Does the Hardees Franchise Agreement require that its execution not conflict with any other agreements the franchisee or any person with an ownership interest in the franchisee is a party to?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, a limited liability company, a partnership or any other type of organization (collectively, "business entity"), Franchisee makes the following representations and warranties: (1) it is duly organized and validly existing under the laws of the state of its formation; (2) it is qualified to do business in the state or states in which the Franchised Restaurant is located; (3) execution of this Agreement and the development and operation of the Franchised Restaurant is permitted by its governing documents; and (4) unless waived in writing by HR, Franchisee's governing documents shall at all times provide that the activities of Franchisee are limited exclusively to the development and operation of Hardee's Restaurants and other restaurants that are franchised by HR or its affiliates and that no Transfer (as defined in Section 18) of an ownership interest may be made except in accordance with Section 18.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Hardees Franchise Disclosure Document, if the franchisee is a business entity, the franchisee makes representations and warranties that the execution of the Franchise Agreement and the development and operation of the franchised restaurant is permitted by its governing documents. Unless waived in writing by Hardees, the franchisee's governing documents must state that the activities of the franchisee are limited exclusively to the development and operation of Hardees restaurants and other restaurants that are franchised by Hardees or its affiliates. The documents must also state that no transfer of an ownership interest may be made except in accordance with the outlined transfer section.
This means that a Hardees franchisee, especially if operating as a business entity, must ensure that their existing organizational documents and any other agreements they are party to do not conflict with their ability to fulfill the obligations and restrictions outlined in the Hardees Franchise Agreement. This includes ensuring that the franchisee's activities are primarily focused on operating Hardees restaurants and that any transfer of ownership interests adheres to Hardees's requirements.
For prospective franchisees, this underscores the importance of carefully reviewing all existing legal and business commitments before signing the Hardees Franchise Agreement. It may be necessary to amend organizational documents or seek waivers from Hardees to ensure compliance. Failure to do so could result in a breach of the franchise agreement.