Considering the Hardees litigation (Item 3), what steps should a prospective franchisee take to assess the potential impact on their investment (Item 7)?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 5. The provisions of this Addendum will be effective only to the extent that the jurisdictional requirements of the Illinois Franchise Disclosure Act are met independently of this Addendum.
- 6. Except as expressly modified by this Addendum, the Preliminary Agreement remains unmodified and in full force and effect.
[Signatures on following page.]
HARDEE'S RESTAURANTS LLC Print Name: Danell Caron Vice President, Legal DEVELOPER: Print Name: Individuals" identified in the Preliminary Agreement, agree to be bound by this Addendum. The persons signing below, who are the "Other OTHER INDIVIDUALS: HR:
ADDENDUM TO THE HARDEE'S RESTAURANT FRANCHISE DISCLOSURE DOCUMENT REQUIRED FOR MARYLAND FRANCHISEES
Items 5 and 7, Additional Disclosures. The following statement is added to Items 5 and 7:
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens.
Item 17, Additional Disclosures. The following statements are added to Item 17:
The general release required as a condition of assignment/transfer or renewal shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
The "Summary" column of Item 17(H) of the Disclosure Document, pertaining to "Cause defined – defaults that cannot be cured" is supplemented to state that any provision in the Franchise Agreement which terminates the franchise upon the bankruptcy of the Franchisee may not be enforceable under federal bankruptcy law.
Franchisee may sue in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, provided that the Franchise Agreement may provide for arbitration in a forum outside of Maryland.
Section 14-227(e) of the Maryland Franchise Registration and Disclosure Law requires that any claims arising under that Law be brought within 3 years after the grant of the franchise.
ADDENDUM TO THE HARDEE'S RESTAURANT DEVELOPMENT AGREEMENT REQUIRED FOR MARYLAND FRANCHISEES
| This | Addendum | to | the | Hardee's | Restaurant | Development | Agreement | dated |
|---|---|---|---|---|---|---|---|---|
| between | Hardee's | Restaurants | LLC | ("HR") | and | |||
| ("Developer") is entered into simultaneously with the | ||||||||
| execution of the Development Agreement. |
- 1. The provisions of this Addendum form an integral part of, and are incorporated into the Development Agreement. This Addendum is being executed because: (A) the offer or sale of a franchise to Developer was made in the State of Maryland; (B) Developer is a resident of the State of Maryland; and/or (C) part or all of the Development Territory is located in the State of Maryland.
- 2. The following statement is added to the end of Section 4:
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens.
3. The following sentences are added to the end of Sections 4 and 5.E.:
Notwithstanding anything to the contrary in this Agreement, including, but not limited to, this Section, in the State of Maryland, HR will defer the payment of: (A) the Development Fee until the first Franchised Restaurant developed hereunder opens for business; and (B) with respect to each Franchised Restaurant developed hereunder, the Initial Franchise Fee and any other initial fees owed by Developer to HR for the Franchised Restaurant until that Franchised Restaurant opens for business. Upon the opening of the first Franchised Restaurant developed hereunder, Developer will pay HR the Development Fee. Upon the opening of each Franchised Restaurant developed hereunder, Developer will pay HR the Initial Franchise Fee and any other initial fees owed by Developer to HR for that Franchised Restaurant.
4. The following sentence is added to the end of Sections 10.B.(5) (transfer) and 11 (general release):
Any provision requiring Developer to sign a general release of claims against HR does not release any claim Developer may have under the Maryland Franchise Registration and Disclosure Law.
5. The following sentence is added to the end of Section 22.B.:
A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
6. The following sentence is added to the end of Section 22.C.:
Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.
7. The following sentence is added to the end of Section 24:
- Representations in this Agreement are not intended to, nor shall they act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.
- 8. The provisions of this Addendum will be effective only to the extent that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law are met independently of this Addendum.
- 9. Any capitalized terms that are not defined in this Addendum shall have the meaning given them in the Development Agreement.
- 10. Except as expressly modified by this Addendum, the Development Agreement remains unmodified and in full force and effect.
HR: HARDEE'S RESTAURANTS LLC Print Name: Danell Caron Vice President, Legal DEVELOPER: Print Name:
ADDENDUM TO THE HARDEE'S RESTAURANT FRANCHISE AGREEMENT REQUIRED FOR MARYLAND FRANCHISEES
| between | Hardee's | Restaurants | LLC | ("HR") | and |
|---|---|---|---|---|---|
| ("Franchisee") is entered into simultaneously | |||||
| with the execution of the Franchise Agreement. |
- 1. The provisions of this Addendum form an integral part of, and are incorporated into the Franchise Agreement. This Addendum is being executed because: (A) the offer or sale of the franchise to Franchisee was made in the State of Maryland; (B) Franchisee is a resident of the State of Maryland; and/or (C) the Franchised Restaurant will be located or operated in the State of Maryland.
- 2. The following sentence is added to the end of Sections 2.B.(2)(e) (renewal), 15.B.(5) (transfer) and 16 (general release):
Any provision requiring Franchisee to sign a general release of claims against HR does not release any claim Franchisee may have under the Maryland Franchise Registration and Disclosure Law.
3. The following statement is added to the end of Section 3.A:
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.
4. The following sentences are added to the end of Sections 3.A., 8 and 9.B.:
Notwithstanding anything to the contrary in this Agreement, including, but not limited to, this Section, in the State of Maryland, HR will defer the payment of the Initial Franchise Fee, the opening training support team fee and any other initial fees owed by Franchisee to HR for the Franchised Restaurant until the Franchised Restaurant opens for business. Upon the opening of the Franchised Restaurant, Franchisee will pay HR the Initial Franchise Fee, the opening training support team fee and any other initial fees owed by Franchisee to HR for the Franchised Restaurant.
5. The following sentence is added to the end of Section 27.B.:
A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
6. The following sentence is added to the end of Section 27.C.:
Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the franchise.
7. The following sentence is added to the end of Section 29:
Representations in this Agreement are not intended to, nor shall they act as a release, estoppel, or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.
- 8. The provisions of this Addendum will be effective only to the extent that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law are met independently of this Addendum.
- 9. Any capitalized terms that are not defined in this Addendum shall have the meaning given them in the Franchise Agreement.
- 10. Except as expressly modified by this Addendum, the Franchise Agreement remains unmodified and in full force and effect.
HR: HARDEE'S RESTAURANTS LLC Print Name: Danell Caron Vice President, Legal Print Name:
ADDENDUM TO THE HARDEE'S RESTAURANT FRANCHISE DISCLOSURE DOCUMENT REQUIRED FOR MINNESOTA FRANCHISEES
The following information applies to franchises and franchisees subject to Minnesota statutes and regulations.
- The following statement is added to Items 5 and 7:
Based upon the franchisor's financial condition, the Minnesota Department of Commerce has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens.
What This Means (2025 FDD)
Based on the 2025 Hardees Franchise Disclosure Document addenda for Maryland, Minnesota, North Dakota, South Dakota, California, Illinois and Washington, prospective franchisees should note that these states have specific stipulations that may affect the franchise agreement. These stipulations primarily concern financial assurances, governing laws, and franchisee rights in case of disputes. For example, Maryland and Minnesota require that initial fees and payments be deferred until Hardees completes its pre-opening obligations due to the franchisor's financial condition. North and South Dakota also stipulate that initial franchise fees will be deferred until Hardees fulfills its pre-opening obligations and the franchisee has commenced business. These addenda suggest that Hardees franchisees in these states may have some protection regarding initial investment until certain obligations are met.
Additionally, the addenda address legal rights and obligations. Illinois law dictates that any franchise agreement provision that designates jurisdiction or venue outside of Illinois is void, although arbitration outside of Illinois is permitted. Washington's Franchise Investment Protection Act may supersede provisions in the franchise agreement related to termination and renewal. For North Dakota franchisees, the addendum modifies the franchise agreement to remove the requirement to consent to Tennessee courts, applies North Dakota's statute of limitations, and stipulates that the prevailing party is entitled to recover all costs and expenses, including attorneys' fees. These variations highlight the importance of understanding the specific legal protections afforded to franchisees in different states.
To assess the potential impact of litigation (as detailed in Item 3) on their investment (Item 7), a prospective Hardees franchisee should carefully review the addenda applicable to their state of operation. They should consult with a franchise attorney to understand how these state-specific provisions interact with the standard franchise agreement and how they might affect their rights and obligations in the event of a dispute or litigation. Furthermore, understanding the financial assurances and deferred fee structures in certain states can provide a degree of financial security during the initial phase of the franchise. By thoroughly examining these addenda and seeking legal counsel, prospective franchisees can make a more informed decision about their investment in a Hardees franchise.