Does the Hardees franchise agreement grant franchisees exclusive rights to use the Hardees system or proprietary marks in any geographic area?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement does not give Franchisee any exclusive rights to use the System or the Proprietary Marks in any geographic area. Nothing in this Agreement prohibits HR from, among other things: (1) operating or licensing others to operate at any location, during or after the term of this Agreement, any type of restaurant other than Hardee's Restaurants; (2) operating or licensing others to operate, during the term of this Agreement, Hardee's Restaurants at any location other than the Franchised Location; (3) operating or licensing others to operate, after this Agreement terminates or expires, Hardee's Restaurants at any location, including the Franchised Location; and (4) merchandising and distributing goods and services identified by the Proprietary Marks at any location through any other method or channel of distribution. HR reserves to itself all rights to use and license the System and the Proprietary Marks other than those expressly granted under this Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Hardees Franchise Disclosure Document, the franchise agreement does not grant franchisees exclusive rights to operate in a specific geographic area. The agreement explicitly states that franchisees do not receive any exclusive rights to use the Hardees system or proprietary marks within any geographic area. This means Hardees retains the right to operate or license others to operate Hardees restaurants at any location, except for the franchisee's specific franchised location during the term of the agreement.
Hardees reserves the right to operate or license others to operate different types of restaurants other than Hardees restaurants at any location, both during and after the franchise agreement term. After the agreement terminates or expires, Hardees can operate or license others to operate Hardees restaurants at any location, including the franchisee's former location. Additionally, Hardees retains the right to merchandise and distribute goods and services identified by its proprietary marks through any method or distribution channel at any location.
This lack of exclusivity has significant implications for prospective franchisees. It means that Hardees could potentially open another franchise or corporate-owned location nearby, which could impact the franchisee's market share and profitability. The franchisee's investment is therefore subject to the risk of competition from within the Hardees system itself. This is a fairly common practice in the franchise industry, although some franchise systems do offer some form of territorial protection.
Prospective franchisees should carefully consider the potential impact of this non-exclusivity clause on their investment. During due diligence, it would be prudent to inquire about Hardees's plans for future expansion in the franchisee's target market and to assess the potential for cannibalization of sales.