What is the Hardee's Local Store Marketing (LSM) amount?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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 advertising materials for your own use; however, we must approve these advertising materials in advance of use. LSM monies may be spent only for approved advertising. (4) |
| Interest | Interest on the amount owed from the date due until paid | When any payment is overdue | The interest rate is the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurant is located not to exceed 1.5% per fiscal period (or a portion of a fiscal period). |
| Secret Shopper, and other Quality Assurance (QA) Programs | All costs associated with the Secret Shopper programs or other QA programs as HR may require | As incurred | You must participate in programs initiated to verify customer satisfaction and/or your compliance with all operational and other aspects of the System. Currently, there is no charge for an initial QA audit; the cost of a second audit due to a deficiency is currently $211 per Restaurant which may be increased every year, although we do not anticipate the annual increase to exceed 30%. |
Source: Item 6 — OTHER FEES (FDD pages 29–36)
What This Means (2025 FDD)
According to Hardee's 2025 Franchise Disclosure Document, the Local Store Marketing (LSM) amount is the difference between the franchisee's Advertising and Promotional Obligation (APO) and the amounts contributed to the Hardee's National Advertising Fund (HNAF) and the Regional Co-op. The APO is up to 7% of Gross Sales; however, currently, it is 5.5% of Gross Sales. The HNAF contribution is currently 4.25% of Gross Sales. The Regional Co-op contribution is a minimum of 0.5% of Gross Sales if the restaurant is in an area covered by a Regional Co-op. However, the Regional Co-op can vote to increase each member's contribution.
In practice, this means a Hardee's franchisee's LSM contribution will fluctuate depending on the Regional Co-op's decisions and the restaurant's gross sales. The franchisee does not pay the LSM fees to Hardee's directly. Instead, the franchisee uses the funds for local advertising after Hardee's approves the advertising materials.
For example, if a Hardee's restaurant has $500,000 in Gross Sales, the APO would be $27,500 (5.5% of $500,000). If that same restaurant contributes 4.25% to HNAF ($21,250) and 0.5% to a Regional Co-op ($2,500), the LSM amount would be $3,750, which is the difference between the APO and the total contributions to HNAF and the Regional Co-op. The franchisee would then use this $3,750 for local marketing efforts, with Hardee's prior approval of the advertising materials.
It's important for prospective Hardee's franchisees to understand that the LSM contribution is not a fixed percentage and can vary. Franchisees should factor in potential increases in Regional Co-op contributions when budgeting for local marketing expenses. Additionally, franchisees must ensure that all advertising materials are approved by Hardee's before use, which could impact the timeliness and flexibility of their local marketing campaigns.