Carrols Corp · 10-K · For 12/31/94

Filed On 3/30/95   ·   SEC File 1-06553   ·   Accession Number 17927-95-7

Annual Report   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         55    242K 
 2: EX-10       Material Contract                                      9     46K 
 3: EX-10       Material Contract                                     10     46K 
 4: EX-10       Material Contract                                      6     31K 
 5: EX-10       Material Contract                                      5     19K 
 6: EX-10       Material Contract                                     32    135K 
 7: EX-10       Material Contract                                     73    240K 
 8: EX-10       Material Contract                                     73    200K 
 9: EX-10       Material Contract                                     27    101K 
10: EX-10       Material Contract                                     12     56K 
11: EX-10       Material Contract                                     23     85K 
12: EX-10       Material Contract                                      7     27K 
13: EX-10       Material Contract                                      8     31K 
14: EX-10       Material Contract                                      1      9K 
15: EX-10       Material Contract                                     61    187K 
16: EX-10       Material Contract                                     17     67K 
17: EX-10       Material Contract                                     40    161K 
18: EX-10       Material Contract                                      2     12K 
19: EX-27       Financial Data Schedule                                1     10K 

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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, 1994

     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, 1995:  10.                                        

Documents Incorporated by Reference:  None                                      

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PART I                                                                          

ITEM 1.  BUSINESS                                                               

HISTORICAL DEVELOPMENT                                                          

   Carrols Corporation (the "Company" or "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 Carrols
Holdings Corporation ("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.  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 became 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 217 as of March 15, 1995. During this period, Carrols
built 27 restaurants, purchased 61 restaurants, and disposed of or closed  nine 
restaurants. See "Business--Restaurant Locations."  Since October 1992, the     
Company has acquired  50 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 and the 1994 acquisition of 22 restaurants 
in three separate transactions, for a total purchase price of $11.6 million.    

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On August 17, 1993 the Company consummated a refinancing (the
"Refinancing") that repaid all outstanding amounts under the then existing      
senior secured credit facility, the senior subordinated notes and the           
subordinated debentures.  Under the terms of the refinancing and the Company's  
present outstanding indebtedness, debt amortization requirements are less than  
$1.0 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 will be  secured by the 22    
Burger King restaurants acquired during 1994. See "Management's Discussion and  
Analysis of Financial Condition and Results of Operations -- Liquidity and      
Capital Resources".                                                             

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, 1995, the Company  
operated, as franchisee, 217 Burger King restaurants, of which 195 are          
free-standing restaurants and 22 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. The majority of the Company's Burger King restaurants are free-standing 
buildings offering in-store seating and drive-thru service.  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 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 generated through drive-thru windows. Carrols leases most 
of its restaurant properties, although it owns the land and buildings on which  
17 restaurants are located. See "Business--Properties."                         

  Burger King.   There are approximately 7,400 Burger King restaurants
worldwide making BKC the second largest hamburger fast food operation.  BKC has 
been franchising since 1954 and has expanded to locations in all 50 states, the 
District of Columbia and  approximately 50 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, speed of service, quality 
of food and price/value are the primary competitive advantages of Burger King   
restaurants. Burger King restaurants appeal to a broad spectrum of consumers,   
with different meal segments tending to appeal to different groups.             

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    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 primarily of hamburgers, cheeseburgers, chicken
sandwiches and filets, fish sandwiches, french fried potatoes, salads, 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. At the option of BKC, a Successor     
Franchise Agreement may be granted 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. In addition to this fee, in  
order to obtain a Successor Franchise Agreement, Carrols 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.   BKC  
has granted Successor Franchise Agreements for all of the Franchise Agreements  
for which the Company has sought Successor Agreements.                          

    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 costs for a standard    
free-standing restaurant are approximately $260,000 (excluding the cost of the  
building and related real estate). In addition, the Company estimates that the  

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aggregate cost of constructing a free-standing restaurant and the cost of the   
associated real estate ranges from $650,000 to $1,000,000 (or higher) depending 
upon building type, land costs 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. 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  
each 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 who are responsible for the operations  
of all Burger King restaurants in their respective regions. Each of the three   
regional directors has been employed by Carrols for over 20 years.   A fourth   
regional director has replaced a recently retired vice president-regional       
director. 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 full-time manager and two or three 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 point of sale  system which         
electronically communicates 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.            

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     Factors Affecting the Company's Operations. Carrols' business is affected
by conditions which reduce automobile usage, such as 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. See "Management's Discussion and Analysis of Financial Condition   
and Results of Operations." Historically, the Company's business has also been  
affected by changes in local and national economic conditions, consumer spending
habits, consumer tastes, consumer concerns about the nutritional quality of fast
food and demographic trends.                                                    

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

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RESTAURANT LOCATIONS                                                            

The following table sets forth the locations of the 217 Burger King   
restaurants in Carrols' system at March 15, 1995.                               

NEW YORK (97)                 OHIO (65)                     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 (2)             MASSACHUSETTS (2)   
Buffalo (1)                   Bryan (1)                                         
Catskill (1)                  Greater Canton (11)           North Andover (1)   
Cobleskill (1)                Greater Cleveland (12)        Billerica (1)       
Cortland (1)                  Defiance (1)                                      
Fulton (1)                    Findlay (2)                                       
Glens Falls (2)               Fostoria (1)                  NEW JERSEY (2)      
Gloversville (2)              Fremont (1)                                       
Herkimer (1)                  Hartville (1)                 Franklin (1)        
Hudson (1)                    Lima (2)                      Newton (1)          
Kingston (3)                  Mansfield (6)                                     
Middletown (2)                Medina (1)                                        
New City (1)                  Mentor (1)                    CONNECTICUT (1)     
Newburgh (3)                  New Philadelphia (2)                              
Niagara Falls (1)             Ottawa (1)                    Westport (1)        
Norwich (1)                   Streetsboro (1)                                   
Oneonta (2)                   Tiffin (1)                                        
Oswego (1)                    Van Wert (1)                  VERMONT (1)         
Peekskill (1)                 Wapakoneta (1)                                    
Plattsburgh (3)               Wooster (1)                   Rutland (1)         
Poughkeepsie (2)                                                                
Port Jervis (1)                                                                 
Greater Rochester (15)        MICHIGAN (14)                                     
Rome (2)                                                                        
Greater Syracuse (17)         Ann Arbor (3)                                     
Schodack (1)                  Battle Creek (4)                                  
Greater Utica (4)             Kalamazoo (4)                                     
Watertown (2)                 Jackson (3)                                       
Yorktown Heights (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)                                                                      

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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 are comprised of national campaigns and 
local advertising which supplements the national campaigns. BKC's advertising   
campaigns are generally carried on television, radio and in the mass 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 which Carrols is required   
to obtain all of its foodstuffs (other than bread products), paper, promotional 
premiums and packaging from ProSource.  The new 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  
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.             

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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, sandwiches and french fries are discarded after ten minutes and    
seven minutes following preparation, respectively. 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 insure that standards
and policies are  followed and that product quality, customer service and       
cleanliness of the restaurants are maintained. BKC conducts unscheduled monthly 
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 the          
franchisor. Concurrent with growth within the Burger King system, the Company   
has identified other quick service restaurant concepts with appealing market    
niches and favorable unit economics which management believes provide excellent 
growth vehicles and will allow the Company to leverage its strong operations    
expertise.  During the last 12 months, the Company entered into Area Development
Agreements with Taco Cabana, Inc., and Pollo Tropical, Inc., pursuant to which  
the Company has the exclusive right in specified territories to develop and     
operate franchised restaurants in each of those concepts.  See "Business --     
Additional Restaurant Concepts".                                                

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

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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, price and ambiance, are
the most important competitive factors in the fast food restaurant industry.    

EMPLOYEES                                                                       

At December 31, 1994, Carrols employed approximately 7,800        
persons;approximately 100 were administrative personnel and 7,700 restaurant    
operating personnel. None of Carrols' employees is covered by collective        
bargaining agreements. Approximately 7,100 of the restaurant operating personnel
at December 31, 1994 were part-time employees. Carrols believes that its        
employee relations are satisfactory.                                            

ADDITIONAL RESTAURANT CONCEPTS                                                  

   Taco Cabana.  On June 20, 1994 Carrols entered into an agreement (the
"Taco Cabana Agreement") with T.C. Management, Inc., an affiliate of Taco       
Cabana, Inc., for Carrols to have 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, 1994, 
Taco Cabana owned and operated 104 Taco Cabana restaurants and franchised 23    
Taco Cabana restaurants.                                                        

 Taco Cabana restaurants feature generous portions of fresh, premium
quality Tex-Mex and traditional Mexican style food at low prices.  The          
restaurants provide interior, semi-enclosed and patio dining areas with a       
festive Mexican theme.  Menu items include flame-grilled beef and chicken       
fajitas served on sizzling iron skillets, "Chicken Flameante" (a marinated      
rotisserie chicken), other Tex-Mex dishes, fresh, hot flour tortillas, and      

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lighter items such as a variety of salad entrees.  Unlike many of its           
competitors, Taco Cabana makes all menu items "from scratch," preparing each    
item daily in each of its restaurants.                                          

  The Taco Cabana Agreement requires Carrols to develop three (3) Taco
Cabana restaurants during the first year, six (6) Taco Cabana restaurants during
the second year, and eight (8) Taco Cabana restaurants during each of the next  
three (3) 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.           

   Pollo Tropical.  On January 1, 1995 Carrols entered into an agreement
(the "Pollo Tropical Agreement") with Pollo Franchise, Inc., an affiliate of    
Pollo Tropical, Inc., for 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, 1994, Pollo Tropical   
currently had 34 restaurants systemwide, of which 33 were Company owned and 1   
was franchised.                                                                 

Pollo Tropical restaurants are quick-service restaurants featuring
grilled, fresh chicken, marinated in a proprietary blend of tropical fruit      
juices and spices, and authentic "made from scratch" side dishes.  The menu's   
emphasis on freshness and quality, as well as its focus on chicken served hot   
off the grill, provides a healthy and flavorful alternative to ordinary quick-  
service restaurants.  Pollo Tropical restaurants combine high quality,          
distinctive taste and an inviting tropical setting with the convenience and low-
price appeal of quick-service restaurants.                                      

     Pollo Tropical restaurants have a tropical and Latin theme, and feature
fresh and flavorful chicken grilled to a quick golden brown over open flames in 
view of the customer.  Chicken is served whole, in halves or in quarters, and   
grilled chicken breasts are served in sandwiches, salads and platters.  The     
restaurants also offer a wide variety of distinctive and popular side dishes    
including black beans and rice, yucatan fries and sweet plantains.              

      The Pollo Tropical Agreement requires Carrols to develop three (3) Pollo
Tropical restaurants during the first 18 months, six (6) Pollo Tropical         
restaurants during the next 12 months, and eight (8) 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         

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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.   

      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 available for sale or long-term lease. 

  In addition to the above, at March 15, 1995, the Company owned or leased
the following properties:                                                       

                   Owned        Leased      Leased
                  Land;        Land;       Land;
                   Owned        Owned       Leased
                             Building     Building    Building     Total

Burger King restaurants            17            16         184(a)       217    

Excess properties:                                                              
Leased to others                  1            --           7            8  
Available for sale or lease       4            --          --            4  

Total properties                   22            16         191          229    

      (a)  Includes 22 restaurants located in mall shopping centers or specialty
locations.                                                                      

     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                                                      

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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                

None.                                                 

     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 is owned by Holdings.                            

     Cash dividends per share were declared during 1993 and 1994 as follows:

January, 1993          $  20,010.00     
April, 1993               20,010.00     
July, 1993                20,010.00     
October, 1993            113,935.45     
December, 1993            99,995.00     
January, 1994            237,301.10     
April, 1994               20,000.00     
July, 1994                20,000.00     
October, 1994             20,000.00     

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ITEM 6.  SELECTED FINANCIAL DATA                                                

CARROLS CORPORATION AND SUBSIDIARIES - SUMMARY OF SELECTED FINANCIAL DATA       

                                                                · Download Table

Col. A                                                Col. B       Col. C       
 Col. D       Col. E       Col. F                                               
                                                                        YEARS   
ENDED DECEMBER 31,                                                              
                                                    __________   __________     
__________   __________   __________                                            
                                                       1994         1993        
  1992         1991         1990                                                
                                                    __________   __________     
__________   __________   __________                                            
                                                    (52 weeks)   (52 weeks)     
(53 weeks)   (52 weeks)   (52 weeks)                                            
                                                    (Dollars in thousands except
for per share data and restaurants)                                             
                                                                                
                                                                                
OPERATING RESULTS:                                                              

Revenues                                            $ 204,254    $ 171,634      
$ 156,413    $ 146,634    $ 149,890                                             
Loss from continuing operations                        (1,831)      (4,408)     
  (1,262)      (4,919)      (5,760)                                             
Income from discontinued operations                                             
                             2,986                                              
Extraordinary loss on                                                           
 extinguishment of debt                                             (4,883)     
Cumulative effect of change in accounting                                       
 for post-retirement benefits                                                   
  (1,037)                                                                       

Net Loss                                            $  (1,831)   $  (9,291)     
$  (2,299)   $  (4,919)   $  (2,774)                                            

PER SHARE OF COMMON STOCK:                                                      

Loss from continuing operations                     $(183,100)   $(440,800)     
$(126,200)   $(491,900)   $(576,000)                                            
Income from discontinued operations                                             
                           298,600                                              
Extraordinary loss on                                                           
 extinguishment of debt                                           (488,300)     
Cumulative effect of change in accounting                                       
 for post-retirement benefits                                                   
(103,700)                                                                       

Net Loss                                            $(183,100)   $(929,100)     
$(229,900)   $(491,900)   $(277,400)                                            

Dividends Declared                                  $ 297,301    $ 273,960      
$  20,010    $  40,000    $  80,000                                             

OTHER DATA:                                                                     

Total assets                                        $ 124,688    $ 119,735      
$ 115,900    $ 115,592    $ 132,942                                             
Long-term debt                                        120,680      114,197      
  91,245       88,541      102,568                                              
Capital lease obligations                               3,966        4,603      
   5,436        6,002        6,632                                              
Total long-term debt and capital lease                                          
 obligations                                          124,646      118,800      
  96,681       94,543      109,200                                              
Common stockholder's equity (deficit)                 (27,208)     (22,404)     
 (10,383)      (7,884)      (2,565)                                             

Burger King restaurants in operation:                                           
  At end of period                                        219          195      
     177          165          164                                              
  Annual weighted average                                 206.8        184.5    
     168.7        163.8        162.5                                            

FN> </TABLE                                                                     

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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,
1992, 1993 and 1994 certain consolidated financial data for the Company,        
expressed as a percentage of sales:                                             

                                                 PERCENTAGE OF SALES            
                                               YEARS ENDED DECEMBER 31,         

                                            1994        1993         1992       

Sales                                      100.0%      100.0%       100.0%      
Other income                                  .2          .3           .3       
Cost of sales                               28.4        28.3         27.6       
Restaurant wages and related expenses       29.4        30.2         30.2       
Other restaurant operating expenses         20.8        20.6         19.7       
Depreciation and amortization                5.5         7.1          7.1       
Administrative expenses                      4.6         4.7          4.5       
Advertising expense                          4.3         4.6          4.9       
Interest expense                             7.1         7.3          7.1       
Loss on closing restaurants and other         .9                                
Loss before extraordinary item and                                              
 cumulative effect of change in                                                 
 accounting principles                       (.9)       (2.6)         (.8)      

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.                                               

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     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    
$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 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.  This 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  
$.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.                        

1993 COMPARED TO 1992                                                           

Sales increased $15.1 million, or 9.7%, for the year ended December 31, 1993    
compared to the year ended December 31, 1992.  After adjusting for the extra    
week in 1992, average restaurant unit sales increased 1.7% in 1993 compared to  
1992, while sales at comparable restaurants, the 158 units operating for the    
entirety of 1992 and 1993 decreased $1.9 million, or 1.3%.  Net restaurant      
selling prices were down approximately 3.4% from increased discount promotional 
activity during the year and a reduction in menu prices during the last quarter 
of 1993.  Sales were adversely affected during most of the first quarter of 1993

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by unusually heavy snowfall in the geographic areas of Carrols operations.      

       Cost of Sales. Cost of sales (food and paper costs) for the year ended   
December 31, 1993 compared to the year ended December 31, 1992 increased in     
dollars due to higher sales and as a percentage of sales, cost of sales         
increased from 27.6% to 28.3%.  A 1.0% increase in cost of sales resulting from 
the decrease in net restaurant selling prices  and increases in the cost of beef
were partially offset by decreases in the cost of various other commodities.    

       Restaurant Wages and Related Expenses.  Restaurant wages and related     
expenses increased $4.6 million for the year ended December 31, 1993 as compared
to the year ended December 31, 1992.  This increase was due to the increased    
sales in 1993 and increases in labor rates and payroll taxes, partially offset  
by labor efficiencies.                                                          

       Other Restaurant Operating Expenses.  Other restaurant operating expenses
increased both in dollars  of $4.5 million and as a percentage of sales  of     
0.9% from 1992 to 1993.  Rent of $1.4 million and other operating costs of $2.7 
million associated with restaurants which were not operating for the entirety   
of both years contributed $4.1 million to the increase in 1993 compared to 1992.
Additionally, an increase in the costs of utilities and repairs and maintenance 
at comparable units contributed to the balance of the increase for the year.    

       Depreciation and Amortization. The additional depreciation from new      
restaurants acquired during 1992 and 1993, partially offset by a decrease from  
assets becoming fully depreciated, resulted in a $1.1 million increase in 1993  
as compared to 1992.                                                            

       Administrative Expenses.  The increase in administrative expenses of $1.1
million when comparing 1993 to 1992 resulted from costs associated with the     
supervision of additional restaurants operating during part of 1992 and 1993 and
costs expended to prepare for planned future expansion.                         

       Advertising Expense.  An increase in advertising payments to BKC (based  
upon sales levels) offset by a decrease in other promotional advertising        
activities resulted in the increase of $0.3 million in advertising expense when 
comparing the year ended December 31, 1993 to 1992.                             

       Interest Expense.  Higher average loan balances outstanding together with
an increase of approximately 1/2% in the average interest rate were responsible 
for the increase in interest expense when comparing 1993 to 1992.               

LIQUIDITY AND CAPITAL RESOURCES                                                 

       On August 17, 1993, the Company consummated the Refinancing, which repaid
substantially all of the Company's outstanding indebtedness through the issuance
of $110.0 million aggregate principal amount of 11-1/2% Senior Notes due 2003   
(the "Notes") and the concurrent closing of the $25.0 million Senior Secured    
Credit Facility.  The Refinancing significantly reduced the Company's then      
scheduled debt amortization requirements to less than $1.0 million per year     
until 2000, thus enhancing Carrols' ability to pursue its business strategy.    
Among other factors, the Company entered into the  Refinancing because the      

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Company's ability to expand its operations through the acquisition and          
construction of additional Burger King restaurants had been constrained in the  
past by significant annual debt amortization requirements associated with the   
indebtedness incurred to finance the Acquisition.                               

       On December 20, 1994, the Senior Secured Credit Facility was amended to  
increase the maximum amount of the revolver to the original $25.0 million,      
eliminate the scheduled annual reductions in the maximum revolver availability, 
reduce the interest rate and provide an additional $5.0 million acquisition     
loan.  The acquisition loan will be fully advanced during 1995, secured by the  
22 Burger King restaurants acquired during 1994, and requires principal         
repayments of $250,000 in 1997, $1.25 million in 1998, $2.0 million in 1999 and 
$1.5 million in 2000.                                                           

       The Company has reported net losses in each of the last three years.     
Since completing a leveraged buyout in 1986, the Company's focus has been on    
developing annual cash flow to service its indebtedness, maintain its assets,   
and provide for modest growth.  With its current capital structure and having   
depreciation and amortization expense which is considerably greater than its    
capital reinvestment requirements, reflecting net income on the statement of    
operations is less meaningful to the Company than cash flow.  Cash flow from    
operations has been adequate to maintain the quality of operations and the      
competitive position of the Company's restaurants.                              

       The operating activities of the Company during 1994 provided $14.4       
million of cash.  The net loss of $1.8 million is after a non-cash charge of    
$1.8 million for a loss on closing restaurants and other and $11.3 million of   
depreciation and amortization.  Operating cash also resulted from an increase   
in accounts payable of $1.1 million due to more restaurants being operated at   
the end of 1994 and an increase in accrued liabilities of $2.8 million,         
primarily because of an increase in accrued payroll and employee benefits.      

       Capital spending during 1994 of $17.6 million included $13.0 million for 
the acquisition of three Burger King restaurants in North Carolina, 19 Burger   
King restaurants in New York, and the construction of two new restaurants.  The 
balance of the spending went toward restaurant maintenance and remodeling.  The 
Company completed 22 remodelings in 1994.                                       

       The Company borrowed a net $6.8 million under the Senior Secured Credit  
Facility and completed a sale and leaseback of one restaurant property for $0.7 
million.  Dividends of $3.5 million were paid to Holdings for the payment by    
Holdings of $0.8 million of regular quarterly preferred stock dividends of $0.2 
million each and $2.7 million for the redemption and retirement of tendered     
Holdings' common stock and warrants to purchase such stock in connection with   
the tender offer initiated by Holdings in 1993.                                 

       At December 31, 1994, the Company had $19.2 million available under its  
Senior Secured Credit Facility after reserving $1.6 million for a letter of     
credit guaranteed by the Senior Secured Credit Facility.  While interest is     
accrued monthly, payments of approximately $6.3 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

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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 Holdings'     
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 Company's loan agreements contain restrictions as to payment of      
dividends.  Based on current limitations, the Company is able to pay only three 
regular quarterly dividends on Holdings' Preferred Stock after December 31,     
1994.  As more fully explained in Note 6 to the financial statements, the       
dividend rate is increased if timely dividend payments are not made.            

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.                                            

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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                  53           Chairman of the Board, Chief          
                                           Executive Officer and Director       

Daniel T. Accordino          44           President, Chief Operating            
                                           Officer and Director                 

Richard V. Cross             59           Executive Vice President - Finance,   
                                           Treasurer and Director               

Peter J. Weidhorn            48           Director                              

M. Bruce Adelberg            58           Director                              

Franklin Glasgall            62           Director                              

Joseph A. Zirkman            34           Vice President, General Counsel and   
                                           Secretary                            

Richard H. Liem              41           Vice President--Financial Operations  

Paul P. Drotar               48           Vice President--Corporate Controller  

David R. Smith               45           Vice President--Regional Director     

James E. Tunnessen           40           Vice President--Regional Director     

Michael A. Biviano           38           Vice President--Regional Director     

David Morency                39           Vice President--Casual Dining         
                                           Division                             

       Certain biographical information regarding each 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 managing general partner of Morgan        
Ventures III, a limited partnership ("Morgan Ventures"), which is the record    
owner of 1,538,706 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 

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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 Tyco Toys, Inc., and 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. Weidhorn has been a Director of Carrols since 1986. He is also a     
Director and President of Holdings. Mr. Weidhorn has been engaged in the        
commercial real estate business for approximately 15 years. Since April 1981,   
he has been president of WNY Management Corp., a firm that manages real estate  
properties. Mr. Weidhorn is co-owner with Mr. Vituli of Morgan Realty           
Associates, a general partnership formed in June 1985 which owns interests in   
a number of residential real estate properties. In addition, Mr. Weidhorn is a  
general partner of Morgan Ventures which is the record owner of 1,538,706 shares
of voting common stock of Holdings. Mr. Weidhorn currently serves as a director 
on the Board of Directors of Monmouth Capital Corp.                             

       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. 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

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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.                                                  

       Mr. Morency became Vice President--Casual Dining Division of Carrols in  
February, 1995.  Prior to joining Carrols, Mr. Morency was Director of          
Operations for Vicorp-Bakers Square.  Mr. Morency was with Vicorp-Bakers Square 
for ten 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, Cross and Weidhorn are members; the         
Compensation Committee, of which Messrs. Adelberg and Glasgall are members; and 
the Audit Committee, of which Messrs. Weidhorn, 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  

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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.                                                                          

ITEM 11.     EXECUTIVE COMPENSATION                                             

     The following table sets forth certain information for the years ended     
December 31, 1994, 1993 and 1992 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, 1994 whose annual compensation exceeded   
$100,000.                                                                       

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SUMMARY COMPENSATION TABLE                                                      

                                                                  LONG TERM     
                                                             COMPENSATION AWARDS

                                   ANNUAL COMPENSATION                          

                                                                   NUMBER OF    
                                                                  SECURITIES    
                                                                  UNDERLYING    
NAME AND PRINCIPAL POSITION   YEAR       SALARY       BONUS         OPTIONS     

Alan Vituli                   1994      $300,430     $81,000                    
Chairman of the Board,        1993       292,118                     100,000    
 Chief Executive Officer      1992       224,788      16,826                    
  and Director                                                                  

Daniel T. Accordino           1994       226,216      60,891                    
President, Chief Operating    1993       206,516                      25,000    
  Officer, and Director       1992       193,479      14,426                    

Richard V. Cross              1994       156,378      42,106                    
Executive Vice                1993       155,936                       8,000    
 President--Finance,          1992       153,290      11,424                    
  Treasurer  and Director                                                       

Joseph A. Zirkman             1994        95,890      24,303                    
Vice President, General       1993        85,711      15,000           5,000    
 Counsel and Secretary                                                          

David R. Smith                1994        77,310      34,596                    
Vice President - Regional     1993        74,694                       5,000    
 Director                     1992        71,798      16,554                    

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   

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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   
10 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 December 31, 1994, options to purchase 242,000 shares of common
stock at $4.00 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,        

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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.                            

       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, 1994, options to purchase 15,000 shares of common stock at $4.00
per share have been granted under the Directors' Option Plan.                   

       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 

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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.                               

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, 1994, 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.        

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CARROLS' COMMON STOCK                                                           

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

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

                                HOLDINGS' COMMON STOCK                          

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

Alan Vituli(b)(k)                       1,558,706                    68.2%      
Peter J. Weidhorn(c)(k)                   640,881                    28.3       
Richard V. Cross(d)(k)                    226,222                    10.0       
Daniel T. Accordino(e)(k)                 239,680                    10.5       
Joseph A. Zirkman(f)(k)                    11,000                      .5       
David R. Smith (f)(k)                      18,059                      .8       
Citicorp Venture Capital, Ltd.(g)         959,388                    30.6       
Heller Financial, Inc.(h)                 488,111                    17.7       
World Equity Partners, L.P.(i)            234,668                     9.4       
M. Bruce Adelberg(j)                        1,667                      .1       
Franklin Glasgall(j)                        1,667                      .1       
Directors and executive officers                                                
 of Carrols as a group                                                          
  (12 persons)(k)(l)                    2,111,267                     91.7      

       (a)  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.                                                

       (b)  Includes 1,538,706 shares of Holdings voting common stock held of   
record by Morgan Ventures, over which shares Mr. Vituli, as managing general    
partner of Morgan Ventures, exercises voting and investment power. Of the       
shares held of record by Morgan Ventures, Mr. Vituli effectively owns 639,214   

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shares through his ownership interest in Morgan Ventures. Mr. Vituli            
disclaims beneficial ownership of all but such 639,214 shares held of record    
by Morgan Ventures.  The address of Mr. Vituli is c/o Carrols Corporation,      
968 James Street, Syracuse, New York 13203.  Also includes 20,000 shares of     
Holdings' voting common stock subject to currently exercisable stock options.   

       (c)  Includes 639,214 shares of Holdings voting common stock held of     
record by Morgan Ventures, which shares Mr. Weidhorn effectively owns through   
his ownership interest in Morgan Ventures.  Also includes 1,667 shares of       
Holdings' voting common stock subject to currently exercisable options.         
The address of Mr. Weidhorn is c/o Morgan Realty Associates, Suite 200, 198     
Route 9, Manalapan, New Jersey 07726.                                           

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

       (e)  Includes 1,058 shares of Holdings voting common stock subject to    
currently exercisable warrants and 5,000 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.                                                                          

       (f)  Includes 1,000 shares of Holdings' voting common stock subject to   
currently exercisable stock options.                                            

       (g)  Includes 740 shares of Holdings Class B Convertible Preferred       
Stock issued to Citicorp Venture Capital, Ltd.,  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.                                                                 

       (h)  Includes currently exercisable warrants, issued to Heller           
Financial, Inc., the lender under the Senior Secured Credit Facility, 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 Heller Financial, Inc. is 500 West Monroe Street, Chicago,          
Illinois 60661.                                                                 

       (i)  Includes currently exercisable warrants, issued to World Equity     
Partners, L.P., 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.                                          

       (j)  Includes 1,667 shares of Holdings' voting common stock subject to   
currently exercisable options.                                                  

       (k)  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        

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acquire the shares of a stockholder who wishes to sell shares to a third        
party.                                                                          

       (l)  Includes 36,200 shares of Holdings' voting common stock subject     
to currently exercisable options.                                               

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTION                         

             None.                                                              

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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-18     

                    (b)       Financial Statement Schedules                     

Schedule            Description                                        Page     

                    CARROLS CORPORATION AND SUBSIDIARIES:                       

    II              Valuation and Qualifying Accounts                  F-19     

                    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, 1994.                                

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

                    The following exhibits are filed with this form 10-K:       

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

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

                          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               

                                                 * * * * * * *                  

                          3.1         Form of Restated Certificate of           
                                      Incorporation is incorporated by          
                                      reference from the Annual Report          
                                      on Form 10-K filed for the year           
                                      ended December 31, 1987                   

                          3.2         Form of Restated By-Laws is               
                                      incorporated by reference from the        
                                      Annual Report on Form 10-K filed          
                                      for the year ended December 31,           
                                      1987                                      

                          4.1         Indenture between Carrols                 
                                      Corporation and Marine Midland Bank,      
                                      Trustee, is incorporated by reference     
                                      to Exhibit 4 to Registration              
                                      Statement on Form S-1, Number             
                                      3365100, filed August 10, 1993            

                    The following are incorporated by reference from the        
                    Annual Report on Form 10-K filed for the year ended         
                    December 31, 1987                                           

                          10.1        First Amended and Restated Loan           
                                      Security and Preferred Stock              
                                      Purchase Agreement by and among           
                                      Carrols Merger Corporation and            
                                      Carrols Holdings Corporation, as          
                                      "Borrower" and Heller Financial,          
                                      Inc., as "Lender" dated 12/22/86          

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

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                                      Shareholders                              

                    The following are incorporated by reference from the        
                    Annual Report on Form 10-K filed for the year ended         
                    December 31, 1992                                           

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

                          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.                            

                    The following are incorporated by reference from            
                    Amendment No. 2 to Form S-1 Registration Statement under    
                    The Securities Act of 1933 as filed with the Securities     
                    and Exchange Commission on August 4, 1993:                  

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

                    The following are incorporated by reference from the        
                    Annual Report on Form 10-K filed for the year ended         
                    December 31, 1993                                           

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

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

                          10.8        Carrols Holdings Corporation              
                                      1993 Employee Stock Option and            
                                      Award Plan                                

                    The following exhibits are filed with this 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        

                          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                                      

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

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

                          10.13       Letter Agreement dated September 8,       
                                      1994 amending the Taco Cabana             
                                      Restaurants Development Agreement dated   
                                      June 30, 1994                             

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

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

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

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

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

                          10.19       1994 Regional Director's Bonus Plan       

                          10.20       1994 Director's Stock Option Plan         

                          10.21       Carrols Corporation Corporate             
                                      Employee's Savings Plan dated December    
                                      31, 1994                                  

                          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.                   
                                      Carrols Realty III Corp.                  
                                      CDC Theatre Properties, Inc.              
                                      H.N.S. Equipment & Leasing Corp.          
                                      Quanta Advertising Corp.                  
                                      Confectionery Square Corp.                
                                      Jo-Ann Enterprises, Inc.                  

                         27.1         Financial Data Schedule                   

             (d)    Reports on Form 8-K                                         

                    The Company did not file any reports on Form 8-K during     
the last quarter of the year covered by this report.                            

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                                 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 31st day of March, 1995.                     

                                       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                Director, Chairman and           March 31, 1995   
(Alan Vituli)                    Chief Executive Officer                        

/s/Daniel T. Accordino        Director, President              March 31, 1995   
(Daniel T. Accordino)            and Chief Operating                            
                                 Officer                                        

/s/Richard V. Cross           Director, Executive              March 31, 1995   
(Richard V. Cross)               Vice President -                               
                                 Finance, and Treasurer                         
                                 (Principal Financial &                         
                                 Accounting Officer)                            

/s/Peter J. Weidhorn          Director                         March 31, 1995   
(Peter J. Weidhorn)                                                             

/s/Franklin Glasgall          Director                         March 31, 1995   
(Franklin Glasgall)                                                             

/s/M. Bruce Adelberg          Director                         March 31, 1995   
(M. Bruce Adelberg)                                                             

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                              
                                        ___________                             

To the Board of Directors of                                                    
 Carrols Corporation                                                            

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

We conducted our audits in accordance with generally accepted auditing stan-    
dards.  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 man- 
agement, 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 Corpora-  
tion and Subsidiaries as of December 31, 1994 and 1993, and the consolidated    
results of their operations and their cash flows for each of the three years in 
the period ended December 31, 1994 in conformity with generally accepted ac-    
counting principles.  In addition, in our opinion, the financial statement      
schedules referred to above, when considered in relation to the basic financial 
statements taken as a whole, present fairly, in all material respects, the in-  
formation required to be included therein.                                      

As further discussed in the notes to the consolidated financial statements, the 
Company changed its method of accounting for income taxes and postretirement    
benefits in 1993 and 1992, respectively.                                        

                                               COOPERS & LYBRAND L.L.P.         

Syracuse, New York                                                              
February 25, 1995                                                               

                                      F-1                                       

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                                   CONSOLIDATED BALANCE SHEETS                               

                                    DECEMBER 31, 1994 AND 1993                               
                                           ___________                                       


       ASSETS                                                         1994           1993    
                                                                                             
Current assets:                                                                              
  Cash and cash equivalents                                      $  1,710,000   $  1,172,000 
  Trade and other receivables, net of                                                        
    reserves of $424,000 and $563,000                                                        
    for 1994 and 1993, respectively                                   532,000        632,000 
  Inventories                                                       2,254,000      2,051,000 
  Prepaid real estate taxes                                           384,000        273,000 
  Prepaid expenses and other current assets                           459,000        487,000 
                                                                  -----------    ----------- 
    Total current assets                                            5,339,000      4,615,000 
                                                                  -----------    ----------- 

Property and equipment, at cost:                                                             
  Land                                                              6,543,000      6,431,000 
  Buildings and improvements                                       14,260,000     14,341,000 
  Leasehold improvements                                           34,854,000     34,125,000 
  Equipment                                                        40,141,000     35,012,000 
  Capital leases                                                   15,558,000     15,689,000 
                                                                  -----------    ----------- 
                                                                  111,356,000    105,598,000 
  Less accumulated depreciation                                                              
    and amortization                                              (53,969,000)   (47,254,000)
                                                                  -----------    ----------- 
   Net property and equipment                                      57,387,000     58,344,000 

Franchise rights, at cost (less accumulated                                                  
  amortization of $17,548,000 and $15,146,000                                                
  for 1994 and 1993, respectively)                                 46,042,000     39,566,000 

Beneficial leases, at cost (less accumulated                                                 
  amortization of $7,433,000 and $6,921,000                                                  
  for 1994 and 1993 respectively)                                   8,405,000      9,233,000 

Excess of cost over fair value of assets acquired                                            
  (less accumulated amortization of $462,000                                                 
  and $404,000 for 1994 and 1993, respectively)                     1,849,000      1,907,000 

Other assets                                                        5,666,000      6,070,000 
                                                                   ----------     ---------- 
                                                                 $124,688,000   $119,735,000 
<FN>                                                              ===========    =========== 

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

                                      F-2                                       

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                  CARROLS CORPORATION AND SUBSIDIARIES

                                    CONSOLIDATED BALANCE SHEETS                              

                                    DECEMBER 31, 1994 AND 1993                               
                                            ___________                                      

               LIABILITIES AND STOCKHOLDER'S DEFICIT                  1994            1993   
                                                                                             
Current liabilities:                                                                         
  Current portion of long-term debt                               $   258,000    $   283,000 
  Current portion of capital lease obligations                        615,000        584,000 
  Accounts payable                                                  6,915,000      5,845,000 
  Accrued liabilities:                                                                       
    Taxes                                                           1,525,000      1,073,000 
    Payroll and employee benefits                                   3,748,000      2,340,000 
    Interest                                                        4,899,000      4,864,000 
    Other                                                           3,835,000      3,432,000 
                                                                   ----------     ---------- 
     Total current liabilities                                     21,795,000     18,421,000 

Long-term debt, net of current portion                            120,680,000    114,197,000 

Capital lease obligations,                                                                   
  net of current portion                                            3,966,000      4,603,000 

Deferred gain - sale/leaseback of real estate                       1,888,000      1,998,000 

Accrued postretirement benefits                                     1,354,000      1,288,000 

Other liabilities                                                   2,213,000      1,632,000 
                                                                  -----------    ----------- 
     Total liabilities                                            151,896,000    142,139,000 
                                                                  -----------    ----------- 
Commitments and contingencies                                                                

Stockholder's deficit:                                                                       
  Common stock, par value $1; authorized 1,000                                               
    shares, issued and outstanding - 10 shares                             10             10 
  Additional paid-in capital                                        1,474,990      4,447,990 
  Accumulated deficit                                             (28,683,000)   (26,852,000)
                                                                  -----------     ---------- 
     Total stockholder's deficit                                  (27,208,000)   (22,404,000)
                                                                  -----------     ---------- 
                                                                 $124,688,000   $119,735,000 
                                                                  ===========    =========== 

<FN>                                                                                         

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

                                      F-3                                       

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                  CARROLS CORPORATION AND SUBSIDIARIES

                               CONSOLIDATED STATEMENTS OF OPERATIONS                       

                            YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992                   
                                            ___________                                    


                                                      1994           1993           1992   
                                                  (52 Weeks)     (52 Weeks)     (53 Weeks) 
                                                                                           
Revenues:                                                                                  
  Sales                                         $203,927,000   $171,137,000   $156,020,000 
  Other income                                       327,000        497,000        393,000 
                                                 -----------    -----------    ----------- 
                                                 204,254,000    171,634,000    156,413,000 
                                                 -----------    -----------    ----------- 
Costs and expenses:                                                                        
  Cost of sales                                   57,847,000     48,502,000     43,133,000 
  Restaurant wages and related expenses           59,934,000     51,739,000     47,122,000 
  Other restaurant operating expenses             42,390,000     35,192,000     30,725,000 
  Depreciation and amortization                   11,259,000     12,143,000     11,021,000 
  Administrative expenses                          9,449,000      8,031,000      6,961,000 
  Advertising expense                              8,785,000      7,930,000      7,671,000 
  Interest expense                                14,456,000     12,505,000     11,042,000 
  Loss on closing restaurants and other            1,800,000                               
                                                  ----------     ----------     ---------- 
                                                 205,920,000    176,042,000    157,675,000 
                                                 -----------    -----------    ----------- 

    Loss before taxes, extraordinary item                                                  
      and cumulative effect of change                                                      
      in accounting principle                     (1,666,000)    (4,408,000)    (1,262,000)

Provision for state taxes, current                  (165,000)                              
                                                   ---------      ---------      --------- 
Loss before extraordinary item and                                                         
  cumulative effect of change in                                                           
  accounting principle                            (1,831,000)    (4,408,000)    (1,262,000)

Extraordinary loss on                                                                      
  extinguishment of debt                                         (4,883,000)               

Cumulative effect of change in                                                             
  accounting for postretirement benefits                                        (1,037,000)
                                                   ---------     ----------     ---------- 

              NET LOSS                            (1,831,000)    (9,291,000)    (2,299,000)

Accumulated deficit, beginning of year           (26,852,000)   (17,561,000)   (15,262,000)
                                                  ----------     ----------     ---------- 
     ACCUMULATED DEFICIT, END OF YEAR           $(28,683,000)  $(26,852,000)  $(17,561,000)
                                                  ==========     ==========     ========== 

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

                   F-4

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                  CARROLS CORPORATION AND SUBSIDIARIES

                               CONSOLIDATED STATEMENTS OF CASH FLOWS                        

                           YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992                     
                                            ___________                                     

                         Increase (Decrease) in Cash and Cash Equivalents                   

                                                      1994           1993          1992     
                                                  (52 Weeks)     (52 Weeks)    (53 Weeks)   
                                                                                            
Cash flows from operating activities:                                                       
  Net loss                                      $(1,831,000)     $(9,291,000)   $(2,299,000)
  Adjustments to reconcile net loss                                                         
    to net cash provided by operating                                                       
    activities:                                                                             
      Depreciation and amortization              11,259,000       12,143,000     11,021,000 
      Non-cash charges included in                                                          
        extraordinary loss                                         2,245,000                
      Non-cash charges included                                                             
        in loss on closing restaurants                                                      
        and other                                 1,800,000                                 
      Change in operating assets and liabilities:                                           
        Trade and other receivables                 100,000         (278,000)       395,000 
        Inventories                                (203,000)        (147,000)      (355,000)
        Prepaid expenses and                                                                
          other current assets                     (117,000)         (76,000)      (132,000)
        Other assets                               (494,000)         424,000        (74,000)
        Accounts payable                          1,070,000          471,000       (514,000)
        Accrued interest                             35,000        4,006,000        272,000 
        Accrued liabilities and other             2,781,000          211,000      2,118,000 
                                                 ----------       ----------     ---------- 
     Cash provided by operating activities       14,400,000        9,708,000     10,432,000 
                                                 ----------       ----------     ---------- 

Cash flows from investing activities:                                                       
  Capital expenditures:                                                                     
    Property and equipment                       (4,509,000)      (2,303,000)    (2,848,000)
    Construction of new restaurants              (1,357,000)      (1,411,000)      (243,000)
    Acquisition of restaurants                  (11,615,000)     (10,464,000)    (7,863,000)
    Franchise fees and renewals                    (158,000)        (149,000)       (80,000)
  Notes and mortgages issued                                        (613,000)      (110,000)
  Payments received on notes, mortgages                                                     
    and capital subleases receivable                112,000           82,000        233,000 
  Disposal of property, equipment                                                           
    and franchise rights                            569,000          842,000        113,000 
                                               ------------       ----------      --------- 
     Net cash used for                                                                      
        investing activities                    (16,958,000)     (14,016,000)   (10,798,000)
                                               ------------       ----------     ---------- 

<FN>                                                                                        
                                             Continued                                      

                                                F-5                                         
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                   CARROLS CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF CASH FLOWS, (Continued)                   

                           YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992                      
                                            ___________                                      

                         Increase (Decrease) in Cash and Cash Equivalents                    


                                                      1994           1993           1992     
                                                   (52 Weeks)     (52 Weeks)     (53 Weeks)  
                                                                                             
Cash flows from financing activities:                                                        
  Proceeds from long-term debt                    $ 6,800,000     $119,629,000   $15,000,000 
  Principal payments on long-term debt               (267,000)      (4,187,000)  (14,486,000)
  Retirement of long-term debt                        (75,000)    (104,090,000)              
  Proceeds from sale -                                                                       
    leaseback transaction                             672,000                                
  Dividends paid                                   (3,473,000)      (2,241,000)     (200,000)
  Principal payments on capital leases               (561,000)        (564,000)     (631,000)
  Payment of other liability                                        (4,256,000)              
                                                   ----------       ----------     --------- 
     Net cash provided by (used for)                                                         
       financing activities                         3,096,000        4,291,000      (317,000)
                                                   ----------       ----------     --------- 
     Increase (decrease) in cash                                                             
       and cash equivalents                           538,000          (17,000)     (683,000)

Cash and cash equivalents,                                                                   
  beginning of year                                 1,172,000        1,189,000     1,872,000 
                                                  -----------       ----------    ---------- 
     CASH AND CASH EQUIVALENTS,                                                              
       END OF YEAR                                $ 1,710,000      $ 1,172,000   $ 1,189,000 
                                                   ==========       ===========   ========== 

Supplemental disclosures:                                                                    
  Interest paid on debt                           $14,421,000      $ 8,499,000   $10,770,000 
  Taxes paid                                      $   126,000                                

<FN>                                                                                         

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

                                        F-6                                     

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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").  The Company is a             
wholly-owned subsidiary of Carrols Holdings Corporation ("Holdings").  All      
significant intercompany transactions have been eliminated in consolidation.    

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.                                                                         

Inventories                                                                     

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

Acquisitions                                                                    

The Company has purchased existing restaurants, principally for cash, during    
1994 and 1993 consisting of the following:                                      

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                                                          1994         1993                  
                                                                                             
Number of units                                               22            18               

Property and equipment:                                                                      
 Leasehold improvements                               $  128,000    $  967,000               
 Equipment                                             2,626,000     2,140,000               
                                                       ---------     ---------               
                                                       2,754,000     3,107,000               
Franchise rights                                       8,786,000     7,339,000               
Other assets                                              75,000        18,000               
                                                       ---------     ---------               
                                                     $11,615,000   $10,464,000               
                                                      ==========    ==========               

These acquisitions have been accounted for by the purchase method; accordingly, their results
are included in the consolidated financial statements from the respective acquisition dates. 
<FN>                                                                                         

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CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 ___________

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

Acquisitions (Continued)                                                        

Proforma financial information with respect to the 1993 acquisition of 18       
restaurants is as follows and assumes the acquisition took place at the         
beginning of the fiscal year:                                                   

                                           1993             1992

 Revenues                                  $181,341,000     $175,350,000
Income (loss) before extraordinary                                    
item and cumulative effect of                                     
   accounting change                      ($  3,703,000)         434,000

  Net loss                                 ($  8,586,000)        (603,000)

Proforma financial information is not provided for the 1994 acquisitions since  
their effect on the 1994 consolidated financial statements is not significant.  

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 op-
                                                         tions 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, 1994, 1993 and   
1992 was $7,404,000, $7,840,000 and $7,240,000, 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.         

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

   F-8

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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.                                      

Deferred Financing Costs                                                

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

Cash and Equivalents                                                    

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

Income Taxes                                                            

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

Effective January 1, 1993, the Company adopted FASB Statement No. 109,  
  "Accounting for Income Taxes" which requires, among other things, an asset
and liability approach to recognizing the tax effects of temporary      
   differences between tax and financial reporting.  This change had no effect
on the Company's 1993 financial statements.                             

Advertising Costs                                                       

All advertising costs are expensed as incurred.                         

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, $111,000, and     
    $101,000 for the years ended December 31, 1994, 1993 and 1992, respectively.

         F-9

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CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 ___________

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 January 1,
   1995 (52 weeks), January 2, 1994 (52 weeks) and January 3, 1993 (53 weeks).

Reclassification                                                        

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

2.  INVENTORIES                                                                 

Inventories at December 31 consisted of:                                
                                              1994          1993

    Raw materials (food and paper products)     $1,415,000    $1,205,000
    Supplies                                       839,000       846,000
                                                 ---------     ---------
                                                $2,254,000    $2,051,000
                                                 =========     =========

3.  LEASES                                                                      

The Company utilizes land and buildings in its operations under various 
  lease agreements. Initially these leases are generally for 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.      

During 1991, the Company sold the real estate of twelve of the Company's
restaurants under sale/leaseback arrangements for total proceeds of     
   approximately $10,150,000.  Deferred gains of approximately $2,050,000 were
  recorded in 1991 as a result of these transactions and are being amortized
over the lives of the leases.  The 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
leases contain purchase options at fair market value, as defined in each
 lease agreement.  The deferred gain of $1,888,000 at December 31, 1994 is
primarily the result of the 1991 transactions.                          

 Accumulated amortization pertaining to capital leases for the years ended
December 31, 1994 and 1993 was $8,285,000 and $7,422,000, respectively. 

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CARROLS CORPORATION AND SUBSIDIARIES                                            

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 ___________

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3.  LEASES - continued                                                                  

    Minimum rent commitments under noncancelable leases as of December 31, 1994,        
    are as follows:                                                                     
                                                               Capital        Operating 
     Years ending:                                                                      
                                                                                        
         1995                                                $1,124,000      $10,474,000
         1996                                                 1,088,000       10,343,000
         1997                                                   980,000       10,085,000
         1998                                                   805,000        9,533,000
         1999                                                   588,000        8,911,000
         2000 and thereafter                                  2,961,000       81,821,000
                                                              ---------       ----------
     Total minimum lease payments                             7,546,000     $131,167,000
                                                                             ===========
       Less amount representing interest (7.7% to 16.6%)      2,965,000                 
                                                              ---------                 
     Total obligations under capital leases                   4,581,000                 
       Less current portion                                     615,000                 
                                                              ---------                 
         Long-term obligations under capital leases          $3,966,000                 
                                                              =========                 
<FN>                                                                            

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

                                                                · Download Table
    follows:                                                            
                                  1994        1993        1992    
                                                                  
Minimum rent on real property  $10,147,000  $8,627,000  $7,223,000
Additional rent based on a                                        
  percentage of sales            1,917,000   1,290,000   1,148,000
Equipment rent                     109,000      69,000      92,000
                                ----------  ----------   ---------
                               $12,173,000  $9,986,000  $8,463,000
                                ==========  ==========   =========

<FN>                                                                            

        F-11

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         CARROLS CORPORATION AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                           

                                   ___________                                           

4.  LONG-TERM DEBT                                                                       

    Long-term debt at December 31 consisted of:                                          
                                                                     1994        1993    
                                                                                         
      Collateralized:                                                                    
        Revolving line of credit                                  $8,622,000   $2,500,000
        Acquisition loan                                             650,000             
        Industrial Development Revenue bonds                         846,000    1,096,000
        Other notes payable with                                                         
          interest rates to 10%                                      820,000      884,000
      Unsecured:                                                                         
        Senior notes                                             110,000,000  110,000,000
                                                                 -----------  -----------
                                                                 120,938,000  114,480,000
   Less current portion                                              258,000      283,000
                                                                 -----------  -----------
                                                                $120,680,000 $114,197,000
                                                                 ===========  ===========
<FN>                                                                            

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      
 includes $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.      

   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 will be collateralized by the twenty-two restaurants   
   acquired during 1994 and will be 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.  As of December 31, 1994, the outstanding balance under the
acquisition loan was $650,000.                                          
        F-12

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CARROLS CORPORATION AND SUBSIDIARIES                                            

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 ___________

4.  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 borrowings to either the London Interbank   
    Offering Rate plus 2.5% or the prime rate plus 1.25%.  If the revolving line
 of credit and acquisition loan exceed $25 million, then 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, 1994 there was $14.8 million available under the revolving line
 of credit facility after reduction for the $8.6 million outstanding and a
  $1.6 million letter of credit guaranteed by the facility. A commitment fee
of 1/2% is payable on the unused balance.  At December 31, 1994, the    
facility was collateralized by substantially all assets of the Company. 

  The Industrial Development Revenue bonds were issued on August 30, 1983 in
 connection with the purchase and modernization of a warehouse.  Bonds are
due in yearly amounts of $250,000 through 1998, with interest at        
seventy-five percent of prime.  The bonds are collateralized by the     
warehouse which has a net book value of $1,890,000.                     

  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, 1994, principal payments required on all long-term debt are
as follows:                                                             

1995                        $    258,000          
1996                             258,000          
1997                             291,000          
1998                             266,000          
1999                             452,000          
Subsequent to 1999           119,413,000          
                   -----------
                  $120,938,000
                   ===========

        F-13

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CARROLS CORPORATION AND SUBSIDIARIES                                            

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________ 

5.  INCOME TAXES                                                                

The components of deferred income taxes at December 31, are as follows: 

                                                   1994           1993
Assets                                                      
         Receivable and other reserves         $   588,000     $   351,000
         Insurance reserves                        707,000         487,000
         Accrued vacation                          426,000         405,000
Deferred gain on sale/leaseback                         
           transactions                            755,000         799,000
         Postretirement benefits                   542,000         534,000
         Capital leases                            572,000         555,000
         Net operating loss carryforwards       14,845,000      13,096,000
          Less: Valuation allowance             (11,799,000)     (6,376,000)
                                                ----------      ----------
                                                 6,636,000       9,851,000
                                                ----------      ----------
Liabilities                                                 
         Franchise rights                        6,500,000       7,384,000
         Depreciation                              136,000       2,438,000
         Installment sales                                          29,000
                                                ----------      ----------
                                                 6,636,000       9,851,000
                                                ----------      ----------
                                           $     0         $     0
                                                ==========      ==========

During 1993, the Company settled outstanding disputes with the Internal 
   Revenue Service relating to income tax claims arising from periods prior to
 the acquisition of Carrols by Holdings.  The cost to the company of these
settlements approximated $2.7 million of tax claims plus $1.6 million of
interest and had been previously reserved. The Company has net operating
loss carryforwards for income tax purposes of approximately $37 million,
which expire in varying amounts beginning 2001 through 2009.            

6.  STOCKHOLDER'S EQUITY                                                        

The Company                                                             

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

Additional paid-in capital was reduced for cash dividends declared of   
$2,973,000,$2,741,000 and $200,000 in 1994, 1993 and 1992, respectively.

  F-14

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          CARROLS CORPORATION AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         
                                   ___________                                         

6.  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:                                                    

                                                                   1994          1993  
                                                                                       
       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                                    
           2,266,157 and 2,760,012 shares for                                          
           1994 and 1993, respectively                             23,000        28,000
         Non-voting, par value $.01, authorized                                        
           882,353  shares, issued - none                                              
<FN>                                                                            
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.                                                                
F-15

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CARROLS CORPORATION AND SUBSIDIARIES                                            

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________ 

6.  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, 1994
and 1993 totalled 463,549 and 529,412, respectively.  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.  As of December 31, 1994, 51 employees and non-employee directors
   were granted options for 257,000 shares at $4.00 per share, of which 15,000
  shares were for non-employee directors.  Options are generally exercisable
over 5 years with 46,400 options exercisable as of December 31, 1994.   

7.  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.             

F-16

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CARROLS CORPORATION AND SUBSIDIARIES                                            

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 ___________

8.  POSTRETIREMENT EMPLOYMENT BENEFITS                                          

The Company provides postretirement medical and life insurance benefits 
covering substantially all salaried employees.                          

  As of January 1, 1992, the provisions of Statement of Financial Accounting
 Standard (SFAS) No. 106, Employers Accounting for Postretirement Benefits
Other Than Pensions, were adopted.  The Company elected the immediate   
recognition approach with respect to the transition obligation.         

The following sets forth the plan status at December 31:                

Accumulated Postretirement Benefit Obligation (APBO):               

                                                                · Download Table


                                                       1994           1993   
                                                                             
 Retirees                                          $  409,000     $  364,000 
 Fully eligible                                                              
   active participants                                130,000        135,000 
 Other active plan participants                                              
   not fully eligible                                 568,000        851,000 
                                                    ---------      --------- 
      Total APBO                                    1,107,000      1,350,000 
 Unrecognized prior service cost                      281,000        304,000 
 Unrecognized net loss                                (34,000)      (366,000)
                                                    ---------      --------- 
      Accrued postretirement                                                 
        benefit obligation                         $1,354,000     $1,288,000 
                                                    =========      ========= 
<FN>                                                                             

                                                                · Download Table

Net periodic postretirement benefit cost included the following components:  

                                      1994             1993             1992 
                                                                             
   Service cost                     $ 47,000          $ 61,000       $ 80,000
   Interest cost                      70,000            74,000         83,000
   Net amortization                  (20,000)          (19,000)              
                                     -------           -------         ------
                                    $ 97,000          $116,000       $163,000
                                     =======           =======        =======
<FN>                                                                             

            F-17

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CARROLS CORPORATION AND SUBSIDIARIES                                            

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 ___________

8.  POSTRETIREMENT EMPLOYMENT BENEFITS (Continued)                              

 A 10.5% annual rate of increase in the per capita costs of covered health
    care benefits was assumed for 1994, gradually decreasing to 5.5% by the year
    2004.  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, 1994 by $471,000 and increase the aggregate
of the service cost and interest cost components of net periodic        
   postretirement benefit cost for 1994 by $18,000.  A discount rate of 7% was
    used to determine the accumulated postretirement benefit obligation.  Actual
benefit costs paid on behalf of retirees in 1994 amounted to $31,000.   

9.  LIQUIDITY AND RESOURCES                                                     

Although the Company has experienced losses since inception, it has and 
expects to continue to generate sufficient cash flows to meet its       
obligations.  In addition to cash flows from operations, the Company's  
 available resources include, among other things, borrowing from available
lines of credit, sale leasebacks of owned real estate to the extent     
permitted under the loan agreements and managing certain discretionary  
expenditures.                                                           

10. LOSS ON CLOSING RESTAURANTS AND OTHER                                       

   The loss on closing restaurants and other of $1.8 million for 1994 reflects
approximately $1.3 million associated with the closing during 1995 of   
  certain restaurants operating at a negative annual cash flow.  These costs
include the  write-down of assets to net realizable value and estimated 
lease termination costs.  The loss also includes the write-down of      
approximately $0.5 million to net estimated realizable value of a vacant
warehouse held for sale with a net book value as of December 31, 1994 of
$1.9 million.                                                           

      F-18

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CARROLS CORPORATION AND SUBSIDIARIES                                            
                         SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                          YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
                           ___________

                                                        · Enlarge/Download Table

       Col. A                                            Col. B           Col. C         Col. D        Col. E    
                                                                         Additions                               
                                                        Balance at       Charged to                   Balance at 
                                                         Beginning       Costs and                      End      
    Description                                          of Period       Expenses      Deductions     of Period  
                                                                                                                 
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

  Reserve for notes and mortgages receivable(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
  Reserve for notes and mortgages receivable(c)            292,000          229,000                       521,000

Year ended December 31, 1992:                                                                                    

  Accumulated depreciation of property                                                                           
    and equipment                                       33,573,000        7,240,000     (127,000)(d)   40,686,000
  Accumulated amortization of franchise rights          11,153,000        2,211,000                    13,364,000
  Accumulated amortization of beneficial leases          4,985,000          977,000                     5,962,000
  Accumulated amortization of excess                                                                             
    cost over fair value of assets                         289,000           58,000                       347,000

  Reserve for doubtful trade accounts receivable           699,000                       (83,000)(b)      616,000

  Reserve for notes and mortgages receivable(c)            235,000           57,000                       292,000

  (a)  Represents reduction of accumulated amortization for franchise rights 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.                                                                   
<FN>                                                                            
              F-19

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		1/1/92		53
		9/15/92		33
		12/31/92		15		55
		1/1/93		45
		1/3/93		46
		8/4/93		33
		8/9/93		33
		8/10/93		32
		8/17/93		3		17
		10/27/93		33
		12/14/93		25		52
		12/31/93		15		55
		1/2/94		46
		2/10/94		32
		3/11/94		34
		3/15/94		26		27
		4/1/94		2		52
		4/18/94		32
		5/2/94		34
		5/31/94		32
		6/20/94		10
		6/30/94		34					10-Q
		9/8/94		34
		12/20/94		3		49
For The Period Ended		12/31/94		1		55
		1/1/95		11		46
		2/25/95		37
		3/15/95		1		12
Filed On / Filed As Of		3/30/95
		3/31/95		36					10-Q, 10-Q/A
		12/31/97		26		27			10-K
		8/15/98		48
		3/31/99		2		8			10-Q
		8/15/3		48
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