What financial resources and working capital requirements must a proposed Hardees transferee meet?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) The proposed transferee (and if the proposed transferee is not a natural person, all persons that have a direct or indirect interest in the transferee as HR may require) must demonstrate to HR's satisfaction that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by HR or its affiliates; must meet the managerial, operational, experience, quality, character and business standards for a developer promulgated by HR from time to time; must possess a good character, business reputation and credit rating; must have an organization whose management culture is compatible with HR's management culture; and must have adequate financial resources and working capital, as determined by HR in its sole discretion, to meet Developer's development obligations under this Agreement.
(2) The sales price shall not be so high, in HR's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurants and meet financial obligations to HR, third party suppliers and creditors.
(3) All of Developer's accrued monetary obligations to HR and its affiliates (whether arising under this Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurants (including, but not limited to, bills from suppliers, taxes, judgments and any required governmental reports, returns, affidavits or bonds) have been satisfied or, in the reasonable judgment of HR, adequately provided for.
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 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a proposed transferee must demonstrate to Hardees's satisfaction that they possess adequate financial resources and working capital to meet the developer's obligations under the agreement. The determination of what constitutes 'adequate' is made at Hardees's sole discretion. This implies that Hardees has significant control over who can become a transferee and can set potentially high financial standards.
Hardees also considers whether the sales price of the transfer jeopardizes the transferee's ability to manage the franchised restaurants, meet financial obligations to Hardees, third-party suppliers, and creditors. This suggests Hardees is concerned about the long-term financial viability of the transferee and the impact on the Hardees brand.
Furthermore, all of the developer's accrued monetary obligations to Hardees and its affiliates, along with other outstanding obligations related to the franchised restaurants, must be satisfied or adequately provided for, in Hardees's reasonable judgment. Hardees can also require a reasonable sum of money to be placed in escrow to ensure these obligations are met. This protects Hardees from potential financial losses during the transfer process and ensures that the restaurants remain in good financial standing.