If the Hardees franchisee is a business entity, what activities must the franchisee's governing documents limit them to, unless waived in writing by HR?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, a limited liability company, a partnership or any other type of organization (collectively, "business entity"), Franchisee makes the following representations and warranties: (1) it is duly organized and validly existing under the laws of the state of its formation; (2) it is qualified to do business in the state or states in which the Franchised Restaurant is located; (3) execution of this Agreement and the development and operation of the Franchised Restaurant is permitted by its governing documents; and (4) unless waived in writing by HR, Franchisee's governing documents shall at all times provide that the activities of Franchisee are limited exclusively to the development and operation of Hardee's Restaurants and other restaurants that are franchised by HR or its affiliates and that no Transfer (as defined in Section 18) of an ownership interest may be made except in accordance with Section 18.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee is a business entity, its governing documents must limit its activities. Specifically, unless Hardees waives this requirement in writing, the franchisee's activities must be limited exclusively to the development and operation of Hardee's Restaurants and other restaurants that are franchised by Hardees or its affiliates. The governing documents must also stipulate that no transfer of an ownership interest can occur except as outlined in Section 18 of the franchise agreement.
This restriction ensures that the franchisee's primary focus remains on the Hardees franchise and other approved restaurant ventures. It prevents the franchisee from diverting resources or attention to unrelated business activities that could potentially detract from the performance of the Hardees restaurant.
For a prospective Hardees franchisee, this means that if they choose to operate under a business entity such as a corporation or LLC, the organizational documents for that entity must explicitly state these limitations. Any deviation from this requirement needs written approval from Hardees. This provision is designed to protect the Hardees brand and ensure consistent operation and management across all franchise locations. Franchisees should carefully review Section 18 of the franchise agreement to fully understand the restrictions on ownership transfers.