For Hardees franchisees in Maryland, under what condition are initial fees and payments deferred?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Items 5 and 7, Additional Disclosures. The following statement is added to Items 5 and 7:
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 71–84)
What This Means (2025 FDD)
According to the 2025 Hardees Franchise Disclosure Document, initial fees and payments for franchisees in Maryland are deferred under specific conditions related to the franchisor's financial status and the completion of pre-opening obligations. The Maryland Securities Commissioner has mandated a financial assurance due to Hardees' financial condition. As a result, all initial fees and payments owed by franchisees in Maryland are deferred until Hardees completes its pre-opening obligations as outlined in the franchise agreement. This deferral also applies to development fees and initial payments for area developers, which are deferred until the first franchise under the development agreement opens.
This condition provides a significant benefit to prospective Hardees franchisees in Maryland. By deferring the initial fees, franchisees are not required to make these payments until Hardees has fulfilled its obligations to prepare the franchisee to open their restaurant. This lessens the initial financial burden on the franchisee and aligns the payment schedule with the progress of the restaurant's development. It also mitigates some of the risk for the franchisee, as they are not paying fees upfront before the franchisor has delivered on its promises.
Furthermore, the deferral of development fees for area developers until the opening of the first franchise unit under the development agreement provides a similar benefit at a larger scale. This encourages area developers to focus on successfully launching the first unit, knowing that the development fees are contingent upon that milestone. This alignment of interests can foster a stronger partnership between Hardees and its area developers in Maryland.
It is important for prospective Hardees franchisees in Maryland to carefully review the franchise agreement and related addenda to fully understand the specific pre-opening obligations that Hardees must fulfill to trigger the payment of the deferred fees. Additionally, franchisees should monitor the financial condition of Hardees to assess the likelihood of any changes to this deferral policy.