Is Hardees obligated to provide a reason if they withhold consent for a Developer transfer?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
R does not approve the proposed Development Principal, Developer will have 15 days from its receipt of notice of
the decision to advise HR in writing of another person to act as Development Principal who satisfies the preceding qualifications.
If Developer is developing restaurants in multiple markets that are franchised by HR or its affiliates, an individual meeting the qualifications of this Section will serve as Development Principal in at least one market.
G. Multi-Unit Development Manager
If Developer is developing Franchised Restaurants in multiple geographic markets, for all markets in which the Development Principal fails to satisfy the requirements of Section 8.F., Developer shall designate and retain an individual to serve as Multi-Unit Development Manager. The Multi-Unit Development Manager shall be under the supervision of the Development Principal. The Multi-Unit Development Manager shall meet all of the following qualifications:
- (1) The Multi-Unit Development Manager shall devote full time and best efforts to supervising the development of the Franchised Restaurants and other restaurants operated by Developer that are franchised by HR or its affiliates in a geographic market and shall not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility.
- (2) Unless waived in writing by HR, the Multi-Unit Development Manager shall maintain his primary residence within a reasonable driving distance of the Development Territory.
- (3) If requested by HR, the Multi-Unit Development Manager shall successfully complete HR's development training. In addition, the Multi-Unit Development Manager shall successfully complete the FMTP and any additional training required by HR.
- (4) HR shall have approved the Multi-Unit Development Manager, and not have later withdrawn that approval.
If a Multi-Unit Development Manager no longer qualifies as such, Developer shall designate another qualified person to act as Multi-Unit Development Manager within 30 days after the date the prior Multi-Unit Manager ceases to be qualified. Developer's designee to become Multi-Unit Development Manager must successfully complete the FMTP and any additional development training required by HR.
9. TRANSFERS BY HR
HR shall have the absolute, unrestricted right, exercisable at any time, to transfer and assign all or any part of its rights and obligations under this Agreement to any person or legal entity without the consent of Developer. Developer agrees that HR will have no liability after the effective date of transfer or assignment for the performance of, or any failure to perform, any obligations transferred.
10. TRANSFERS BY DEVELOPER
A. Developer understands and acknowledges that the rights and duties set forth in this Agreement are personal to Developer, that HR has entered into this Agreement in reliance on Developer's (and Developer's direct and indirect owners') business skill, financial capacity, personal character, experience and demonstrated or purported ability in developing and operating high quality foodservice operations and that HR has entered into this Agreement with the understanding that, except as otherwise reserved by HR in Section 2, Developer will be the only franchisee of HR in the Development Territory during the Development Term. Accordingly, neither Developer nor any immediate or remote successor to
any part of Developer's interest in this Agreement, nor any individual, partnership, corporation or other legal entity which directly or indirectly has an interest in Developer shall sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in Developer, this Agreement or any other assets pertaining to Developer's operations under this Agreement (collectively "Transfer") without the prior written consent of HR. HR shall be free to withhold consent to any Transfer, without consideration of the factors listed in Section 10.B., if Developer does not propose to Transfer the same interest with respect to all agreements with HR in the Development Territory.
Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of HR shall be null and void and shall constitute a material breach of this Agreement, for which HR may terminate this Agreement without providing Developer an opportunity to cure the breach.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, Hardees has broad discretion regarding Developer transfers. Hardees is free to withhold consent for any transfer if the Developer does not propose to transfer the same interest with respect to all agreements with Hardees in the Development Territory.
Hardees' decision to consent to a proposed transfer is made in its sole discretion and includes numerous factors deemed relevant by Hardees. These factors include the transferee's experience in high-quality restaurant operations, meeting Hardees' managerial, operational, experience, quality, character, and business standards, possessing a good character, business reputation, and credit rating, having an organization whose management culture is compatible with Hardees' management culture, and having adequate financial resources and working capital. The sales price also should not be so high as to jeopardize the ability of the transferee to develop, maintain, operate, and promote the Franchised Restaurants and meet financial obligations to Hardees, third-party suppliers, and creditors.
Hardees' decision with respect to a proposed Transfer shall not create any liability on the part of Hardees to the transferee, if Hardees consents to the Transfer and the transferee experiences financial difficulties, or to Developer or the proposed transferee, if Hardees withholds consent to the Transfer. Hardees has the right, in its sole discretion, to communicate and counsel with Developer and the proposed transferee regarding any aspect of the proposed Transfer, without any liability to Developer or the proposed transferee. Hardees and Developer intend that the exercise of Hardees' right or discretion will not be subject to limitation or review.
Therefore, Hardees is not obligated to provide a reason for withholding consent, as the decision is at their sole discretion. However, Hardees may communicate and counsel with the Developer and the proposed transferee regarding any aspect of the proposed Transfer.