What constitutes 'Designated Entrée Items' for the purpose of restrictions on Hardees franchisees operating competing businesses?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Own, maintain, operate, engage in, grant a franchise to, advise, help, make loans to, lease property to, sell the property underlying the Franchised Location and related assets to, or have any interest in, either directly or indirectly, any restaurant business: (i) whose sales of Designated Entrée Items (as defined below) during any daypart are reasonably likely to account collectively for 20% or more of the restaurant's sales of all entrée items during that daypart; (ii) that features or promotes any Designated Entrée Item in its advertising; or (iii) that operates in a quick-service format (with or without table service). For purposes of the previous sentence, the term "Designated Entrée Items" means any hamburger sandwich, chicken sandwich, breakfast sandwich and any other entrée item of a type designated by HR as part of the System at any time during the term of this Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, 'Designated Entrée Items' are defined specifically within the context of restrictions placed on franchisees regarding involvement with competing restaurant businesses.
The term encompasses any hamburger sandwich, chicken sandwich, breakfast sandwich, and any other entrée item that Hardees designates as part of their system at any point during the franchise agreement's term. This definition is crucial because it determines the scope of the restriction preventing franchisees from engaging with other restaurant businesses.
Specifically, a Hardees franchisee is restricted from owning, operating, or having an interest in a restaurant business if its sales of these 'Designated Entrée Items' are reasonably likely to account for 20% or more of the restaurant's total entrée sales during any daypart. The franchisee is also restricted if the competing restaurant features or promotes any of these designated items in its advertising or operates in a quick-service format.
This definition allows Hardees to maintain control over competition from its franchisees, ensuring they do not directly compete with the Hardees system, either during the term of the agreement or for a period of two years after its expiration, transfer, or termination, within a specified radius of a Hardees location.