After the Hardees Development Term expires, is there a period during which the Developer is restricted from engaging in certain activities, and if so, for how long?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Accordingly, Developer covenants and agrees that, except with HR's prior written consent, during the Development Term, and for a continuous period of 2 years following its expiration, Transfer, or termination, Developer shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with, any person, firm, partnership, corporation, or other entity:
(a) Divert or attempt to divert any business or customer, or potential business or customer, of any Hardee's Restaurant to any competitor, by direct or indirect inducement or otherwise.
(b) Own, maintain, operate, engage in, grant a franchise to, advise, help, make loans to, lease property to sell the real property underlying any Franchised Restaurant 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 Hardee's System or by HR at any time during the Development Term. During the Development Term, there is no geographical limitation on this restriction. Following the expiration, transfer or termination of this Agreement, this restriction shall apply within the Development Territory, within 2 miles of the border of the Development Territory and within a 2-mile radius of any then-existing Hardee's Restaurant. This restriction shall not apply to Developer's existing restaurant or foodservice operations, if any, which are identified in Appendix B, nor shall it apply to other restaurants operated by Developer that are franchised by HR or its affiliates.
If any part of these restrictions is found to be unreasonable in time or distance, each month of time or mile of distance may be deemed a separate unit so that the time or distance may be reduced by appropriate order of the court to that deemed reasonable. If, at any time during the 2-year period following the expiration, Transfer or termination of this Agreement, Developer fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Developer's satisfaction of the 2 year obligation.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a Developer is subject to certain restrictions for a period of two years following the expiration, transfer, or termination of the Development Agreement. These restrictions prevent the Developer from engaging in activities that could harm the Hardees system.
Specifically, the Developer is prohibited from diverting or attempting to divert any business or customers from a Hardees Restaurant to a competitor. Additionally, the Developer cannot own, operate, or have any interest in a restaurant business that competes with Hardees. A competing restaurant is defined as one where the sales of specific entrée items (like hamburger sandwiches, chicken sandwiches, or breakfast sandwiches) are likely to account for 20% or more of the restaurant's sales during any part of the day, or one that features or promotes these items in its advertising, or one that operates in a quick-service format.
During the Development Term, these restrictions have no geographical limitation. However, after the agreement expires, is transferred, or is terminated, the restrictions apply within the Development Territory, within 2 miles of the border of the Development Territory, and within a 2-mile radius of any then-existing Hardees Restaurant. These restrictions do not apply to any existing restaurant or foodservice operations the Developer has, if these operations are identified in Appendix B, or to other restaurants operated by the Developer that are franchised by Hardees or its affiliates.
The FDD also states that if any part of these restrictions is found to be unreasonable in time or distance, the time or distance may be reduced by a court order to what is deemed reasonable. Furthermore, if the Developer fails to comply with these obligations at any time during the 2-year period, the period of noncompliance will not count towards fulfilling the 2-year obligation.