What is Hardees' advertising and promotion obligation (APO) based on?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ctronic information, meetings or seminars, telephone communications, email communications and other communications. (Franchise Agreement, § 12.C.)
- 6. Conduct inspections of the Franchised Restaurant and evaluations of the products sold and services rendered as we deem appropriate or necessary. (Franchise Agreement, § 12.D.)
Advertising
We have established, and will maintain and administer, HNAF for the creation and development of advertising, marketing and public relations, research and related programs, gift card and loyalty programs, activities and materials that we, in our sole discretion, deem appropriate. During the term of the Franchise Agreement, you will have an advertising and promotion obligation ("APO") in the amount set forth in an appendix to the Franchise Agreement. You will pay that portion of the APO as we direct (which, as of the date of this disclosure document, is 4.25% of Hardee's Gross Sales) to HNAF as described in the next paragraph. HNAF contributions are due on the tenth day of each month. The remainder of the APO is paid to a Regional Co-op and/or will be spent by you for LSM. There is no franchisee advertising council that advises HR on advertising policy. Hardee's Restaurants operated by us contribute to HNAF on the same basis as comparable franchisees. Vendors and other suppliers also may contribute to HNAF.
We or our designee direct all advertising, marketing, and public relations programs and activities financed by HNAF with sole discretion over the creative concepts, materials and endorsements used in those programs and activities, and the geographic, market and media placement and allocation of advertising and marketing materials. We may work with an advertising agency in developing advertising for print, radio, internet and television and also often leverage internal and contract creative services.
During our last fiscal year ended January 27, 2025, HNAF monies were spent as follows: approximately 76% on media and public relations; approximately 7% on television, radio, outdoor and print production; approximately 1% on point of purchase items, artwork and packaging; approximately 2% on research and development; approximately 3% on digital creative production; and 11% on other (which includes agencies fees, contract services, administration expenses and other miscellaneous advertising production expenses). No funds were used to solicit franchisees.
We also have the right to establish a Regional Co-op in the DMA in which your Franchised Restaurant is located. Hardee's Restaurants operated by us in an area covered by a Regional Co-op will contribute on the same basis as comparable franchisees. Only company-operated and franchised Hardee's Restaurants located in the DMA covered by a Regional Co-op contribute to the Regional Co-op. If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, you are required to contribute a minimum of 0.5% of Hardee's Gross Sales to the Regional Co-op; however, the Regional Co-op can vote to increase each member's contribution.
HR or its designee will administer HNAF. The HNAF is not a trust or escrow account, and HR has no fiduciary obligation to franchisees with respect to it. HR has the right to terminate HNAF and establish, if HR so elects, a different advertising fund. HR also has the right to terminate (and subsequently restart) any Regional Co-op. HR may incorporate any fund and may have a separate entity manage the fund.
Unaudited reports of the operations of HNAF and the Regional Co-ops are prepared annually and are available to you upon written request.
You must spend for approved LSM, on a monthly basis, the difference between your APO and the amount you contribute to HNAF and the Regional Co-op. You may develop advertising materials or purchase advertising materials from sources other than HR or its affiliates for your own local use; however, we must approve these advertising materials before first use. These advertising materials should be submitted to HR for review and approval at least 30 days in advance of first use.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 44–57)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, franchisees have an advertising and promotion obligation (APO) that is determined by an appendix to the Franchise Agreement. Currently, franchisees must pay 4.25% of Hardee's Gross Sales to the Hardee's National Advertising Fund (HNAF). These contributions are due by the tenth day of each month. The remaining portion of the APO is allocated to a Regional Co-op and/or spent by the franchisee on local store marketing (LSM). Hardees may reallocate or increase the APO, but increases are capped at ½% of Gross Sales within a 12-month period, and the APO cannot exceed 7% of Gross Sales. However, a Regional Co-op can require contributions that, when combined with the HNAF contribution, exceed the 7% limit.
The funds contributed to HNAF are managed by Hardees or its designee, who have sole discretion over advertising, marketing, and public relations programs. Hardees is not obligated to ensure that advertising expenditures benefit each franchisee proportionally to their contribution, nor are they obligated to spend the advertising payments in the same year they are received; unspent funds will be used in the following year. Franchisees are also required to spend the difference between their total APO and their contributions to HNAF and the Regional Co-op on approved LSM activities.
For a prospective Hardees franchisee, this means that a significant portion of their gross sales will be allocated to advertising and promotional activities. It is important to understand the specific APO percentage outlined in the Franchise Agreement and how the funds are distributed between HNAF, Regional Co-ops, and local store marketing. Franchisees should also be aware that Hardees has the right to modify the APO within certain limits and that the benefits from advertising expenditures may not be directly proportional to their contributions. Furthermore, franchisees need to adhere to Hardees' guidelines and obtain approval for any local advertising materials not sourced directly from Hardees or its affiliates.