAEs 1993 Annual Report on                                            
Form 10-K                                                                       

10.8                                                                            
Carrols Holdings Corporation 1993                                               
Employee Stock Option and Award                                                 
Plan                                                                            

The CompanyAEs 1993 Annual Report on                                            
Form 10-K                                                                       

10.9                                                                            
Third Amendment to Third Amended                                                
and Restated Loan and Security                                                  
Agreement among Carrols Holdings                                                
Corporation, Carrols Corporation and                                            
Heller Financial, Inc., dated May 2,                                            
1994                                                                            

Exhibit 10.9 to the CompanyAEs 1994 Annual                                      
Report on Form 10-K                                                             

10.10                                                                           
Fourth Amendment to Third Amended                                               
and Restated Loan and Security                                                  
Agreement among Carrols Holdings                                                
Corporation, Carrols Corporation and                                            
Heller Financial, Inc., dated December                                          
20, 1994                                                                        

Exhibit 10.10 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.11                                                                           
Supply Agreement between                                                        
ProSource Services Corporation and                                              
Carrols Corporation dated April 1,                                              
1994                                                                            

Exhibit 10.11 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

EXHIBIT                                                                         
NUMBER                                                                          

DESCRIPTION                                                                     
INCORPORATION BY REFERENCE TO                                                   
THE FOLLOWING INSTRUMENTS                                                       
PREVIOUSLY FILED WITH THE                                                       
SECURITIES AND EXCHANGE                                                         
COMMISSION                                                                      

10.12                                                                           
Taco Cabana Restaurants                                                         
Development Agreement dated June                                                
30, 1994 between T.C. Management                                                
Inc. and Carrols Corporation                                                    

Exhibit 10.12 of the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.13                                                                           
Letter Agreement dated September 9,                                             
1994 amending the Taco Cabana                                                   
Restaurants Development Agreement                                               
dated June 30, 1994                                                             

Exhibit 10.13 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.14                                                                           
Pollo Tropical Area Development                                                 
Agreement dated January 1, 1995                                                 
between Pollo Franchise, Inc. and                                               
Carrols Corporation                                                             

Exhibit 10.14 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.15                                                                           
Option Agreement for Toronto dated                                              
January 1, 1995 between Pollo                                                   
Franchise, Inc. and Carrols                                                     
Corporation                                                                     

Exhibit 10.15 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.16                                                                           
Option Agreement for Michigan dated                                             
January 1, 1995 between Pollo                                                   
Franchise, Inc. and Carrols                                                     
Corporation                                                                     

Exhibit 10.16 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.17                                                                           
Employment Agreement dated                                                      
January 1, 1995 between Carrols                                                 
Corporation and Daniel T. Accordino                                             

Exhibit 10.17 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.18                                                                           
Employment Agreement dated                                                      
January 1, 1995 between Carrols                                                 
Corporation and Alan Vituli                                                     

Exhibit 10.18 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.19                                                                           
1994 Regional Directors Bonus Plan                                              
Exhibit 10.19 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.20                                                                           
1994 Directors Stock Option Plan                                                
Exhibit 10.20 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

EXHIBIT                                                                         
NUMBER                                                                          

DESCRIPTION                                                                     
INCORPORATION BY REFERENCE TO                                                   
THE FOLLOWING INSTRUMENTS                                                       
PREVIOUSLY FILED WITH THE                                                       
SECURITIES AND EXCHANGE                                                         
COMMISSION                                                                      

10.21                                                                           
Carrols Corporation Corporate                                                   
EmployeeAEs Savings Plan dated                                                  
December 31, 1994                                                               

Exhibit 10.21 to the CompanyAEs 1994                                            
Annual Report on Form 10-K                                                      

10.22                                                                           
Escrow Agreement dated March 6,                                                 
1996, by and among Atlantic                                                     
Restaurants, Inc., Bahrain                                                      
International Bank (E.C.), Carrols                                              
Holdings Corporation, Carrols                                                   
Corporation, certain selling                                                    
shareholders and Baer Marks &                                                   
Upham L.L.P.                                                                    

Exhibit 2.3 to the CompanyAEs Current Report                                    
on Form 8-K dated March 21, 1996                                                

22.1                                                                            
Subsidiaries of the Registrant, all                                             
wholly-owned are:                                                               

Carrols J.G. Corp.                                                              
Carrols Realty Holdings Corp.                                                   
Carrols Realty I Corp.                                                          
Carrols Realty II Corp.                                                         
CPC Theater Properties, Inc.                                                    
H.N.S. Equipment & Leasing Corp.                                                
Quanta Advertising Corp.                                                        
Confectionery Square Corp.,                                                     
Jo-Ann Enterprises, Inc.                                                        

(d)     Reports on Form 8-K                     

                   No  current reports on Form 8-K were  filed  during
the CompanyAEs fiscal                                                           
quarter ended December 31, 1995.                                                

SIGNATURES                                                      

   Pursuant to the requirements  of  Section  13  or  15  (d)  of  the
Securities Exchange Act of                                                      
1934, the Registrant has duly caused this report to be signed on its behalf     
by the undersigned                                                              
thereunto duly authorized in the City of Syracuse, State of New York on the     
1st day of April, 1996                                                          

                                                       CARROLS
CORPORATION                                                                     

                                                           BY:     /s/
Alan Vituli                                                                     

                                                    Alan
Vituli, Chairman                                                                
                                                             and Chief
Executive Officer                                                               

   Pursuant  to  the  requirements  of the Securities Exchange Act  of
1934, this report has been                                                      
signed below by the following persons on behalf  of  the  Registrant and in     
the capacities and on  the                                                      
dates indicated.                                                                

SIGNATURE                                                                       
TITLE                                                                           
DATE                                                                            

/S/Alan Vituli                                                                  
(Alan Vituli)                                                                   

Director, Chairman and Chief                                                    
Executive Officer                                                               
April 1,1996                                                                    

/s/Daniel T. Accordino                                                          
(Daniel T. Accordino)                                                           

Director, President and Chief                                                   
Operating Officer                                                               
April 1,1996                                                                    

/s/ Richard V. Cross                                                            
(Richard V. Cross)                                                              
Director, Executive Vice                                                        
President - Finance, and                                                        
Treasurer (Principal Financial &                                                
Accounting Officer)                                                             

April 1,1996                                                                    

/s/ Franklin Glasgall                                                           
(Franklin Glasgall)                                                             

Director                                                                        
April 1,1996                                                                    

/s/ M. Bruce Adelberg                                                           
(M. Bruce Adelberg)                                                             
Director                                                                        
April 1,1996                                                                    

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                              

To the Board of Directors of                                                    
Carrols Corporation                                                           

We have audited the consolidated financial statements and the                   
financial statement schedules of Carrols Corporation (a wholly                  
owned subsidiary of Carrols Holdings Corporation) and Subsidiaries              
listed in Item 14(a) of this Form 10K.  These financial statements              
and financial statement schedule are the responsibility of the                  
Company's management.  Our responsibility is to express an opinion              
on these financial statements and financial statement schedule                  
based on our audits.                                                            

We conducted our audits in accordance with generally accepted                   
auditing standards.  Those standards require that we plan and                   
perform the audit to obtain reasonable assurance about whether the              
financial statements are free of material misstatement.  An audit               
includes examining, on a test basis, evidence supporting the                    
amounts and disclosures in the financial statements.  An audit also             
includes assessing the accounting principles used and significant               
estimates made by management, as well as evaluating the overall                 
financial statement presentation.  We believe that our audits                   
provide a reasonable basis for our opinion.                                     

In our opinion, the financial statements referred to above present              
fairly, in  all material respects, the consolidated financial                   
position of Carrols Corporation and Subsidiaries as of December 31,             
1995 and 1994, and the consolidated   results of their operations               
and their cash flows for each of the three years in  the period                 
ended December 31, 1995 in conformity with generally accepted                   
accounting principles.  In addition, in our opinion, the financial              
statement schedule referred to above, when considered in relation               
to the basic financial  statements taken as a whole, present                    
fairly, in all material respects, the information required to be                
included therein.                                                               

                                                          COOPERS    &
LYBRAND                                                                         
L.L.P.                                                                          

Syracuse, New York                                                              
March 1, 1996, except for the subsequent                                        
event discussed in Note 7, as to which                                      
the date is March 6, 1996                                                   

F-1                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

CONSOLIDATED BALANCE SHEETS                                                     

DECEMBER 31, 1995 AND 1994                                                      
___________                                                                     

ASSETS                                                                          
1995                                                                      
1994                                                                      

Current assets:                                                                 

Cash and cash equivalents                                                   
$ 1,463,000                                                                     
$ 1,710,000                                                                     

Trade and other receivables net of                                          
reserves of $419,000 and $424,000                                         
for 1995 and 1994, respectively                                           

688,000                                                                         

532,000                                                                         

Inventories                                                                 
2,292,000                                                                       
2,254,000                                                                       

Prepaid real estate taxes                                                   
664,000                                                                         
714,000                                                                         

Deferred income taxes                                                       
3,641,000                                                                     

Prepaid expenses and other current assets                                   
830,000                                                                 
760,000                                                                 

Total current assets                                                
9,578,000                                                                   
5,970,000                                                                   

Property and equipment, at cost:                                                

Land                                                                        
6,888,000                                                                       
6,543,000                                                                       

Buildings and improvements                                                  
15,049,000                                                                      
14,260,000                                                                      

Leasehold improvements                                                      
36,260,000                                                                      
34,854,000                                                                      

Equipment                                                                   
42,361,000                                                                      
40,141,000                                                                      

Capital leases                                                              
15,352,000                                                                    
15,558,000                                                                    

115,910,000                                                                     
111,356,000                                                                     

Less accumulated depreciation                                               

and amortization                                                          
(59,631,000)                                                                    
(53,969,000)                                                                    

Net property and equipment                                          
56,279,000                                                                    
57,387,000                                                                    

Franchise rights, at cost (less accumulated                                     
amortization of $19,648,000 and                             
$17,548,000 for 1995 and                  
1994,                                                                           

respectively)                                                               
44,582,000                                                                      
46,042,000                                                                      

Beneficial leases, at cost (less                                                
accumulated                                                                     
amortization of $7,655,000 and                                              

$7,433,000 for 1995 and 1994,                                               
respectively)                                                                   
7,705,000 0                                                                     
8,405,000                                                                       

Excess of cost over fair value of assets                                        
acquired (less accumulated                                
amortization                                                                    
of $520,000 and $462,000 for 1995 and                                       

1994, respectively)                                                         

1,791,000                                                                       
1,849,000                                                                     

Deferred income taxes                                                           
6,420,000                                                                   

Other assets                                                                    
8,709,000                                                                   
5,666,000                                                                   

$135,064,000                                                                    
$125,319,000                                                                    

The accompanying notes are an integral part of the financial                    
statements.                                                                     

F-2                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

CONSOLIDATED BALANCE SHEETS (Continued)                                         

DECEMBER 31, 1995 AND 1994                                                      
___________                                                                     

LIABILITIES AND STOCKHOLDER'S DEFICIT                                           
1995                                                                      
1994                                                                    

Current liabilities:                                                            

Current portion of long-term debt                                           
$  258,000                                                                      
$  258,000                                                                      

Current portion of capital lease                                            
obligations                                           

644,000                                                                         

615,000                                                                         

Accounts payable                                                            
8,909,000                                                                       
7,546,000                                                                       

Accrued liabilities:                                                        

Taxes                                                                   
1,426,000                                                                       
1,525,000                                                                       

Payroll and employee benefits                                           
4,000,000                                                                       
3,748,000                                                                       

Interest                                                                
4,809,000                                                                       
4,899,000                                                                       

Other                                                                   
3,134,000                                                                   
3,835,000                                                                   

Total current liabilities                                       
23,180,000                                                                    
22,426,000                                                                    

Long-term debt, net of current portion                                          
116,375,000                                                                     
120,680,000                                                                     

Capital lease obligations, net of current                                       
portion                                                                         
3,301,000                                                                       
3,966,000                                                                       

Deferred income - sale/leaseback of real                                        
estate                                                                          
1,773,000                                                                       
1,888,000                                                                       

Accrued postretirement benefits                                                 
1,424,000                                                                       
1,354,000                                                                       

Other liabilities                                                               
1,927,000                                                                   
2,213,000                                                                   

Total liabilities                                               
147,980,000                                                                     
152,527,000                                                                     

Commitments and contingencies                                                   

StockholderAEs deficit:                                                         

Common stock, par value $1; authorized                                      
1,000 shares, issued and outstanding -                                  
10 shares                                                               

10                                                                              

10                                                                              

Additional paid-in capital                                                  
840,990                                                                     
1,474,990                                                                       

Accumulated deficit                                                         
(13,757,000)                                                                    
(28,683,000)                                                                    

Total stockholderAEs deficit                                    
(12,916,000)                                                                    
(27,208,000)                                                                    

$135,064,000                                                                    
$125,319,000                                                                    

The accompanying notes are an integral part of the financial                    
statements.                                                                     

F-3                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

CONSOLIDATED STATEMENTS OF OPERATIONS                                           

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993                                    
___________                                                                     

1995                                                                            
1994                                                                            
1993                                                                            

(52 Weeks)                                                                      
(52 Weeks)                                                                      
(52 Weeks)                                                                      

Revenues:                                                                       

Sales                                                                       
$226,257,000                                                                    
$203,927,00                                                                     
0                                                                               
$171,137,000                                                                    

Other income                                                                
201,000                                                               

327,000                                                                         
497,000                                                               

226,458,000                                                                   

204,254,000                                                                     
171,634,000                                                                   

Costs and expenses:                                                             

Cost of sales                                                               
63,629,000                                                                  

57,847,000                                                                      
48,502,000                                                                  

Restaurant wages and related                                                
expenses                                                                        
65,932,000                                                                  

59,934,000                                                                      
51,739,000                                                                  

Other restaurant operating                                                  
expenses                                                                        
45,635,000                                                                  

42,390,000                                                                      
35,192,000                                                                  

Depreciation and amortization                                               
11,263,000                                                                  

11,259,000                                                                      
12,143,000                                                                  

Administrative expenses                                                     
10,635,000                                                                  

9,449,000                                                                       
8,031,000                                                                 

Advertising expense                                                         
9,764,000                                                                 

8,785,000                                                                       
7,930,000                                                                 

Interest expense                                                            
14,500,000                                                                  

14,456,000                                                                      
12,505,000                                                                  

Loss on closing restaurants and                                             
other                                                                           
_                                                         

1,800,000                                                                       
_                                                         

221,358,000                                                                   

205,920,000                                                                     
176,042,000                                                                   

Income (loss) before taxes                                              
and                                                                             

extraordinary item                                                  
5,100,000                                                                 

(1,666,000)                                                                     

(4,408,000)                                                                     

(Provision) benefit for taxes                                                   

9,826,000                                                                 

(165,000)                                                                       

Income (loss) before                                                    
extraordinary                                                                   

item                                                                

14,926,000                                                                  

(1,831,000)                                                                     

(4,408,000)                                                                     

Extraordinary loss on                                                           
extinguishment                                                                  

of debt                                                                     

(4,883,000)                                                                     

NET INCOME (LOSS)                                                       
14,926,000                                                                  

(1,831,000)                                                                     

(9,291,000)                                                                     

Accumulated deficit, beginning of                                               
year                                                                            

(28,683,000)                                                                    

(26,852,000                                                                     
)                                                                               

(17,561,000)                                                                    

ACCUMULATED DEFICIT, END OF                                             
YEAR                                                                            
$(13,757,000                                                                    
)                                                                               
$(28,683,00                                                                     
0)                                                                              
$(26,852,000                                                                    
)                                                                               

The accompanying notes are an integral part of the financial                    
statements.                                                                     

F-4                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

CONSOLIDATED STATEMENTS OF CASH FLOWS                                           

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993                                  
___________                                                                   

Increase (Decrease) in Cash and Cash Equivalents                              

1995                                                                            
1994                                                                            
1993                                                                            

(52 Weeks)                                                                      
(52 Weeks)                                                                      
(52 Weeks)                                                                      

Cash flows from operating                                                       
activities:                                                                     

Net income (loss)                                                           

$14,926,000                                                                     

$(1,831,000                                                                     
)                                                                               

$(9,291,000                                                                     
)                                                                               

Adjustments to reconcile net                                            
loss                                                                            

to net cash provided by                                                 
operating                                                                       

activities:                                                             

Depreciation and                                                    
amortization                                                                    

11,263,000                                                                      

11,259,000                                                                      

12,143,000                                                                      

Non-cash charges included                                           
in                                                                              

extraordinary loss                                              

2,245,000                                                                       

Non-cash charges included                                           

in loss on closing                                              
restaurants                                                                     

and other                                                       

1,800,000                                                                       

Deferred income taxes                                               

(10,061,000                                                                     
)                                                                               

Change in operating assets                                          
and                                                                             

liabilities:                                                    

Trade and other                                             
receivables                                                                     

(156,000)                                                                       

100,000                                                                         

(278,000)                                                                       

Inventories                                                 

(38,000)                                                                        

(203,000)                                                                       

(147,000)                                                                       

Prepaid expenses and                                        
other                                                                           

current assets                                          

(45,000)                                                                        

(256,000)                                                                       

(568,000)                                                                       

Other assets                                                

(80,000)                                                                        

(494,000)                                                                       

424,000                                                                         

Accounts payable                                            

1,363,000                                                                       

1,209,000                                                                       

963,000                                                                         

Accrued interest                                            

(90,000)                                                                        

35,000                                                                          

4,006,000                                                                       

Accrued liabilities and                                     

other                                                   

(461,000)                                                                       

2,781,000                                                                       

211,000                                                                         

Cash provided by                                    
operating                                                                       

activities                                      

16,621,000                                                                      

14,400,000                                                                      

9,708,000                                                                       

Cash flows from investing                                                       
activities:                                                                     

Capital expenditures:                                                       

Property and equipment                                                  

(4,846,000)                                                                     

(4,509,000)                                                                     

(2,303,000)                                                                     

Construction of new                                                     
restaurants                                                                     

(2,607,000)                                                                     

(1,357,000)                                                                     

(1,411,000)                                                                     

Acquisition of restaurants                                              

(516,000)                                                                       

(11,615,000                                                                     
)                                                                               

(10,464,000                                                                     
)                                                                               

Franchise fees and renewals                                             

(569,000)                                                                       

(158,000)                                                                       

(149,000)                                                                       

Notes and mortgages issued                                                  

(2,503,000)                                                                     

(613,000)                                                                       

Payments received on notes,                                                 
mortgages                                                                       

and capital subleases                                                   
receivable                                                                      

32,000                                                                          

112,000                                                                         

82,000                                                                          

Disposal of property, equipment                                             

and franchise rights                                                    

17,000                                                                          

569,000                                                                         

842,000                                                                         

Other Investments                                                           

(1,295,000)                                                                     

Net cash used for                                   

investing                                       
activities                                                                      

(12,287,000                                                                     
)                                                                               

(16,958,000                                                                     
)                                                                               

(14,016,000                                                                     
)                                                                               

The accompanying notes are an integral part of the financial                    
statements.                                                                     

Continued                                                                       

F-5                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

CONSOLIDATED STATEMENTS OF CASH FLOWS, (Continued)                            

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993                                    
___________                                                                     

Increase (Decrease) in Cash and Cash Equivalents                                

1995                                                                            
(52 Weeks)                                                                      
1994                                                                            
(52 Weeks)                                                                      
1993                                                                            
(52 Weeks)                                                                      

Cash flows from financing                                                       
activities:                                                                     

Proceeds from long-term debt                                                
$ 4,376,000                                                                     
$                                                                               
6,800,000                                                                       
$ 119,629,000                                                                   

Principal payments on long-term                                             
debt                                                                            

(7,181,000)                                                                     

(267,000)                                                                       

(4,187,000)                                                                     

Retirement of long-term debt                                                

(75,000)                                                                        

(104,090,000)                                                                   

Purchase of senior notes                                                    

(1,387,000)                                                                     

Proceeds from sale-leaseback                                                
transaction                                                                     
861,000                                                                 

672,000                                                                         

Dividends paid                                                              

(636,000)                                                                       

(3,473,000)                                                                     

(2,241,000)                                                                     

Principal payments on capital                                               
leases                                                                          

(616,000)                                                                       

(561,000)                                                                       

(564,000)                                                                       

Exercise of employee stock options                                          
2,000                                                               

Payment of other liability                                                  

(4,256,000)                                                                     

Net cash provided by (used for)                                         

financing activities                                                  

(4,581,000)                                                                     

3,096,000                                                                       
4,291,000                                                               

Increase (decrease) in cash                                             

and cash equivalents                                              

(247,000)                                                                       

538,000                                                                         

(17,000)                                                                        

Cash and cash equivalents,                                                      

beginning of year                                                           
1,710,000                                                                   

1,172,000                                                                       
1,189,000                                                               

CASH AND CASH EQUIVALENTS,                                              

END OF YEAR                                                         
$ 1,463,000                                                                     
$                                                                               
1,710,000                                                                       
$   1,172,000                                                                   

Supplemental disclosures:                                                       

Interest paid on debt                                                       
$14,590,000                                                                     
$                                                                               
14,421,000                                                                      
$   8,499,000                                                                   

Taxes paid                                                                  
$   153,000                                                                     
$                                                                               
126,000                                                                         

The accompanying notes are an integral part of the financial                    
statements.                                                                     

F-6                                                                             
CARROLS CORPORATION AND SUBSIDIARIES                              

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                        

____________                                                                    

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                 

Accounting Policies                                                             

The following is a summary of certain significant accounting                    
policies followed in the preparation of the consolidated financial              
statements.                                                                     

Basis of Consolidation                                                          

The consolidated financial statements include the accounts of                   
Carrols Corporation and its subsidiaries (the "Company").  All                  
significant intercompany transactions have been eliminated in                   
consolidation.  The Company is a wholly-owned subsidiary of Carrols             
Holdings Corporation ("Holdings").                                              

The Company operates, as franchisee, 219 fast food restaurants                  
under the trade name "Burger King" in nine Northeastern and                     
Midwestern states and one Southeastern state.  As reported by                   
Burger King Corporation ("BKC"), the Burger King system is the                  
second largest "hamburger fast food" restaurant system in the                   
United States in terms of sales and number of restaurants.  The                 
Company is the largest independent Burger King franchisee in the                
United States.                                                                  

Cash and Equivalents                                                            

The Company considers all highly liquid investments with a maturity             
of three months or less when purchased to be cash equivalents.                  

Inventories                                                                     

Inventories are stated at the lower of cost (first-in, first-out)               
or market.                                                                      

Depreciation and Amortization                                                   

Depreciation and amortization is provided on the straight-line                  
method for financial reporting purposes.  The useful lives for                  
computing depreciation and amortization are as follows:                         

Buildings and improvements              5 to 20 years           
Leasehold improvements                  Remaining life of lease 
including                                                                       
                                                   renewal  options or
life of                                                                         
asset,                                                                          
                                                   whichever        is
shorter                                                                         
Equipment                                       3 to 10 years   
Capital leases                          Remaining life of lease 

At the time of retirement or other disposition, the cost and                    
accumulated depreciation is removed from the accounts and any gain              
or loss is reflected in income.  Depreciation expense for the years             
ended December 31, 1995, 1994 and 1993 was $7,594,000, $7,404,000,              
and $7,840,000, respectively.                                                 

Franchise Rights and Beneficial Leases                                          

Fees for initial franchises and renewals paid to Burger King                    
Corporation are amortized using the straight-line method over the               
term of the agreement, generally twenty years.                                  

Acquisition costs allocated to franchise rights and beneficial                  
leases are amortized using the straight-line method, principally                
over the remaining lives of the leases including renewal options,               
but not in excess of 40 years.                                                  

F-                                                                              

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                     

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                 
(Continued)                                                                     

Excess of Cost Over Fair Value                                                  

The excess of cost over fair value of assets acquired is amortized              
on a straight-line basis over 40 years.                                         

Long-Lived Assets                                                               

The recoverability of the carrying values of property, equipment,               
franchise rights and beneficial leases is periodically evaluated                
based on current and forecasted undiscounted cash flows, future                 
market opportunities, strategic importance and estimated disposal               
values.                                                                         

Deferred Financing Costs                                                        

Financing costs incurred in obtaining long-term debt are                        
capitalized and amortized over the life of the related debt on an               
effective interest basis.                                                       

Income Taxes                                                                    

The Company and its subsidiaries are included in the consolidated               
federal income tax return of Holdings.                                          

Advertising Costs                                                               

All advertising costs are expensed as incurred.                                 

Use of Estimates                                                                

The preparation of financial statements in conformity with                      
generally accepted accounting principles requires management to                 
make estimates and assumptions that affect the reported amounts of              
assets and liabilities and disclosure of contingent assets and                  
liabilities at the date of the financial statements.  Estimates                 
also affect the reported amounts of revenues and expenses during                
the reporting period.  Actual results could differ from those                   
estimates.                                                                      

Fair Value of Financial Instruments                                             

Senior Notes - The fair value of senior notes is based on quoted                
market prices.  The recorded amount, as of December 31, 1995,                   
approximates fair value.                                                        

Revolving Line of Credit and Acquisition Loan - Rates currently                 
available to the Company for debt with similar terms and remaining              
maturities are used to estimate fair value. The recorded amount, as             
of December 31, 1995, approximates fair value.                                  

F-8                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                 
(Continued)                                                                     

Fiscal Year                                                                     

The Company uses a 52-53 week fiscal year ending on the Sunday                  
closest to December 31. The financial statements included herein                
are as of December 31, 1995 (52 weeks), January 1, 1995 (52 weeks)              
and January 2, 1994 (52 weeks).                                                 

Reclassification                                                                

Certain amounts for prior years have been reclassified to conform               
to the current year presentation.                                               

2. ACQUISITIONS                                                                 

Proforma financial information reflecting the 1993 acquisition of               
18 restaurants assuming the acquisition took place at the beginning             
of the fiscal year is as follows:                                               

1993                                                                            

Revenues                                                                        
$181,341,000                                                                

Loss before extraordinary                                                       

item                                                                          
$                                                                           
(3,703,000)                                                                     

Net loss                                                                        
$                                                                           
(8,586,000)                                                                     

This acquisition has been accounted for by the purchase method;                 
accordingly, the results of operations are included in the                      
consolidated financial statements from the acquisition date.                    

3.  INVENTORIES                                                                 

Inventories at December 31 consisted of:                                        

1995                                                                            
1994                                                                            

Raw materials (food and paper                                                   
products)                                                                       
$                                                                             
1,458,000                                                                       
$                                                                             
1,415,000                                                                       

Supplies                                                                        

834,000                                                                         

839,000                                                                         

$                                                                             
2,292,000                                                                       
$                                                                             
2,254,000                                                                       

F-9                                                                             

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

4.  LEASES                                                                      

The Company utilizes land and buildings in its operations under                 
various  lease agreements. These leases are generally for initial               
terms of twenty years and, in most cases, contain renewal options               
for two to four additional five year periods.  The rent payable                 
under such leases is generally a percentage of sales with a                     
provision for minimum rent.  In addition, most leases require                   
payment of property taxes, insurance and utilities.                             

Deferred gains of approximately $2,300,000 were recorded as a                   
result of sale/leaseback transactions and are being amortized over              
the lives of the leases. These leases are operating leases, have a              
20 year term with four five-year renewal options and provide for                
additional rent based on a percentage of sales in excess of                     
predetermined levels.  The deferred gain of $1,773,000 and                      
$1,888,000 at December 31, 1995 and 1994, respectively, is the                  
result of these transactions.                                                   

Accumulated amortization pertaining to capital leases for the years             
ended December 31, 1995 and 1994 was $8,945,000 and $8,285,000,                 
respectively.                                                                   

Minimum rent commitments under noncancelable leases as of December              
31, 1995, are as follows:                                                       

Capital                                                                         

Operating                                                                       

Years Ending:                                                                   

1996                                                                        
$                                                                         
1,088,000                                                                       
$                                                                           
9,165,000                                                                       

1997                                                                        

980,000                                                                         

9,000,000                                                                       

1998                                                                        

805,000                                                                         

8,454,000                                                                       

1999                                                                        

588,000                                                                         

7,869,000                                                                       

2000                                                                        

527,000                                                                         

7,684,000                                                                       

2001 and thereafter                                                         

2,434,000                                                                       

61,287,000                                                                      

Total minimum lease payments                                                    

6,422,000                                                                       

$103,459,00                                                                     
0                                                                               

Less amount representing interest (7.7%                                     
to 16.6%)                                                                       

2,477,000                                                                       

Total obligations under capital leases                                          

3,945,000                                                                       

Less current portion                                                        

644,000                                                                         

Long term obligations under capital leases                                      
$                                                                         
3,301,000                                                                       

F-10                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

4. LEASES (Continued)                                                           

Total rent expense on operating leases, including percentage rent               
on both operating and capital leases, for the years ended December              
31, was as follows:                                                             

1995                                                                            
1994                                                                            
1993                                                                            

Minimum rent on real property                                                   
$                                                                             
11,108,000                                                                      
$ 10,147,000                                                                  
$  8,627,000                                                                  

Additional rent based on a                                                      

percentage of sales                                                         

2,548,000                                                                       
1,917,000                                                               
1,290,000                                                               

Equipment rent                                                                  

164,000                                                                         
109,000                                                             
69,000                                                            

$                                                                             
13,820,000                                                                      
$ 12,173,000                                                                  
$  9,986,000                                                                  

5.  LONG-TERM DEBT                                                              

Long-term debt at December 31 consisted of:                                     

1995                                                                            
1994                                                                            

Collateralized:                                                                 

Revolving line of credit                                                    
$  1,700,000                                                              
$  8,622,000                                                              

Acquisition loan                                                            
5,000,000                                                           
650,000                                                         

Industrial Development Revenue                                              
bonds                                                                           
596,000                                                         
846,000                                                         

Other notes payable with                                                    

interest rates to 10%                                                     
837,000                                                         
820,000                                                         

Unsecured:                                                                      

Senior notes                                                                
108,500,000                                                             
110,000,000                                                             

116,633,000                                                             
120,938,000                                                             

Less current portion                                                            
258,000                                                         
258,000                                                         

$116,375,000                                                              
$120,680,000                                                              

The Company issued $110 million of unsecured senior notes in                    
August 1993 to effect a refinancing of existing long-term                       
obligations.  The extraordinary loss of $4,883,000 on                           
extinguishment of debt in 1993 included $2,245,000 of previously                
deferred financing costs and $2,638,000 of premium and expenses                 
paid on the retirement of subordinated debentures and debt.                     

The senior notes bear interest at a rate of 11.5%, payable                      
semi-annually on each February 15 and August 15, and are due August             
15, 2003.  The notes are  not redeemable prior to August 15, 1998,              
except that, through August 1996, the Company may redeem up to $33              
million in aggregate principal amount at 111.5% plus accrued                    
interest from the proceeds of a public offering of common stock by              
the Company or by Carrols Holdings Corporation.  The notes are                  
redeemable at  the option of the Company in whole or in part on or              
after August 15, 1998 at specified redemption prices.  Provisions               
of the revolving line of credit facility place limitations on the               
redemption or repurchase of the notes so long as the facility                   
remains in effect.  During 1995, the Company purchased $1.5 million             
face value of senior notes.                                                     

On December 20, 1994, the revolving line of credit agreement was                
amended to provide for an additional acquisition loan of $5                     
million.  The $5 million acquisition loan was collateralized by the             
twenty-two restaurants acquired during 1994 and was fully advanced              
during 1995. The $5 million is required to be repaid by quarterly               
payments of $250,000 beginning in November 1997 increasing to                   
quarterly payments of $500,000 beginning in November 1998.                      

F-11                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                     

5.  LONG-TERM DEBT (Continued)                                                  

Effective December 20, 1994, in conjunction with the additional $5              
million acquisition loan, the revolving line of credit agreement                
was amended to reduce the interest rate on all borrowings                       
thereunder to either the London Interbank  Offering Rate plus 2.5%              
or the prime rate plus 1.25%, as selected by the Company.  If the               
revolving line of credit and acquisition loan exceed $25 million,               
the interest rate is increased to either the London Interbank                   
Offering Rate plus 3.5% or the prime rate plus 2.25% on the amount              
of the loan exceeding $25 million.  The amount available under the              
revolving line of credit was increased to $25 million with no                   
future reductions until its maturity in August 2000.  At December               
31, 1995 there was $21.9 million available under the revolving line             
of credit facility after reduction for the $1.7 million outstanding             
and a $1.4 million letter of credit guaranteed by the facility. A               
commitment fee of 1/2% is payable on the unused balance.  At                    
December 31, 1995, the facility was collateralized by substantially             
all assets of the Company.                                                      

The Industrial Development Revenue bonds are due in yearly amounts              
of $250,000 through 1998, with interest at seventy-five percent of              
prime.  The bonds are collateralized by a warehouse which has a net             
book value of $1,300,000 at December 31, 1995 and is available for              
disposition.                                                                    

Restrictive covenants of the senior notes and the revolving line of             
credit facility include limitations with respect to the issuance of             
additional debt and redeemable preferred stock; the sale of assets;             
dividend payments and  capital stock redemption; transactions with              
affiliates; consolidations, mergers and transfers of assets and                 
minimum interest and fixed charge coverage ratios.                              

At December 31, 1995, principal payments required on all long-term              
debt are as follows:                                                            

1996                                                                            
$    258,000                                                                    

1997                                                                            
508,000                                                               

1998                                                                            
1,354,000                                                                 

1999                                                                            
2,192,000                                                                 

2000                                                                            
3,320,000                                                                 

2001 and thereafter                                                             
109,001,000                                                                   

$116,633,000                                                                    

6.  INCOME TAXES                                                                

The income tax (provision) benefit was comprised of the following               
at December 31:                                                                 

1995                                                                            
1994                                                                            

Current:                                                                        

Federal                                                                     
$   (35,000)                                                                

State                                                                       
(200,000)                                                             
$                                                                         
(165,000)                                                                       

(235,000)                                                             

(165,000)                                                                       

Deferred:                                                                       

Federal                                                                     
8,552,000                                                               

State                                                                       
1,509,000                                                               

10,061,000                                                                

$ 9,826,000                                                                 
$                                                                         
(165,000)                                                                       

F-12                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

6.  INCOME TAXES (Continued)                                                    

The components of deferred income tax assets and liabilities at                 
December 31, are as follows:                                                    

1995                                                                            
1994                                                                            

Deferred tax assets:                                                            

Receivable and other reserves                                               
$   405,000                                                                 
$   588,000                                                                 

Accrued vacation benefits                                                   
484,000                                                             
426,000                                                             

Deferred income on sale/leaseback                                           

of real estate                                                          
709,000                                                             
755,000                                                             

Postretirement benefits                                                     
569,000                                                             
542,000                                                             

Capital leases                                                              
545,000                                                             
572,000                                                             

Property and equipment                                                      
138,000                                                             

Alternative minimum tax credit                                              
carryforward                                                                    
35,000                                                            

Net operating loss carryforwards                                            
12,458,000                                                                
15,552,000                                                                

Less: Valuation allowance                                                   

(11,799,000)                                                                

15,343,000                                                                
6,636,000                                                               

Deferred tax liabilities:                                                       

Franchise rights                                                            
5,282,000                                                               
6,500,000                                                               

Property and equipment                                                      

136,000                                                             

5,282,000                                                               
6,636,000                                                               

Net deferred income tax asset                                         
$10,061,000                                                                 
$     0                                                                     

The Company has net operating loss and alternative minimum tax                  
(<o^>AMT<o">) credit carryforwards for income tax purposes of                   
approximately $31.1 million and $35,000, respectively. The net                  
operating loss carryforwards expire in varying amounts beginning                
2003 through 2009.  Realization of the deferred income tax assets               
relating to the net operating loss and AMT credit carryforwards is              
dependent on generating sufficient taxable income prior to the                  
expiration of the loss carryforwards.  Based upon the increase in               
the number of restaurants operated by the Company and the favorable             
results of operations, management believes it is more likely than               
not that the Company will generate sufficient future taxable income             
to fully realize the benefit of the net operating loss                          
carryforwards and existing temporary differences, although there                
can be no assurance of this.  Accordingly, during 1995 the                      
previously provided valuation allowance has been eliminated and the             
net deferred tax asset has been recognized as a deferred income tax             
benefit.                                                                        

The difference for 1995 between the expected tax provision                      
resulting from application of the federal statutory income tax rate             
to pre-tax income and the actual income tax benefit recognized                  
results principally from recognition of the previously unrecorded               
deferred tax asset.                                                             

7.  STOCKHOLDER'S EQUITY                                                        

The Company                                                                     

The Company has 1,000 shares of common stock authorized of which 10             
shares are issued and outstanding. Dividends on the Company's                   
common stock are restricted to amounts permitted by various loan                
agreements.                                                                     

Additional paid-in capital was reduced for cash dividends declared              
of $636,000, $2,973,000, and $2,741,000 in 1995, 1994 and 1993,                 
respectively.                                                                   

F-13                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

7.  STOCKHOLDER'S EQUITY (Continued)                                            

Holdings                                                                        

The sole activity of Holdings is the ownership of 100% of the stock             
of Carrols Corporation.                                                         

Holdings, the parent, has issued various classes of stock with                  
redemption, convertibility and cumulative dividend payment                      
requirements.  At December 31, Holdings stock consists of:                      

1995                                                            
1994                                                            

Preferred stock:                                                    

Class A, 10% cumulative                                           
redeemable,                                                                     

par value $.01, authorized,                                   
issued                                                                          

and outstanding 7,250 shares                                  
at                                                                              

liquidation preference and                                    

redemption price                                              
$7,250,000                                                            
$7,250,000                                                            

Class B, convertible, 10%                                         
cumulative                                                                      

redeemable Series I, par value                                
$.01,                                                                           

authorized, issued and                                        
outstanding 750                                                                 

shares at liquidation                                         
preference and                                                                  

redemption price                                              
750,000                                                         
750,000                                                         

Class B, 10% cumulative                                           
redeemable                                                                      

Series II, par value $.01,                                    
authorized                                                                      

750 shares, issued - none                                     

Common stock:                                                       

Voting, par value $.01,                                           
authorized                                                                      

6,000,000 shares, issued and                                  

outstanding 2,260,757 and                                     
2,266,157                                                                       

shares for 1995 and 1994,                                     
respectively                                                                    
23,000                                                        
23,000                                                        

Non-voting, par value $.01,                                       
authorized                                                                      

882,353 shares, issued - none                                 

The Class A Preferred Stock, issued in December 1986, is subject to             
redemptions equally over each of the tenth through thirteenth                 
anniversaries of issuance.  Subject to the redemption restrictions              
of various loan agreements, all preferred stock may be redeemed at              
the option of Holdings, at a price of $1,000 per share, plus                    
accrued dividends. In the event that the scheduled redemptions are              
not timely made, the annual dividend rate on the Class A Preferred              
Stock will automatically increase to 14%.                                       

Each share of Holdings Class B Convertible Preferred Stock is                   
convertible at any time prior to redemption into 1,176.5 shares of              
Holdings Non-Voting Common Stock (subject to adjustment to prevent              
dilution).                                                                      

Holders of the Preferred Stock are entitled to cumulative dividends             
payable quarterly at the rate of 10% per annum.  In the event that              
Holdings fails to pay four consecutive quarterly dividends on the               
Class A preferred stock, the subsequent dividend rate increases to              
11.5%; if eight consecutive quarterly dividends are missed, the                 
rate increases to 13% per annum until such dividends are paid.                  
Dividends on the Class B preferred stock cannot be declared or paid             
if there are any Class A preferred stock dividends in arrears.                  
Because of certain restrictive covenants in the CompanyAEs loan                 
agreements, at December 31, 1995, dividends have not been paid for              
the last two quarters which aggregate $405,000.                                 

F-14                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                     

7.  STOCKHOLDER'S EQUITY (Continued)                                            

In conjunction with the Class A Preferred Stock, warrants to                    
purchase 529,412 shares of Holdings Common Stock at an exercise                 
price of $.97 to $1.00 per share were granted.  Outstanding                     
warrants as of December 31, 1995 and 1994 totalled 463,549.                     
Warrants are exercisable until the redemption of the Class A                    
Preferred Stock. The warrants contain restrictions as to transfer,              
dilution and registration rights.                                               

The Company also granted warrants for the purchase of 281,602                   
shares of Holdings Common Stock with various expiration dates                   
through 2004 at an exercise price of $1.00 per share.                           

Redemption Offer                                                                

During 1993, Carrols Holdings Corporation initiated a redemption                
and retirement offer resulting in the tender of 743,843 shares of               
common stock and the tender of warrants to purchase 65,863 shares               
of common stock with a total redemption value of $3,173,000.                    

Approximately $500,000, or 249,988 shares, of the redemption was                
effected during 1993.  The remainder of the redemption, $2,673,000,             
or 493,855 shares and warrants for 65,863 shares, was completed in              
1994.                                                                           

Stock Options                                                                   

Carrols Holdings Corporation adopted an Employee Stock Option and               
Award Plan on December 14, 1993. Effective April 1, 1994, Holdings              
also adopted a Stock Option Plan for non-employee directors.  The               
Plans allow for the granting of non-qualified stock options, stock              
appreciation rights and incentive stock options to directors,                   
officers and certain other Company employees.  The Company is                   
authorized to grant options for up to 850,000 shares, 100,000                   
shares for non-employee directors and 750,000 shares for employees.             
Options are generally exercisable over 5 years with 94,600 and                
46,400 options exercisable as of December 31, 1995 and 1994,                    
respectively.  As of December 31, 1995 and 1994, non-employee                   
directors were granted options totaling 18,000 and 15,000,                      
respectively.  Under the non-employee director plan, no options                 
were exercised or cancelled during 1994 or 1995.                                

Option activity during 1994 and 1995 consisted of:                              

Options at                                                                      
$4.00                                                                           
Options at                                                                      
$6.12                                                                           

Balance at December 31, 1993                                                    
235,000                                                                 
0                                                             

Granted                                                                     
25,000                                                                

Exercised                                                                   

Cancelled                                                                   
(3,000)                                                               

Balance at December 31, 1994                                                    
257,000                                                                 
0                                                             

Granted                                                                     

99,100                                                            

Exercised                                                                   
(600)                                                             

Cancelled                                                                   
(12,400)                                                                

(2,300)                                                                         

Balance at December 31, 1995                                                    
244,000                                                                 
96,800                                                            

Subsequent Event                                                                

On March 6, 1996, Carrols Holdings Corporation, Carrols Corporation             
and certain selling shareholders of Carrols Holdings Corporation                
signed, subject to certain conditions, an agreement to sell                     
substantially all of the issued common stock and common stock                   
equivalents (the Class B Convertible Preferred stock, warrants to               
buy common stock and the options to buy common stock).                          

F-15                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

7.  STOCKHOLDERAES EQUITY (Continued)                                           

The sale of stock pursuant to this agreement consistutes an                     
ownership change under certain provisions of the Internal Revenue               
Code which may result in annual limitations on utilization of the               
net operating loss carryforward referred to in Note 6.                          

The consummation of the transaction contemplated by the Agreement               
will constitute a <o^>change of control<o"> under the Indenture                 
governing the Senior Notes Due 2003 (<o^>Notes<o">). Accordingly, each          
holder of the Notes will have the right to require the Company to               
repurchase all or any part of such holderAEs Notes at a repurchase              
price in cash equal to 101% of the principal amount of the Notes                
being repurchased plus accrued and unpaid interest, if any, within              
a 30-60 day period, as determined by the Company.  The Company does             
not anticipate a significant number of Note holders to exercise                 
their rights, based on current market conditions.  However, to the              
extent holders exercise their rights, the Company expects to                    
finance the aggregate repurchase amount through borrowings under                
the revolving line of credit portion of its Senior Secured Credit               
Facility, and/or , through additional debt financing on a pari                  
passu basis with the Notes.                                                     

8.  LITIGATION                                                                  

The Company is a party to various legal proceedings arising from                
the normal course of business.  Management believes adverse                     
decisions relating to litigation and contingencies in the aggregate             
would not materially effect the Company's results of operations or              
financial condition.                                                            

9.  EMPLOYEE SAVINGS PLAN                                                       

The Company offers a savings plan for salaried employees.  Under                
the plan, participating employees may contribute up to 10% of their             
salary annually.  The Company's contributions, which begin to vest              
after three years and fully vest after seven years of service, are              
equal to 50% of the employee's contributions to a maximum Company               
contribution of $530 annually.  The employees have various                      
investment options available under a trust established by the plan.             
The plan cost was $125,000, $125,000, and $111,000, for the years             
ended December 31, 1995, 1994 and 1993, respectively.                           

F-16                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      
___________                                                                   

10.  POSTRETIREMENT BENEFITS                                                    

While the Company reserves the right to change its policy, the                  
Company provides postretirement medical and life insurance benefits             
covering substantially all salaried employees.                                

The following sets forth the plan status at December 31:                        

Accumulated Postretirement Benefit Obligation (APBO):                     

1995                                                                            
1994                                                                            

Retirees                                                                  
$   411,000                                                               
$   409,000                                                               

Fully eligible active                                                     
participants                                                                    
242,000                                                           
130,000                                                           

Other active plan participants                                            
not fully eligible                                                    

580,000                                                           

568,000                                                           

Total APBO                                                        
1,233,000                                                             
1,107,000                                                             

Unrecognized benefit from plan                                            
changes                                                                         
255,000                                                           
281,000                                                           

Unrecognized net loss                                                     
(64,000)                                                          
(34,000)                                                          

Accrued postretirement                                            
benefit obligation                                            

$ 1,424,000                                                               

$ 1,354,000                                                               

Net periodic postretirement benefit cost included the following                 
components:                                                                     

1995                                                                            
1994                                                                            
1993                                                                            

Service cost                                                          
$47,000                                                                     
$47,000                                                                     
$61,000                                                                   

Interest cost                                                         
76,000                                                                    
70,000                                                                    
74,000                                                                  

Net amortization of                                                   

gains,losses and                                                  
unrecognized                                                                    

benefit from plan                                                 
changes                                                                         
(29,000)                                                                    
(20,000)                                                                    
(19,000)                                                                  

$94,000                                                                     
$97,000                                                                     
$116,000                                                                    

A 7.0% annual rate of increase in the per capita costs of covered               
health care benefits was assumed for 1995, gradually decreasing to              
5.5% by the year 2001.  Increasing the assumed health care cost                 
trend rates by one percentage  point in each year would increase                
the accumulated postretirement benefit obligation as of December                
31, 1995 by $162,000 and increase the aggregate of the service cost             
and interest cost components of net periodic postretirement benefit             
cost for 1995 by $18,000.  For 1995 and 1994, a discount rate of 7%             
was used to determine the accumulated postretirement benefit                    
obligation. Actual benefit costs paid on behalf of retirees in                  
1995, 1994 and 1993 amounted to $24,000, $31,000 and $14,000,                   
respectively.                                                                   

11. LOSS ON CLOSING RESTAURANTS AND OTHER                                       

The loss on closing restaurants and other of $1.8 million for 1994              
included the  write-down of assets to net realizable value and                  
estimated lease termination costs for the closing during 1995 of                
certain restaurants operating at a negative annual cash flow and                
the write down to net realizable value of a vacant warehouse held               
for sale.                                                                       

F-17                                                                            

CARROLS CORPORATION AND SUBSIDIARIES                                            
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS                                 
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993                                    
___________                                                                     

Col. A                                                                          
Col. B                                                                          
Col. C                                                                          
Col. D                                                                          
Col E                                                                           

Additions                                                                       

Balance at                                                                      
Charged to                                                                      

Balance at                                                                      

Beginning                                                                       
Costs and                                                                       

End                                                                             

Decription                                                                      
of Period                                                                       
Expenses                                                                        
Deductions                                                                      
of Period                                                                       

Year ended December 31,                                                         
1995:                                                                           

Accumulated                                                                   
depreciation of property                                                        
and equipment                                                               

$                                                                               
53,969,000                                                                      

$                                                                               
7,594,000                                                                       

$(1,932,00                                                                      
0)(d)                                                                           

$                                                                               
59,631,000                                                                      

Accumulated                                                                   
amortization of                                                                 
franchise rights                                                            

17,548,000                                                                      

2,512,000                                                                       

(412,000)(                                                                      
a)                                                                              

19,648,000                                                                      

Accumulated                                                                   
amortization of                                                                 
beneficial leases                                                           

7,433,000                                                                       

721,000                                                                         

(499,000)(                                                                      
a)                                                                              

7,655,000                                                                       

Accumulated                                                                   
amortization of excess                                                          
cost over fair value                                                        
of assets                                                                       

462,000                                                                         

58,000                                                                          

520,000                                                                         

Reserve for doubtful                                                          
trade accounts                                                                  
receivable                                                                  

424,000                                                                         

12,000                                                                          

(17,000)(b                                                                      
)                                                                               

419,000                                                                         

Other reserves (c)                                                            

542,000                                                                         

388,000                                                                         

(142,000)(                                                                      
b)                                                                              

788,000                                                                         

Year ended December 31,                                                         
1994:                                                                           

Accumulated                                                                   
depreciation of property                                                        
and equipment                                                               

47,254,000                                                                      

7,404,000                                                                       

(689,000)(                                                                      
d)                                                                              

53,969,000                                                                      

Accumulated                                                                   
amortization of                                                                 
franchise rights                                                            

15,146,000                                                                      

2,402,000                                                                       

17,548,000                                                                      

Accumulated                                                                   
amortization of                                                                 
beneficial leases                                                           

6,921,000                                                                       

785,000                                                                         

(273,000)(                                                                      
a)                                                                              

7,433,000                                                                       

Accumulated                                                                   
amortization of excess                                                          
cost over fair value                                                        
of assets                                                                       

404,000                                                                         

58,000                                                                          

462,000                                                                         

Reserve for doubtful                                                          
trade accounts                                                                  
receivable                                                                  

563,000                                                                         

2,000                                                                           

(141,000)(                                                                      
b)                                                                              

424,000                                                                         

Other reserves (c)                                                            

521,000                                                                         

21,000                                                                          

542,000                                                                         

Year ended December 31,                                                         
1993:                                                                           

Accumulated                                                                   
depreciation of property                                                        
and equipment                                                               

40,686,000                                                                      

7,840,000                                                                       

(1,272,000                                                                      
)(d)                                                                            

47,254,000                                                                      

Accumulated                                                                   
amortization of                                                                 
franchise rights                                                            

13,364,000                                                                      

2,513,000                                                                       

(731,000)(                                                                      
a)                                                                              

15,146,000                                                                      

Accumulated                                                                   
amortization of                                                                 
beneficial leases                                                           

5,962,000                                                                       

1,189,000                                                                       

(230,000)(                                                                      
a)                                                                              

6,921,000                                                                       

Accumulated                                                                   
amortization of excess                                                          
cost over fair value                                                        
of assets                                                                       

347,000                                                                         

57,000                                                                          

404,000                                                                         

Reserve for doubtful                                                          
trade accounts                                                                  
receivable                                                                  

616,000                                                                         

(53,000)(b                                                                      
)                                                                               

563,000                                                                         

Other reserves (c)                                                            

292,000                                                                         

229,000                                                                         

521,000                                                                         

(a) Represents reduction of accumulated amortization due to sale                
or disposition of restaurants.                                                  
(b) Represents write-offs of accounts.                                          
(c) Included principally in other assets                                        
(d) Represents retirements of fixed assets.                                     

F-18                                                                            

14                                                                              

25                                                                              

Dates Referenced Herein   and   Documents Incorporated By Reference

This 10-K Filing		Date		Other Filings
		9/15/92
		8/4/93
		8/9/93
		8/10/93
		8/17/93
		10/27/93
		12/14/93
		12/31/93
		1/2/94
		2/10/94
		3/11/94
		4/1/94
		4/18/94
		5/2/94
		5/31/94
		6/20/94
		6/30/94		10-Q
		9/9/94
		12/20/94
		12/31/94		10-K
		1/1/95
		3/15/95
		6/30/95		10-Q
		11/2/95
		11/29/95
		12/29/95
For The Period Ended		12/31/95		10-K/A
		1/1/96
		2/14/96
		2/16/96
		3/1/96
		3/6/96		8-K
		3/15/96
		3/21/96		8-K
		3/27/96
		3/31/96		10-Q
Filed On / Filed As Of		4/1/96
		1/6/97
		7/1/97
		11/1/97
		12/31/97		10-K
		8/15/98
		3/31/99		10-Q
		11/2/0
		8/15/3
		3/31/5
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