What constitutes a material default that would prevent a Hardees franchisee from transferring their franchise?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) Franchisee is not then in material default of any provision of this Agreement or any other agreement between Franchisee and HR or its affiliates, is in good standing as a franchisee with HR and its affiliates, is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant and is not in default beyond the applicable cure period with any vendor or supplier to the Franchised Restaurant.
HR reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a franchisee's ability to transfer their franchise is contingent upon not being in material default of the Franchise Agreement. Specifically, a Hardees franchisee cannot be in material default of any provision within the Franchise Agreement or any other agreement they have with Hardees or its affiliates. This encompasses all outstanding obligations related to the franchised restaurant.
Furthermore, the franchisee must be in good standing with Hardees and its affiliates at the time of the proposed transfer. The franchisee also cannot be in default beyond any applicable cure period under any real estate lease, equipment lease, or financing instrument related to the Hardees restaurant. Similarly, they cannot be in default beyond the applicable cure period with any vendor or supplier to the Hardees restaurant.
Hardees retains the right to ensure that all obligations are met before a transfer is approved. They may require a reasonable sum of money to be placed in escrow to cover any outstanding debts or obligations. This ensures that the new franchisee is not burdened with unresolved financial issues from the previous owner and that Hardees's interests are protected.