If a Hardees franchisee signs a Development Agreement for ten or more Franchised Restaurants and qualifies for the 2025 HR Travel Center Development Incentive, what document will be signed?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If your Franchised Restaurant qualifies for the 2025 HR Travel Center Development Incentive and you sign a Development Agreement for ten or more Franchised Restaurants, then we and you will sign the 2025 Travel Center DIP Addendum attached to this Disclosure Document as Exhibit L. Under the terms of the 2025 Travel Center DIP Addendum and with respect to Gross Sales accruing during the applicable Franchised Restaurant's initial term of operation under the Franchise Agreement, we will reduce the royalty fee by (i) 3% of Gross Sales accruing during the Restaurant's first year of operation; (ii) 2% of Gross Sales accruing during the second year of operation; and (iii) 1% of Gross Sales accruing during the third year of operation. After the third year of operation the royalty fee reverts to 5% of Gross Sales. Additionally, the APO fee will be reduced to 2% of Gross Sales for the full 20 year term of the Franchise Agreement. If you or any of your affiliates
receive, during the initial term of operation of the Franchised Restaurant under the Franchise Agreement, a written notice of default under any agreement between you or any of your affiliates and HR or any affiliate of HR and fails to cure the default within the applicable cure period, the HR 2025 Travel Center DIP Addendum will be terminated and the royalty fee and APO for the Franchised Restaurant will immediately revert to the applicable amounts set forth in the Franchise Agreement.
Source: Item 6 — OTHER FEES (FDD pages 29–36)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee qualifies for the 2025 HR Travel Center Development Incentive and signs a Development Agreement for ten or more Franchised Restaurants, Hardees and the franchisee will sign the 2025 Travel Center DIP Addendum. This addendum is attached to the Disclosure Document as Exhibit L.
Under the terms of this addendum, Hardees will reduce the royalty fee based on the restaurant's gross sales during its initial term of operation. The royalty fee will be reduced by 3% of Gross Sales during the first year, 2% during the second year, and 1% during the third year. After the third year, the royalty fee will revert to 5% of Gross Sales. Additionally, the Advertising and Promotional Obligation (APO) fee will be reduced to 2% of Gross Sales for the full 20-year term of the Franchise Agreement.
However, the 2025 Travel Center DIP Addendum can be terminated if the franchisee or any of their affiliates receive a written notice of default under any agreement with HR or its affiliates and fail to cure the default within the applicable cure period. If this occurs, the royalty fee and APO for the Franchised Restaurant will immediately revert to the amounts set forth in the Franchise Agreement.