If I don't operate my Hardees franchise directly, what role must I designate and have approved?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
You are not obligated to participate personally in the direct operation of the Franchised Restaurant; however, you must designate, and we must approve, a qualified individual to serve as the "Operating Principal" of your Franchised Restaurant. If you sign a Development Agreement, you must designate, and we must approve, a qualified individual to serve as your "Development Principal."
The Operating Principal must own at least a 10% equity ownership interest in you, or in your general partner if you are a limited partnership, unless modified by us in our sole discretion, and be a person acceptable to both us and you. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between you and us.) The Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant, including control over the standards of operation and financial performance. Unless you have named, and we have approved, a Multi-Unit Manager (discussed below), the Operating Principal must: (1) devote full time and best efforts to the supervision and conduct of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant; and (2) maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us. The Operating Principal will be required to successfully complete the FMTP and any additional training required by us. If you operate restaurants in multiple markets that are franchised by us or our affiliates, an individual meeting the above qualifications will serve as the Operating Principal in at least one market.
If you operate restaurants that are franchised by us or our affiliates in multiple geographic markets, for all markets in which the Operating Principal fails to satisfy our requirements, you must designate and retain an individual to serve as Multi-Unit Manager. The Multi-Unit Manager will be under the supervision of the Operating Principal. The Multi-Unit Manager must devote full time and best efforts to supervising the operation of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market, successfully complete the FMTP and any additional training required by us, and be approved by us. In addition, the Multi-Unit Manager must maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 62–63)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee does not directly operate the franchised restaurant, they must designate and have Hardees approve a qualified individual to serve as the "Operating Principal." This individual is responsible for the day-to-day activities and financial performance of the Hardees restaurant, as well as other Hardees franchises the franchisee operates in the same geographic market.
The Operating Principal must meet specific criteria, including owning at least a 10% equity ownership interest in the franchisee (or the general partner, if the franchisee is a limited partnership), unless Hardees modifies this requirement or the franchisee was a publicly-held entity. The Operating Principal must also be part of the "Continuity Group," which includes key stakeholders in the franchise. They must devote their full time and best efforts to supervising the Hardees restaurant and other affiliated restaurants in the same market, and they must live within a reasonable driving distance of the restaurant, unless Hardees waives this requirement in writing. The Operating Principal is also required to successfully complete the Franchise Management Training Program (FMTP) and any additional training Hardees requires.
If the franchisee operates Hardees restaurants in multiple geographic markets and the Operating Principal does not meet Hardees' requirements in all markets, the franchisee must designate a "Multi-Unit Manager" for those markets. The Multi-Unit Manager works under the supervision of the Operating Principal and must also devote full time and best efforts to supervising the operation of the restaurants, complete the FMTP and any additional training, and live within a reasonable driving distance of the restaurant. The franchisee must also ensure that the Hardees restaurant is always supervised on-site by the Operating Principal, a Multi-Unit Manager, a General Manager, or a Site Manager, all of whom must meet Hardees' training qualifications.
It is common in the franchise industry for franchisors to require either direct involvement from the franchisee or the appointment of a qualified manager to oversee operations. This ensures that the brand standards are maintained and that the franchise operates effectively. The specific requirements for the Operating Principal and Multi-Unit Manager roles in the Hardees franchise agreement are designed to ensure that qualified individuals are in place to manage the restaurants, even if the franchisee is not directly involved in the day-to-day operations.