After the Hardees franchise is terminated or expires, what are the geographic limits of the noncompetition covenant?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| applicable cure period on any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant or with any vendor or supplier to the Franchised Restaurant; signed release; transferee must complete training; transfer fee paid; agreements signed; remodeling, maintenance and facility upgrades to modernize Franchised Restaurant to current image; and compliance by transferee and its affiliates with all development and franchise agreements with us or our affiliates. | ||
| n. Our right of first refusal to | Section 18.J. | We or our designee can match any offer for your business. |
| acquire your business | ||
| o. Our option to purchase your business | Section 23 | We can purchase some or all of your assets upon expiration or earlier termination of the Franchise Agreement at a price agreed upon or set by appraisers. In addition, if you purchase an existing company-operated Restaurant and enter into a Development Agreement with us, we will have the right to repurchase the Restaurants then developed by you under the Development Agreement and/or the Restaurants that you purchased from us if you fail to comply with certain development obligations in a timely manner. |
| p. Your death or disability | Section 18.G.(1)(b) | Transfer to your spouse, children, parents, sibling or a member of the Continuity Group is allowed. |
| q. Noncompetition covenants during the term of the franchise | Section 20.C. | Except with our consent – no diversion of any business or customer to any competitor; no interest in any restaurant business or sale of real property to a restaurant business whose sales of Designated Entrée Items during any daypart are reasonably likely to account collectively for 20% or more of the restaurant's sales of all entrée items during that daypart, that features or promotes any Designated Entrée Item in its advertising, or that operates in a quick-service format (with or without table service). "Designated Entrée Items" means any hamburger sandwich, chicken sandwich, breakfast sandwich and any other entrée item of a type designated by us as part of the System at any time during the term of the Franchise Agreement. |
| r. Noncompetition covenants after | Section 20.C. | No activity as described in paragraph q. above for 2 years |
| the franchise is terminated or | within a 2-mile radius of the Franchised Location or within a | |
| expires | 2-mile radius of any then-existing Hardee's Restaurant. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 64–69)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, following the termination or expiration of the franchise agreement, a franchisee is subject to a non-competition covenant. This covenant restricts the franchisee from engaging in activities similar to those of a Hardees restaurant.
The geographic scope of this restriction extends to a 2-mile radius around the former Hardees location. Additionally, the non-competition covenant also applies within a 2-mile radius of any other existing Hardees restaurant at the time of termination or expiration.
This means that a former Hardees franchisee cannot operate or be involved with a competing restaurant within these specified zones. The non-compete lasts for a period of 2 years. This restriction aims to protect Hardees's market share and brand recognition by preventing former franchisees from directly competing in close proximity to existing or former Hardees locations.