Is a Hardees franchisee's interest in the franchise agreement considered personal?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that HR has entered into this Agreement in reliance on Franchisee's (and Franchisee's direct and indirect owners') business skill, financial capacity, personal character, experience and demonstrated or purported ability in developing and operating high quality foodservice operations. Accordingly, neither Franchisee nor any immediate or remote successor to any part of Franchisee's interest in this Agreement, nor any individual, partnership, corporation or other legal entity which directly or indirectly has an interest in Franchisee shall sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in Franchisee, this Agreement, the Franchise, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to Franchisee's operations under this Agreement (collectively "Transfer") without the prior written consent of HR, unless otherwise permitted by this Section.
Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of HR shall be null and void and shall constitute a material breach of this Agreement, for which HR may terminate this Agreement without providing Franchisee an opportunity to cure the breach.
- B. Franchisee shall advise HR in writing of any proposed Transfer, submit (or cause the proposed transferee to submit) a franchise application for the proposed transferee, submit a copy of all contracts and all other agreements or proposals and submit all other information requested by HR relating to the proposed Transfer. If HR does not exercise its right of first refusal pursuant to Section 18.J., the decision as to whether or not to consent to a proposed Transfer shall be made by HR in its sole discretion and shall include numerous factors deemed relevant by HR. These factors may include, but will not be limited to, the following:
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the rights and duties outlined in the franchise agreement are considered personal to the franchisee. Hardees enters into the agreement based on the franchisee's business skills, financial capacity, character, experience, and ability to operate high-quality foodservice operations.
This means that a Hardees franchisee cannot transfer any interest in the franchise agreement, the franchise itself, the restaurant, its assets, or the location without prior written consent from Hardees. Any transfer without this consent is considered a breach of the agreement, potentially leading to termination without an opportunity to correct the issue.
If a franchisee proposes a transfer, they must inform Hardees in writing and submit a franchise application for the proposed transferee, along with copies of all related contracts, agreements, proposals, and any other information Hardees requests. Hardees has the right of first refusal and the final decision to consent to the transfer is at Hardees's discretion. Hardees will consider factors such as the transferee's experience in similar restaurant operations and their managerial, operational, and financial capabilities.
These stipulations are typical in franchising, as franchisors want to ensure that any new franchisee meets their standards and is capable of maintaining the brand's reputation and operational quality. For a prospective Hardees franchisee, this highlights the importance of personal involvement and the need to seek approval for any ownership changes or transfers of the franchise.