Considering the Hardees litigation (Item 3), what are the potential risks and liabilities for a franchisee who is considering relocating their restaurant to a new location?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
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Franchise Agreement
You will not receive any exclusive territory under the Franchise Agreement. You may face competition from other franchisees, from outlets that we own and/or operate, or from other channels of distribution or competitive brands that we control. You do not receive any right under the Franchise Agreement to develop additional Franchised Restaurants. Our prior written consent is required before you relocate the Franchised Restaurant. If your right to possession of the Franchise Restaurant premises is lost through no act or failure to act on your part, you may relocate the Franchised Restaurant if: (1) we accept the new location; (2) you construct and equip 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 original franchised location; and (4) you reimburse us for all reasonable expenses actually incurred by us in connection with the acceptance of the new location.
You may only sell or distribute products identified by some or all of the Proprietary Marks from the Franchised Location; you may not use any other method or channel of distribution. We do not impose any geographic restrictions on your ability to solicit customers; however, see Item 13 for internet restrictions. In addition, you must participate in all online ordering and delivery programs that we may designate from time to time and comply with the terms and conditions of such programs, including any geographic or other delivery restrictions.
What This Means (2025 FDD)
According to the 2025 Hardees Franchise Disclosure Document, a franchisee needs prior written consent from Hardees before relocating their franchised restaurant. Hardees has the right to withhold this approval at their sole discretion. If Hardees does approve the relocation, they can charge the franchisee for all reasonable expenses incurred while considering the relocation request. This means a franchisee could face financial costs even if the relocation is ultimately not approved.
If a Hardees franchisee loses possession of their current location through no fault of their own, they may be able to relocate the restaurant. To do so, Hardees must approve the new location. The franchisee must construct and equip the new restaurant to meet Hardees' current system standards. The new restaurant must open within six months of losing possession of the original location. The franchisee is also responsible for reimbursing Hardees for all reasonable expenses related to the new location's acceptance.
These stipulations highlight the importance of maintaining a good relationship with Hardees and carefully planning any potential relocation. Franchisees should be aware of the potential costs and time constraints involved in relocating, even under circumstances where the loss of the original location was not their fault. It is also important to note that the franchisee is responsible for Hardees' expenses during the approval process, regardless of whether the relocation is ultimately approved.