What is the maximum potential financial exposure for a Hardees franchisee in the first year, considering the initial investment (Item 7) and the ongoing advertising fees (Item 6)?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| upon receipt of invoice | |||
| Hardee’s Advertising | An advertising and promotional obligation (“APO”) in an amount set forth in your Franchise Agreement. Your APO will be up to 7% of Hardee’s Gross Sales. Currently, your APO is 5.5% of Hardee’s Gross Sales. (3) | Divided between HNAF, Regional Co-op and LSM (each as defined below) | |
| Hardee’s National Advertising Fund (“HNAF”) | Currently, 4.25% of Hardee’s Gross Sales | On the 10th day of each month | HNAF contributions are due on the 10th day of each month and are based on Gross Sales in the prior month. |
| Hardee’s Regional Cooperative (“Regional Co-op”) | If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, minimum of 0.5% of Hardee’s Gross Sales; however, your Regional Co- op can vote to increase each member’s contribution. | Same as royalty | We have the right, in our sole discretion, to establish a regional advertising and sales promotion cooperative in the regional area in which your Franchised Restaurant is located (“DMA”) to which you will be required to contribute. |
| Hardee’s Local Store Marketing (“LSM”) | Difference between your APO and the amount you contribute to HNAF and a Regional Co-op | Not paid to HR | You may develop advertising materials for your own use; however, we must approve these advertising materials in advance of use. LSM monies may be spent only for approved advertising. (4) |
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, determining the maximum potential financial exposure for a new franchisee in the first year requires combining the initial investment (Item 7) with potential ongoing advertising fees (Item 6). The advertising fees are structured as an Advertising and Promotional Obligation (APO), which can be up to 7% of the restaurant's gross sales. This APO is further divided into the Hardee's National Advertising Fund (HNAF), Regional Cooperative (Regional Co-op), and Local Store Marketing (LSM).
To calculate the maximum advertising fees, a franchisee would need to estimate their potential gross sales and apply the 7% APO. For example, if a Hardees restaurant generates $500,000 in gross sales during its first year, the maximum advertising fees could be $35,000 (7% of $500,000). This amount is allocated across HNAF, Regional Co-op, and LSM, with the franchisee needing to manage these contributions accordingly. The HNAF is currently 4.25% of gross sales, with a minimum of 0.5% for the Regional Co-op, and the difference going to LSM.
However, the provided FDD excerpts do not include the complete Item 7, which details the full initial investment required to start a Hardees franchise. Without the total initial investment range, it's impossible to provide a precise figure for the maximum potential financial exposure in the first year. A prospective franchisee should carefully review Item 7 of the FDD to understand all the upfront costs, including franchise fees, real estate expenses, equipment costs, and initial inventory, and combine that with an estimate of maximum advertising fees based on projected gross sales to determine their total potential financial exposure.