What minimum equity ownership interest in the Hardees franchisee (or its general partner if a limited partnership) must the Operating Principal have, unless modified by Hardees?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) The Operating Principal shall have at least a 10% equity ownership interest in Franchisee or, if Franchisee is a limited partnership, in Franchisee's general partner, unless this requirement is modified by HR in its sole discretion. This Section 16.G.(1) shall not apply if Franchisee was a publiclyheld entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between Franchisee and HR.
- (2) The Operating Principal, at all times, shall be a member of the Continuity Group and, at a minimum, have full control over the day-to-day activities of the Franchised Restaurant and those other restaurants (that are franchised by HR or its affiliates) operated by Franchisee in the same geographic
market as the Franchised Restaurant, including control over the standards of operation and financial performance.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the Operating Principal must maintain at least a 10% equity ownership interest in the Hardees franchisee. If the franchisee is a limited partnership, the Operating Principal must have at least a 10% equity ownership in the franchisee's general partner.
This requirement can be modified at Hardees's sole discretion. However, this ownership requirement does not apply if the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity on the date of the first franchise-related agreement between the franchisee and Hardees.
In addition to the equity ownership, the Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the franchised restaurant, including control over operational standards and financial performance. The Operating Principal is essentially responsible for the overall management and success of the Hardees location.
This ensures that the Operating Principal has a vested interest in the success of the Hardees franchise and is actively involved in its daily operations. Prospective franchisees should confirm with Hardees whether any modifications to the 10% equity ownership requirement are possible or applicable in their specific situation.