How does the Hardees franchisor's advertising strategy (Item 11) help franchisees differentiate their restaurants from competitors and attract customers in a crowded marketplace (Item 12)?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ctronic information, meetings or seminars, telephone communications, email communications and other communications. (Franchise Agreement, § 12.C.)
- 6. Conduct inspections of the Franchised Restaurant and evaluations of the products sold and services rendered as we deem appropriate or necessary. (Franchise Agreement, § 12.D.)
Advertising
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.
During our last fiscal year ended January 27, 2025, HNAF monies were spent as follows: approximately 76% on media and public relations; approximately 7% on television, radio, outdoor and print production; approximately 1% on point of purchase items, artwork and packaging; approximately 2% on research and development; approximately 3% on digital creative production; and 11% on other (which includes agencies fees, contract services, administration expenses and other miscellaneous advertising production expenses). No funds were used to solicit franchisees.
We also have the right to establish a Regional Co-op in the DMA in which your Franchised Restaurant is located. Hardee's Restaurants operated by us in an area covered by a Regional Co-op will contribute on the same basis as comparable franchisees.
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees utilizes a multi-faceted advertising strategy to help franchisees attract customers. Hardees franchisees are obligated to contribute to advertising and promotion, with the amount set forth in the Franchise Agreement. As of the date of the disclosure document, 4.25% of Hardee's Gross Sales is contributed to the Hardee's National Advertising Fund (HNAF). The remainder of the advertising and promotion obligation (APO) is paid to a Regional Co-op and/or spent by the franchisee for Local Store Marketing (LSM). This combined approach allows for both national brand-building and localized marketing efforts. The total APO can reach up to 7% of Gross Sales.
Hardees, or its designee, has sole discretion over the advertising, marketing, and public relations programs financed by HNAF. This includes creative concepts, materials, endorsements, and the placement and allocation of advertising materials across different media channels like print, radio, internet, and television. Hardees may use an advertising agency or internal creative services to develop these campaigns. This centralized control ensures brand consistency and allows Hardees to leverage its expertise in marketing and advertising.
While franchisees contribute to the advertising fund, Hardees is not obligated to ensure that expenditures benefit each franchisee directly or proportionately to their contribution. However, Hardees generally intends to spend all advertising payments during the taxable year in which they are received, or in the following year. This system allows Hardees to adapt to local market conditions while maintaining a cohesive brand image. Franchisees also have the option to develop their own advertising materials for local store marketing, but these materials must be approved by Hardees in advance.
Despite these advertising efforts, Hardees franchisees do not receive an exclusive territory under the Franchise Agreement or Development Agreement. Franchisees may face competition from other franchisees, company-owned outlets, or other channels of distribution and competitive brands controlled by Hardees. This competitive environment underscores the importance of effective advertising and marketing strategies to differentiate a Hardees franchise from its competitors and attract customers.