After the expiration, transfer, or termination of the Hardees Development Agreement, what is the geographic scope of the restriction on operating a competing restaurant?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, after the expiration, transfer, or termination of the Development Agreement, a developer is restricted from operating a competing restaurant business within a specific geographic area. This restriction applies 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.
The FDD defines a competing restaurant as any restaurant business that meets any of the following criteria: (i) whose sales of Designated Entrée Items (hamburger sandwich, chicken sandwich, breakfast sandwich and any other entrée item of a type designated by HR) 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).
This restriction does not apply to the developer's existing restaurant or foodservice operations, if any, which are identified in Appendix B, nor shall it apply to other restaurants operated by the developer that are franchised by Hardees or its affiliates. The document also states that if any part of these restrictions is found to be unreasonable in time or distance, the court may reduce the time or distance to what is deemed reasonable.
This non-compete clause ensures that a former Hardees developer cannot immediately leverage their knowledge of the Hardees system to directly compete with existing Hardees restaurants in the immediate vicinity. Prospective developers should carefully consider the scope and duration of this restriction, especially if they have existing restaurant businesses or plan to operate other restaurant concepts in the future.