What constitutes a default by the Hardees franchisee or its affiliates that would prevent the restaurant from opening?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4. Termination of Program Incentives. This Addendum and the Program will terminate following written notice to Franchisee if:
- A. Franchisee fails to open the Franchised Restaurant on or before 120 days after the contractual opening date pursuant to the terms of the Franchisee's Development Agreement or Franchise Agreement; or
- B. Franchisee or any affiliate of Franchisee receives, during the first three years of operation of the Franchised Restaurant under the Franchise Agreement, a written notice of default under any agreement between Franchisee or any affiliate of Franchisee and HR or any affiliate of HR and fails to cure the default within the applicable cure period, if any.
- 4. Effect of Termination. If this Addendum is terminated during the first three years of the Franchised Restaurant's operation under the Franchise Agreement, the royalty fee and APO for the Franchised Restaurant will immediately revert to the applicable amounts set forth in the Franchise Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, a Hardees franchisee's participation in the Travel Center Program, which offers reduced royalty and APO fees, can be terminated if the franchisee fails to open the franchised restaurant on or before 120 days after the contractual opening date outlined in their Development Agreement or Franchise Agreement. This is a critical deadline, and missing it can result in the loss of program incentives.
Additionally, if the franchisee or any of their affiliates receives a written notice of default under any agreement with Hardees or its affiliates during the first three years of the restaurant's operation and fails to resolve the default within the given cure period, the Travel Center Program incentives can also be terminated. This highlights the importance of maintaining compliance with all agreements and addressing any defaults promptly to avoid losing the reduced fees.
If the Travel Center Program is terminated within the first three years, the royalty fee and APO (Advertising Pool Obligation) for the Hardees restaurant will revert to the standard amounts specified in the Franchise Agreement. This could significantly impact the franchisee's financial obligations and profitability, making adherence to the opening date and all contractual obligations crucial for maintaining the benefits of the incentive program.