After the Hardees franchise agreement terminates or expires, is HR permitted to operate or license others to operate Hardees Restaurants at any location, including the former Franchised Location?
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 Hardees's 2025 Franchise Disclosure Document, Hardees retains the right to operate or license others to operate Hardees Restaurants at any location, even after the franchise agreement terminates or expires. This includes the former franchised location. This means that upon termination or expiration of the franchise agreement, Hardees could potentially open a corporate-owned store or grant a franchise to another party at the same location where the franchisee previously operated.
This provision highlights the non-exclusive nature of the franchise agreement. A Hardees franchisee is not granted any exclusive rights to a specific territory or location. Hardees reserves the right to operate or license other restaurants, including Hardee's Restaurants, at any location, both during and after the term of the franchise agreement. This lack of exclusivity is a common characteristic of many franchise systems, as franchisors typically want to maintain the flexibility to expand their brand's presence in the market.
For a prospective Hardees franchisee, this clause underscores the importance of location analysis and competitive assessment. While the franchisee may have an established customer base, there is no guarantee that Hardees will not establish another Hardee's Restaurant nearby, potentially impacting the franchisee's sales and profitability. It is crucial to carefully evaluate the market and understand the potential for competition from both other brands and from Hardees itself.
Furthermore, upon termination or expiration, the franchisee is required to alter the former Hardees location to clearly distinguish it from its previous appearance, unless Hardees directs otherwise. This prevents any confusion among customers and protects Hardees's brand identity. If the franchisee fails to make these alterations, Hardees has the right to do so at the franchisee's expense.