What minimum equity ownership interest must the Development Principal have in my Hardees franchise?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
The Development Principal must own at least a 10% equity ownership interest in you, or in your general partner if you are a limited partnership, unless modified by us in our sole discretion. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publiclyheld entity as of the date of the first franchise-related agreement between you and us.) The Development Principal must be a member of the Continuity Group and have full control over the day-to-day development of the Franchised Restaurants. Unless you have named, and we have approved, a Multi-Unit Development Manager (discussed below), the Development Principal must: (1) devote full time and best efforts to the supervising development of the Franchised Restaurants; and (2) maintain his/her primary residence within a reasonable driving distance of the Development Territory, unless waived in writing by us. The Development Principal will be required to successfully complete our development training and any additional training required by us. If you are developing restaurants in multiple markets that are franchised
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 62–63)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the Development Principal must maintain a minimum equity ownership interest of 10% in the franchisee entity or, if the franchisee is a limited partnership, in the general partner. Hardees retains the discretion to modify this requirement. This ownership stake does not apply if the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity when the initial franchise agreement was established.
The Development Principal is also required to be a member of the Continuity Group, ensuring they are bound by confidentiality and non-competition restrictions. They must have full control over the day-to-day development of the franchised restaurants. Unless a Multi-Unit Development Manager has been appointed and approved by Hardees, the Development Principal must dedicate their full time and best efforts to supervising the development of the restaurants and maintain their primary residence within a reasonable driving distance of the Development Territory, unless Hardees waives this requirement in writing.
These requirements ensure that the Development Principal has a significant stake in the success of the Hardees franchise and is actively involved in its development. The equity requirement aligns the Development Principal's interests with those of Hardees, while the residency and full-time commitment requirements ensure they are readily available to oversee the development process. The Continuity Group membership further reinforces their commitment to the Hardees system and its standards.