How does the advertising obligation for Hardees in Item 6 relate to the franchisor's advertising assistance described in Item 11?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
of its existing Franchised Restaurants. In 2025 we waived the Initial Franchise Fee in certain instances where a new franchisee was taking over operation of a Franchised Restaurant that was closed or otherwise may have closed.
ITEM 6 OTHER FEES
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| upon receipt of invoice | |||
| Hardee’s Advertising | An advertising and promotional obligation (“APO”) in an amount set forth in your Franchise Agreement. Your APO will be up to 7% of Hardee’s Gross Sales. Currently, your APO is 5.5% of Hardee’s Gross Sales. (3) | Divided between HNAF, Regional Co-op and LSM (each as defined below) | |
| Hardee’s National Advertising Fund (“HNAF”) | Currently, 4.25% of Hardee’s Gross Sales | On the 10th day of each month | HNAF contributions are due on the 10th day of each month and are based on Gross Sales in the prior month. |
| Hardee’s Regional Cooperative (“Regional Co-op”) | If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, minimum of 0.5% of Hardee’s Gross Sales; however, your Regional Co- op can vote to increase each member’s contribution. | Same as royalty | We have the right, in our sole discretion, to establish a regional advertising and sales promotion cooperative in the regional area in which your Franchised Restaurant is located (“DMA”) to which you will be required to contribute. |
| Hardee’s Local Store Marketing (“LSM”) | Difference between your APO and the amount you contribute to HNAF and a Regional Co-op | Not paid to HR | You may develop advertising materials for your own use; however, we must approve these advertising materials in advance of use. LSM monies may be spent only for approved advertising. (4) |
| Interest | Interest on the amount owed from the date due until paid | When any payment is overdue | The interest rate is the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurant is located not to exceed 1.5% per fiscal period (or a portion of a fiscal period). |
| Secret Shopper, and other Quality Assurance (QA) Programs | All costs associated with the Secret Shopper programs or other QA programs as HR may require | As incurred | You must participate in programs initiated to verify customer satisfaction and/or your compliance with all operational and other aspects of the System. Currently, there is no charge for an initial QA audit; the cost of a second audit due to a deficiency is currently $211 per Restaurant which may be increased every year, although we do not anticipate the annual increase to exceed 30%. |
| Non-Cash Payment Systems | All costs associated with non- cash payment systems | As incurred | You must accept debit cards, credit cards, stored value gift cards or other non-cash payment systems specified by HR to enable customers to purchase authorized products. |
| Other Training | Fees are based upon, but not limited to, actual materials, vendor charges and facility costs and likely will range from $300 to $1,000. | Before the commencement of training | You will be required to pay all travel, living and other expenses incurred by you and your employees while attending training. |
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Item 6 details the franchisee's advertising obligations, while Item 11 outlines how Hardees provides advertising assistance. Hardees franchisees have an advertising and promotion obligation (APO) that can be up to 7% of Gross Sales, but is currently 5.5%. This APO is divided among the Hardee’s National Advertising Fund (HNAF), Regional Co-ops, and Local Store Marketing (LSM). Currently, 4.25% of Gross Sales is contributed to HNAF, with a minimum of 0.5% going to Regional Co-ops if the restaurant is in an area covered by one. The remainder is allocated to LSM.
Hardees maintains and administers HNAF for advertising, marketing, public relations, research, gift card and loyalty programs, and related activities. Hardees has sole discretion over these programs, including creative concepts, materials, endorsements, and the placement and allocation of advertising. This means that while franchisees contribute a percentage of their gross sales to these advertising funds, Hardees ultimately decides how those funds are spent and what advertising strategies are employed.
Franchisees can develop their own advertising materials for local store marketing; however, Hardees must approve these materials before use. This ensures that all advertising aligns with the brand's overall marketing strategy. Hardees also states that Hardee's Restaurants operated by them contribute to HNAF on the same basis as comparable franchisees, and vendors and other suppliers may also contribute to HNAF. This suggests that the advertising fund is supported by various sources, not just franchisees.
In summary, the advertising obligation in Item 6 mandates that franchisees contribute a percentage of their gross sales to advertising efforts, while Item 11 describes how Hardees manages and directs these advertising funds and provides assistance to franchisees in their local marketing efforts, subject to Hardees's approval. This structure ensures a balance between national brand consistency and local marketing flexibility, all under the oversight and direction of Hardees.