How does Hardees account for sublease payments received from franchisees in its Consolidated Statements of Operations?

According to Hardees's 2025 Franchise Disclosure Document, property revenues, which include rental income from properties Hardees leases or subleases to franchisees, are accounted for in accordance with applicable accounting guidance for leases. This revenue is presented net of sales tax on the Consolidated Statement of Operations.

This means that when Hardees subleases a property to a franchisee, the rental income received is recognized as revenue. Hardees follows standard lease accounting principles to determine how and when this revenue is recognized. This typically involves recognizing revenue over the lease term as the franchisee uses the property.

For a prospective Hardees franchisee, this accounting treatment is important because it clarifies how Hardees handles sublease payments. If a franchisee is subleasing a property from Hardees, the payments they make contribute to Hardees's reported revenue. This revenue recognition is a standard accounting practice, ensuring that Hardees's financial statements accurately reflect income from its leasing activities.