Considering the Hardees litigation (Item 3), what are the potential risks and liabilities for a franchisee who is considering participating in a joint marketing campaign with other franchisees?
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. |
| Type of Fee (1) | Amount | Due Date upon receipt of invoice | Remarks |
| 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. |
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, franchisees may be required to participate in regional advertising cooperatives. Hardees reserves the right to establish a regional advertising and sales promotion cooperative in the area where a franchisee's restaurant is located, and the franchisee will be required to contribute to it. The minimum contribution is currently 0.5% of Hardees' Gross Sales, but the Regional Co-op can vote to increase each member’s contribution.
Hardees also utilizes the Hardee’s National Advertising Fund (“HNAF”). Franchisees contribute 4.25% of Gross Sales to HNAF, which is due on the 10th day of each month. Hardees strives to use HNAF to create advertising and marketing that benefits the Hardees system. However, Hardees is not liable to the franchisee for ensuring that HNAF expenditures in any geographic area are proportionate or equivalent to the contributions from Hardee's restaurants in that area. Hardees also does not guarantee that any Hardee's restaurant will benefit directly or in proportion to its contribution to HNAF from the advertising.
The FDD states that Hardees is not directly or indirectly liable to the franchisee regarding the maintenance, direction, or administration of HNAF. Hardees can suspend or terminate HNAF, or defer or waive advertising fees for certain restaurants under unique circumstances. Upon termination of HNAF, the monies will be spent for advertising and promotional purposes. The franchisee may also engage in local store marketing (LSM), using the difference between their advertising and promotional obligation (APO) and the amounts contributed to HNAF and the Regional Co-op. However, Hardees must approve these advertising materials in advance of use.