Does Hardees assume liability to the transferee if they experience financial difficulties after HR consents to the transfer?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
HR's decision with respect to a proposed Transfer shall not create any liability on the part of HR: (a) to the transferee, if HR consents to the Transfer and the transferee experiences financial difficulties; or (b) to Franchisee or the proposed transferee, if HR withholds consent to the Transfer.
HR, without any liability to Franchisee or the proposed transferee, has the right, in its sole discretion, to communicate and counsel with Franchisee and the proposed transferee regarding any aspect of the proposed Transfer.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees (referred to as HR in the document) does not assume liability to the transferee if the transferee experiences financial difficulties after Hardees consents to the transfer. This means that if a franchisee sells their Hardees restaurant to a new owner, and that new owner subsequently struggles financially, Hardees is not responsible for those financial difficulties.
This provision protects Hardees from potential lawsuits or financial claims arising from the transferee's business operations. Hardees's decision to approve a transfer does not imply any guarantee of the transferee's success, and the company is not liable for any losses the transferee may incur. This is a standard practice in franchising, as franchisors typically do not want to be held responsible for the financial performance of individual franchisees after a transfer has been completed.
For a prospective Hardees franchisee, this clause highlights the importance of carefully evaluating the financial stability and business acumen of any potential buyer if they plan to sell their franchise in the future. It also underscores the need for the transferee to conduct their own due diligence and assess the risks and opportunities associated with operating a Hardees restaurant. The transferee should not rely on Hardees's approval of the transfer as an indication of guaranteed financial success.
It is important to note that while Hardees is not liable for the transferee's financial difficulties, Hardees still has the right to demand exact compliance with the terms of the franchise agreement by the transferee. Hardees's consent to the transfer does not waive any claims Hardees may have against the transferring party, nor does it waive Hardees's right to give or withhold consent to future transfers.