What expenditures are specifically excluded from being credited against a Hardees franchisee's Local Store Marketing (LSM) obligation?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| upon receipt of invoice | |||
| Hardee’s Advertising | An advertising and promotional obligation (“APO”) in an amount set forth in your Franchise Agreement. Your APO will be up to 7% of Hardee’s Gross Sales. Currently, your APO is 5.5% of Hardee’s Gross Sales. (3) | Divided between HNAF, Regional Co-op and LSM (each as defined below) | |
| Hardee’s National Advertising Fund (“HNAF”) | Currently, 4.25% of Hardee’s Gross Sales | On the 10th day of each month | HNAF contributions are due on the 10th day of each month and are based on Gross Sales in the prior month. |
| Hardee’s Regional Cooperative (“Regional Co-op”) | If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, minimum of 0.5% of Hardee’s Gross Sales; however, your Regional Co- op can vote to increase each member’s contribution. | Same as royalty | We have the right, in our sole discretion, to establish a regional advertising and sales promotion cooperative in the regional area in which your Franchised Restaurant is located (“DMA”) to which you will be required to contribute. |
| Hardee’s Local Store Marketing (“LSM”) | Difference between your APO and the amount you contribute to HNAF and a Regional Co-op | Not paid to HR | You may develop advertising materials for your own use; however, we must approve these advertising materials in advance of use. LSM monies may be spent only for approved advertising. (4) |
Source: Item 6 — OTHER FEES (FDD pages 29–36)
What This Means (2025 FDD)
Based on the 2025 Hardees Franchise Disclosure Document, the specific expenditures excluded from being credited against a franchisee's Local Store Marketing (LSM) obligation are not explicitly detailed in the provided Item 6 excerpt. The document outlines that LSM monies may be spent only for approved advertising, and that franchisees may develop advertising materials for their own use, subject to Hardees's approval. The FDD specifies that the Local Store Marketing (LSM) contribution is the difference between the franchisee's Advertising and Promotional Obligation (APO) and the amounts contributed to the Hardee’s National Advertising Fund (HNAF) and any Regional Co-op.
Without a comprehensive list of excluded expenditures, prospective Hardees franchisees should seek clarification from the franchisor regarding what specific types of expenses related to local marketing cannot be credited towards their LSM obligation. This is crucial for budgeting and ensuring compliance with Hardees's advertising and promotional requirements. Franchisees need to understand what constitutes 'approved advertising' and what types of marketing activities or materials would not qualify for LSM credit.
In the absence of explicit exclusions, it is common in franchising for certain corporate-level marketing expenses, internal administrative costs, or costs not directly related to local store promotion to be ineligible for LSM credit. However, the exact nature of these exclusions can vary significantly between franchise systems. Therefore, direct inquiry with Hardees is essential to obtain a clear understanding of the permissible uses of LSM funds and any restrictions that may apply.