How does the Hardees Development Fee in Item 5 relate to the franchisee's obligation to develop restaurants as outlined in Item 9?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If the requirements for the 2025 HR Travel Center Development Incentive Program are not satisfied, then the Travel Center Location or Gas and Convenience Location may be eligible for the 2025 Development Incentive Program provided the following requirements are satisfied: (i) franchisee signs a Franchise Agreement for the development of a newly-constructed Hardee's Restaurant by no later than May 24, 2026 or franchisee signs a Franchise Agreement for the development of a newly constructed Hardee's Restaurant pursuant to the terms of a Development Agreement dated no later than May 24, 2026, (ii) franchisee must open the newly-constructed Hardee's Restaurant(s) by the date(s) outlined in the corresponding Development Agreement or Franchise Agreement, (iii) franchisee may not be in default of its obligations under its existing franchise agreements or related agreements with HR or its affiliates, (iv)
franchisee must be approved for growth by HR and its affiliates, (vi) franchisee must satisfy HR's thencurrent financial and operational requirements for new restaurant development, and (v) franchisee and the Hardee's Restaurant(s) otherwise meet the requirements of the 2025 Development Incentive Program.
For Franchisees who are eligible for the 2025 Development Incentive Program, we will reduce the initial franchise fee as set forth in Item 5 and reduce the royalty and APO fee as set forth in Item 6 for the first three years of the franchise term.
If you qualify for the 2025 Development Incentive Program, simultaneously with your execution of the qualifying Franchise Agreement, you will sign a 2025 DIP Addendum to the Franchise Agreement (Exhibit L), which memorializes your right to receive the development incentives described above for the applicable Franchised Restaurant(s). If you sign the 2025 DIP Addendum to Franchise Agreement, you will not be entitled, with respect to the applicable Franchised Restaurant(s) covered by the 2025 Development Incentive Program, to any other incentives that have been or may be offered by us.
What This Means (2025 FDD)
Based on the 2025 Hardees Franchise Disclosure Document, the Development Fee in Item 5 is related to the franchisee's obligation to develop restaurants as outlined in Item 9 through the 2025 HR Development Incentive Program. This program aims to encourage the development of new Hardees restaurants, particularly at eligible travel center and gas and convenience locations. Franchisees who meet specific criteria, such as signing a Development Agreement by a certain date and opening newly-constructed restaurants according to the agreed-upon schedule, may be eligible for this program.
For eligible franchisees, Hardees may reduce the initial franchise fee, as detailed in Item 5, and also reduce royalty and APO fees, as mentioned in Item 6, for the first three years of the franchise term. This incentive is formalized through a 2025 DIP Addendum to the Franchise Agreement, which outlines the franchisee's right to receive these development incentives for the applicable franchised restaurants. However, franchisees participating in the 2025 Development Incentive Program will not be entitled to any other incentives offered by Hardees.
In Maryland, the collection of all initial fees and payments, including development fees, is deferred until Hardees completes its pre-opening obligations under the franchise agreement and the first franchise under the development agreement opens. Similarly, in South Dakota, the collection of the Development Fee is deferred until Hardees has fulfilled its pre-opening obligations and the franchisee has opened their first restaurant. These deferrals are contingent upon Hardees fulfilling its pre-opening responsibilities, providing some financial assurance to the franchisee during the initial stages of development.
Prospective franchisees should carefully review the requirements and conditions of the 2025 HR Development Incentive Program, as well as any state-specific addenda, to understand how the Development Fee and development obligations are structured. It's important to note the deadlines for signing agreements and opening restaurants, as well as the potential impact on other incentives. Franchisees should also be aware of the financial and operational requirements for new restaurant development and ensure they meet these standards to qualify for the program.