For a Hardees franchise, what happens to the initial term if the franchisee loses possession of the franchised location through no fault of their own, except for failing to extend the lease?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, if, during the term of this Agreement, Franchisee, through no act or failure to act on its part (except the failure to extend the lease for the Franchised Location through the Initial Term of this Agreement), loses the right to possession of the Franchised Location, the Initial Term shall expire as of the date of the loss of the right to possession. However, if the right to possession is lost through no act or failure to act on Franchisee's part, Franchisee may relocate the Franchised Restaurant (without paying any additional initial franchise fee or transfer fee) at its expense and the Initial Term shall not expire if: (1) HR accepts the new location; (2) Franchisee constructs and equips a Franchised Restaurant at the new location in accordance with the then-current System Standards and specifications; (3) a Franchised Restaurant at the new location is open to the public for business within 6 months after the loss of possession of the Franchised Location; and (4) Franchisee reimburses HR for all reasonable expenses actually incurred by HR in connection with the acceptance of the new location.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee loses possession of their franchised location during the initial term through no fault of their own (excluding failure to extend the lease), the initial term of the franchise agreement will expire on the date they lose possession. However, Hardees offers an exception: the franchisee can relocate the restaurant without paying an additional franchise or transfer fee, and the initial term will not expire if certain conditions are met.
These conditions include Hardees accepting the new location, the franchisee constructing and equipping a restaurant at the new location according to Hardees' system standards, the new restaurant opening within six months of losing possession of the original location, and the franchisee reimbursing Hardees for reasonable expenses related to the new location's acceptance.
This clause provides some protection for Hardees franchisees who might face unforeseen circumstances that cause them to lose their original location. However, it also places significant responsibility on the franchisee to act quickly and meet Hardees' requirements for relocation to maintain the original term of the agreement.