How does the Hardees franchisor's advertising strategy (Item 11) address the challenges of operating in a competitive market without exclusive territories (Item 12)?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
You will not receive an exclusive territory under the Development Agreement. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
There are no restrictions on the areas in which you may advertise or solicit customers for your Franchised Restaurants; however, see Item 13 for internet restrictions. We reserve all rights to use and license the Hardee's System, and the Proprietary Marks other than those that we expressly grant you. There are no restrictions on the areas in which we may advertise or solicit customers, nor must we compensate you for soliciting or accepting orders from inside the Development Territory. The rights we reserve include the right to use any other channel of distribution, including the internet, to make sales in the Development Territory using the Proprietary Marks or different proprietary marks.
We have established, and will maintain and administer, HNAF for the creation and development of advertising, marketing and public relations, research and related programs, gift card and loyalty programs, activities and materials that we, in our sole discretion, deem appropriate. During the term of the Franchise Agreement, you will have an advertising and promotion obligation ("APO") in the amount set forth in an appendix to the Franchise Agreement. You will pay that portion of the APO as we direct (which, as of the date of this disclosure document, is 4.25% of Hardee's Gross Sales) to HNAF as described in the next paragraph. HNAF contributions are due on the tenth day of each month. The remainder of the APO is paid to a Regional Co-op and/or will be spent by you for LSM. There is no franchisee advertising council that advises HR on advertising policy. Hardee's Restaurants operated by us contribute to HNAF on the same basis as comparable franchisees. Vendors and other suppliers also may contribute to HNAF.
We or our designee direct all advertising, marketing, and public relations programs and activities financed by HNAF with sole discretion over the creative concepts, materials and endorsements used in those programs and activities, and the geographic, market and media placement and allocation of advertising and marketing materials. We may work with an advertising agency in developing advertising for print, radio, internet and television and also often leverage internal and contract creative services.
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| upon receipt of invoice | |||
| Hardee’s Advertising | An advertising and promotional obligation (“APO”) in an amount set forth in your Franchise Agreement. Your APO will be up to 7% of Hardee’s Gross Sales. Currently, your APO is 5.5% of Hardee’s Gross Sales. (3) | Divided between HNAF, Regional Co-op and LSM (each as defined below) | |
| Hardee’s National Advertising Fund (“HNAF”) | Currently, 4.25% of Hardee’s Gross Sales | On the 10th day of each month | HNAF contributions are due on the 10th day of each month and are based on Gross Sales in the prior month. |
| Hardee’s Regional Cooperative (“Regional Co-op”) | If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, minimum of 0.5% of Hardee’s Gross Sales; however, your Regional Co- op can vote to increase each member’s contribution. | Same as royalty | We have the right, in our sole discretion, to establish a regional advertising and sales promotion cooperative in the regional area in which your Franchised Restaurant is located (“DMA”) to which you will be required to contribute. |
| Hardee’s Local Store Marketing (“LSM”) | Difference between your APO and the amount you contribute to HNAF and a Regional Co-op | Not paid to HR | You may develop adverti |
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, franchisees do not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other channels. To address this competitive environment, Hardees has established the Hardee’s National Advertising Fund (HNAF) for advertising, marketing, and public relations programs. Franchisees are obligated to contribute to this fund through an advertising and promotion obligation (APO). As of the date of the FDD, this obligation is 4.25% of Hardee's Gross Sales, which is directed to HNAF.
The HNAF is used at the sole discretion of Hardees to develop advertising concepts and materials for print, radio, internet, and television. Hardees decides on the geographic, market, and media placement of these advertising materials. This centralized approach allows Hardees to maintain a consistent brand image and marketing strategy across all locations, helping to compete effectively even when franchisees are in close proximity to one another.
In addition to the national advertising fund, franchisees also contribute to a Regional Co-op and/or spend on Local Store Marketing (LSM). The Regional Co-op contributions are a minimum of 0.5% of Gross Sales, but can be increased by a vote of the co-op members. The amount spent on LSM is the difference between the total APO (up to 7% of Gross Sales) and the contributions to HNAF and the Regional Co-op. This multi-tiered approach to advertising allows Hardees to address both national brand awareness and local market conditions, which is particularly important in a non-exclusive territory system where competition can vary significantly from one location to another.