What are the conditions under which Hardees can terminate the franchise agreement if the franchisee loses possession of the Franchised Location?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, if, during the term of this Agreement, Franchisee, through no act or failure to act on its part (except the failure to extend the lease for the Franchised Location through the Initial Term of this Agreement), loses the right to possession of the Franchised Location, the Initial Term shall expire as of the date of the loss of the right to possession. However, if the right to possession is lost through no act or failure to act on Franchisee's part, Franchisee may relocate the Franchised Restaurant (without paying any additional initial franchise fee or transfer fee) at its expense and the Initial Term shall not expire if: (1) HR accepts the new location; (2) Franchisee constructs and equips a Franchised Restaurant at the new location in accordance with the then-current System Standards and specifications; (3) a Franchised Restaurant at the new location is open to the public for business within 6 months after the loss of possession of the Franchised Location; and (4) Franchisee reimburses HR for all reasonable expenses actually incurred by HR in connection with the acceptance of the new location.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the franchise agreement's initial term can expire if the franchisee loses the right to possess the franchised location. However, this expiration only occurs if the loss of possession is due to the franchisee's actions or failure to act, except for failing to extend the lease to cover the entire initial term.
If the loss of possession occurs through no fault of the franchisee, Hardees offers an opportunity to relocate the restaurant. The franchisee can relocate the Hardees restaurant without incurring an additional initial franchise fee or transfer fee, provided certain conditions are met. These conditions include Hardees's approval of the new location, construction and equipping of the new restaurant according to current system standards, opening the relocated restaurant within six months of losing possession of the original location, and reimbursing Hardees for reasonable expenses related to the new location's acceptance.
In summary, a Hardees franchisee losing possession of their location could face termination of their franchise agreement. However, Hardees provides an avenue for the franchisee to continue operating under the franchise agreement at a new location if the loss of possession was not their fault and they meet specific relocation requirements.