Is Hardees liable to franchisees if HNAF expenditures in their geographic area are not proportionate to their contributions?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee understands and acknowledges that HNAF is intended to enhance recognition of the Proprietary Marks and patronage of Hardee's Restaurants. HR will endeavor to utilize HNAF to develop advertising and marketing materials and programs, and to place advertising that will benefit the System and all Hardee's Restaurants contributing to HNAF. However, Franchisee agrees that HR is not liable to Franchisee and Franchisee forever covenants not to sue and holds HR harmless of any liability or obligation to ensure that expenditures by HNAF in or affecting any geographic area (including the Franchised Location) are proportionate or equivalent to the contributions to HNAF by Hardee's Restaurants operating in that geographic area, or that any Hardee's Restaurant will benefit directly or in proportion to its contribution to HNAF from the development of advertising and marketing materials or the placement of advertising. Except as expressly provided in this Section 8, neither HR nor its designee assumes any direct or indirect liability to Franchisee with respect to the maintenance, direction or administration of HNAF.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees Restaurants LLC (HR) is not liable to franchisees regarding the proportionality of Hardee's National Advertising Fund (HNAF) expenditures in their area relative to their contributions. The franchisee agrees not to sue Hardees for any obligation to ensure that HNAF expenditures in any geographic area, including the franchised location, are proportionate or equivalent to the contributions made by Hardee's restaurants operating in that area. Additionally, Hardees is not liable if a Hardee's restaurant does not benefit directly or in proportion to its contribution to HNAF from the advertising and marketing materials developed or the advertising placed.
This means that as a Hardees franchisee, you cannot hold Hardees accountable if the advertising and marketing efforts in your specific area do not directly correlate with the amount of money contributed to the HNAF by restaurants in that area. Hardees retains the discretion to allocate these funds as it sees fit to benefit the Hardee's system as a whole.
This lack of liability provides Hardees with flexibility in managing the HNAF for the overall benefit of the brand. However, it also means that franchisees have no guarantee that their contributions will directly translate into local advertising benefits. Prospective franchisees should consider this when evaluating the potential return on investment and the level of control they desire over marketing expenditures.