For Hardees franchises, what documentation must a franchisee provide to HR or its designee to demonstrate the amount and types of Local Store Marketing (LSM) expenditures made?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If, in any fiscal year, Franchisee spends less than the required amount for the Franchised Restaurant for authorized LSM advertising and sales promotions expenditures, the difference between the required amount and the amount actually spent in that fiscal year shall be paid to HNAF within 10 days after demand for payment is sent to Franchisee. In determining whether Franchisee has spent the required amount for the Franchised Restaurant for these purposes in any fiscal year, only expenditures made in that fiscal year will be counted and there will be no carryover from a previous fiscal year of any expenditures.
E. Changes in the APO
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
Based on the 2025 Hardees Franchise Disclosure Document, the specific documentation a franchisee must provide to HR (Hardees Restaurants, LLC) or its designee to demonstrate the amount and types of Local Store Marketing (LSM) expenditures is not detailed in the provided excerpts. However, the FDD does state that if a Hardees franchisee spends less than the required amount for authorized LSM advertising and sales promotions, the difference must be paid to HNAF (presumably Hardees National Advertising Fund) within 10 days of demand.
This implies that Hardees franchisees are required to track and report their LSM expenditures to Hardees or HNAF to ensure compliance with the required spending levels. The FDD specifies certain expenditures that are deemed inappropriate for LSM monies, such as free or discounted food (unless expressly authorized), employee incentive programs, and charitable contributions. This suggests that Hardees franchisees need to provide documentation that details how their LSM funds are being spent to ensure they are in compliance with Hardees' guidelines.
Prospective Hardees franchisees should clarify with Hardees what specific documentation is required to demonstrate LSM expenditures. This may include invoices, receipts, or other proof of payment for advertising and promotional activities. Understanding the exact reporting requirements is crucial for franchisees to avoid any discrepancies or penalties related to LSM spending.