If a Hardees franchisee enters into a Development Agreement, how does the Development Fee relate to the Initial Franchise Fee?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
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Other than these nine (9) actions, no litigation is required to be disclosed in this Item.
ITEM 4
BANKRUPTCY
No bankruptcy is required to be disclosed in this Item.
ITEM 5
INITIAL FEES
Development Fee
If you enter into a Development Agreement for the development of three (3) or more Franchised Restaurants to be located at Travel Center Locations or Gas and Convenience Locations, you must pay HR a Development Fee of $10,000 for each Franchised Restaurant you agree to develop at the time you sign the Development Agreement (this includes the 2025 HR Travel Center Development Incentive Program). The Development Fee is not refundable. If you execute a Franchise Agreement for a new Franchised Restaurant pursuant to the Development Agreement, the $10,000 Development Fee associated with this new Franchised Restaurant will be credited against the Initial Franchise Fee for such Franchised Restaurant. With respect to each Franchised Restaurant developed under the Development Agreement, you will execute the form of Franchise Agreement in use at the time you begin to develop the Franchised Restaurant and the respective 2025 HR Travel Center Development Incentive Program Addendum or 2025 DIP Addendum, if applicable.
Initial Franchise Fee
The Initial Franchise Fee is $25,000, although the balance of the Initial Franchise Fee is reduced to $15,000 for a Franchised Restaurant developed pursuant to the terms of a Development Agreement, including any Conversion Restaurant. You must pay HR the Initial Franchise Fee, less any Development Fee already paid, when you execute the Franchise Agreement. The Initial Franchise Fee is fully earned by HR when paid, and it is not refundable.
Source: Item 5 — Initial Fees (FDD pages 27–29)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the Development Fee paid under a Development Agreement is credited towards the Initial Franchise Fee. If a franchisee enters into a Development Agreement to develop three or more Hardees restaurants at Travel Center or Gas and Convenience Locations, they must pay a Development Fee of $10,000 for each restaurant. This fee is paid when the Development Agreement is signed and is non-refundable.
When the franchisee executes a Franchise Agreement for a specific Hardees restaurant under the Development Agreement, the $10,000 Development Fee already paid for that location is credited against the Initial Franchise Fee. The standard Initial Franchise Fee is $25,000. However, for restaurants developed under a Development Agreement, the balance of the Initial Franchise Fee is reduced to $15,000. Therefore, after the $10,000 credit, the franchisee would only need to pay $5,000 upon signing the Franchise Agreement.
Hardees also offers an incentive related to the opening date. The $15,000 Initial Franchise Fee is waived entirely for any restaurant that opens 6 months prior to its contractual opening date as specified in the Development Agreement. This could represent a significant cost savings for franchisees who are able to accelerate their development schedule.