Considering the Hardees litigation mentioned in Item 3, what pre-opening obligations in Item 11 might be impacted or delayed?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Before you open your Franchised Restaurant, we will:
- 1. Provide you with the following site selection assistance: (a) HR's site selection guidelines and, as you may request, a reasonable amount of consultation with respect to site selection; and (b) onsite evaluation that we may deem advisable as part of our evaluation of your request for site acceptance. (Development Agreement, § 5.B and Franchise Agreement, § 4.B.)
- 2. Advise you in writing, within 45 days after our receipt of all documents that we require, whether we have accepted a particular site; however, we have no obligation to review any development proposal if you or your affiliates are not in full compliance with all agreements with us or our affiliates. If we do not respond within that time period, we will be deemed not to have accepted the site. (Development Agreement, § 5.D and Franchise Agreement, § 4.D.)
- 3. Provide you electronic access to, the OPM, which contains information and knowledge that is unique, necessary and material to the Hardee's System. The OPM remains our property. We may revise the contents of the OPM, and you agree to comply with each new or changed section. (Franchise Agreement, § 9.) The Table of Contents of the OPM as of the date of this disclosure document is attached as Exhibit G. As of that date, the OPM contained approximately 224 pages.
- 4. Provide our FMTP to up to 8 individuals. The details of the FMTP are described later in this Item. (Franchise Agreement, § 11.A.)
- 5. Provide you with any development training that we may require. (Development Agreement, § 5.G and Franchise Agreement, § 4.A.)
- 6. Provide you electronic access to, the Development Guide, which contains mandatory specifications and standards relating to construction of Hardee's Restaurants and information relating to your other obligations under the Development Agreement. (Development Agreement, § 6 and Franchise Agreement, § 4.E.)
- 7. Provide you with consultation and advice with regard to construction or renovation and operation of the Franchised Restaurant, building layout, furnishings, fixtures and equipment plans and specifications, employee selection and training, purchasing and inventory control and those other matters as we deem appropriate at no additional cost. (Franchise Agreement, § 12.A.)
What This Means (2025 FDD)
According to the 2025 Hardees FDD, Item 3 details ongoing litigation that could potentially affect the franchisor's ability to fulfill its pre-opening obligations outlined in Item 11. Specifically, the litigation could delay Hardees's ability to provide site selection assistance, including providing site selection guidelines and consultation, as well as onsite evaluations. The 45-day written advisory period for site acceptance could also be affected. These delays could stem from the franchisor diverting resources to address legal matters, which could slow down the site approval process.
Furthermore, access to the Operations Procedures Manual (OPM) and Development Guide, which are crucial for understanding the Hardees system and construction standards, might be affected. Any delays in development training or consultation regarding construction, renovation, building layout, and other operational matters could also occur. These resources are essential for franchisees to properly set up their restaurants and adhere to Hardees's standards. The litigation may also impact Hardees's financial condition, which, as indicated in addenda for Maryland and Minnesota franchisees, can lead to deferral of initial fees and payments until pre-opening obligations are met.
Prospective franchisees should carefully review Item 3 and Item 11 of the FDD, and discuss with Hardees how the pending litigation might specifically impact the timeline and fulfillment of their pre-opening obligations. It would be prudent to inquire about contingency plans Hardees has in place to ensure franchisees receive the necessary support and resources despite the ongoing legal challenges. Understanding the potential risks and delays associated with these obligations is crucial for making an informed investment decision.