What are the initial minimum lease terms for Hardees' restaurant property financing method sale-leaseback transactions?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
For all of our 125 restaurant property financing method sale-leaseback transactions, whether assumed by or completed by the CKE Securitization Entities, the initial minimum lease terms are 20 years and include renewal options. The leases also include provisions that provide us with the ability to repurchase the properties, which for accounting purposes, prevents sale recognition as the leased properties are real estate, and we have concluded that no two real estate assets are substantially the same.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the initial minimum lease terms for restaurant property financing method sale-leaseback transactions are 20 years. These leases also include renewal options, giving Hardees the potential for extended use of the properties.
Furthermore, the leases contain provisions that allow Hardees to repurchase the properties. According to the document, this repurchase option has accounting implications, preventing sale recognition because the leased properties are real estate assets that Hardees considers unique.
For a prospective franchisee, this indicates that Hardees utilizes long-term lease agreements with options to renew and repurchase, which could provide stability and potential future flexibility in managing property assets. This financing structure impacts how Hardees records sales proceeds and manages its assets and liabilities related to these properties.