What actions related to transferring ownership without consent would cause a Hardees developer to be in default?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Developer understands and acknowledges that the rights and duties set forth in this Agreement are personal to Developer, that HR has entered into this Agreement in reliance on Developer's (and Developer's direct and indirect owners') business skill, financial capacity, personal character, experience and demonstrated or purported ability in developing and operating high quality foodservice operations and that HR has entered into this Agreement with the understanding that, except as otherwise reserved by HR in Section 2, Developer will be the only franchisee of HR in the Development Territory during the Development Term. Accordingly, neither Developer nor any immediate or remote successor to
any part of Developer's interest in this Agreement, nor any individual, partnership, corporation or other legal entity which directly or indirectly has an interest in Developer shall sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in Developer, this Agreement or any other assets pertaining to Developer's operations under this Agreement (collectively "Transfer") without the prior written consent of HR. HR shall be free to withhold consent to any Transfer, without consideration of the factors listed in Section 10.B., if Developer does not propose to Transfer the same interest with respect to all agreements with HR in the Development Territory.
Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of HR shall be null and void and shall constitute a material breach of this Agreement, for which HR may terminate this Agreement without providing Developer an opportunity to cure the breach.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a developer will be in material breach of their agreement if they sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in the Development Agreement without prior written consent from Hardees. This restriction applies to any immediate or remote successor to any part of the developer's interest, as well as any individual, partnership, corporation, or other legal entity with a direct or indirect interest in the developer.
Hardees emphasizes that the rights and duties within the Development Agreement are personal to the developer. Hardees enters into the agreement based on the developer's business skill, financial capacity, personal character, experience, and ability to operate high-quality foodservice operations. The agreement is made with the understanding that, except as otherwise reserved by Hardees, the developer will be the only franchisee in the Development Territory during the Development Term.
Any transfer without Hardees's prior written consent is considered null and void, constituting a material breach of the agreement. In such cases, Hardees reserves the right to terminate the agreement without providing the developer an opportunity to remedy the breach. This stringent requirement underscores Hardees's control over who operates franchises within its system and ensures that only qualified and approved individuals or entities are involved.