What are the potential consequences for a Hardees franchisee who fails to meet their development obligations (Item 9) after paying the Development Fee (Item 5)?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ired by state law.
ITEM 9
FRANCHISEE'S OBLIGATIONS
This table lists your principal obligations under the Franchise and Development Agreements. It will help you find more detailed information about your obligations in these agreements and in other Items of this disclosure document.
| Obligation | Section in Franchise Agreement (FA) and Development Agreement (DA) | Disclosure Document Item | |
|---|---|---|---|
| a. | Site selection and acquisition/lease | FA: Section 3 DA: Sections 3-5 | Items 7 & 11 |
| b. | Pre-opening purchases/leases | FA: Sections 3-5 DA: Section 3-6 | Items 7 & 8 |
| c. | Site development and other pre-opening requirements | FA: Sections 3 - 7 DA: Sections 3 & 5-6 | Items 6, 7 & 11 |
| d. | Initial and ongoing training | FA: Section 11 DA: Section 5 | Items 5, 6, 7 & 11 |
| e. | Opening | FA: Section 5 DA: Not Applicable | Item 11 |
| Obligation | Section in Franchise Agreement (FA) and Development Agreement (DA) | Disclosure Document Item | |
| f. | Fees | FA: Sections 3, 5, 8 & Appendix A-C DA: Section 4 | Items 5 & 6 |
| g. | Compliance with standards and policies/Operating Manual | FA: Sections 7, 9 & 13 DA: Section 6 | Items 8 & 11 |
| h. | Trademarks and proprietary information | FA: Section 14 DA: Not Applicable | Items 13 & 14 |
| i. | Restrictions on products/services offered | FA: Section 13 DA: Not Applicable | Item 16 |
| j. | Warranty and customer service requirements | FA: Section 13 DA: Not Applicable | Item 11 |
| k. | Territorial development and sales quotas | FA: Not Applicable DA: Sections 1-3 & Appendix A-B | Item 12 |
| l. | Ongoing product/service purchases | FA: Section 13.B. DA: Not Applicable | Item 8 |
| m. | Maintenance, appearance and remodeling requirements | FA: Sections 4 & 10 DA: Not Applicable | Item 11 |
| n. | Insurance | FA: Section 15 DA: Section 7 | Items 6, 7 & 8 |
| o. | Advertising | FA: Section 8 & Appendix C DA: Not Applicable | Items 6 & 11 |
| p. | Indemnification | FA: Section 25 DA: Section 16 | Item 6 |
| q. | Owner’s participation/ management/staffing | FA: Sections 13.G & 16.G & 16.H DA: Section 8 | Items 11 & 15 |
| r. | Records and reports | FA: Section 7 DA: Not Applicable | Item 6 |
| s. | Inspections and audits | FA: Sections 4, 7.F & 12.D DA: Not Applicable | Items 6 & 11 |
| t. | Transfer | FA: Sections 17 & 18 DA: Sections 9 & 10 | Items 6 & 17 |
| u. | Renewal | FA: Section 2 DA: Not Applicable | Items 6 & 17 |
| v. | Post-termination obligations | FA: Section 22 DA: Section 14 | Item 17 |
| w. | Noncompetition covenants | FA: Section 20 DA: Section 12 | Item 17 |
| x. | Dispute resolution | FA: Section 30 DA: Section 22 | Item 17 |
ITEM 10
FINANCING
Neither we nor any of our agents or affiliates offer direct or indirect financing to you or guarantee any of your notes, leases or obligations. If you are purchasing one or more company-operated Restaurants, we will issue a Sublease for each site leased by us. The Sublease is a standard commercial lease under which you pay rent to us for use of the premises. The Sublease does not contain any financing terms. At the time of the closing of the transaction, you and we will execute, among other things and if appropriate, a Sublease for each Restaurant you purchase, the general form of which is attached as Exhibit P.
ITEM 11
FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING
Except as listed below, we are not required to provide you with any assistance.
HR's Pre-Opening Obligations
Before you open your Franchised Restaurant, we will:
- 1. Provide you with the following site selection assistance: (a) HR's site selection guidelines and, as you may request, a reasonable amount of consultation with respect to site selection; and (b) onsite evaluation that we may deem advisable as part of our evaluation of your request for site acceptance. (Development Agreement, § 5.B and Franchise Agreement, § 4.B.)
- 2. Advise you in writing, within 45 days after our receipt of all documents that we require, whether we have accepted a particular site;
What This Means (2025 FDD)
According to the 2025 Hardees Franchise Disclosure Document, Item 9 outlines the franchisee's obligations, referencing sections in both the Franchise Agreement (FA) and Development Agreement (DA). These obligations include site selection, pre-opening purchases, site development, training, opening procedures, fee payments, and compliance with Hardees' standards. For territorial development and sales quotas, the Development Agreement specifies relevant sections and refers to Item 12 of the FDD.
Specifically, regarding development obligations, if a Hardees franchisee fails to meet the requirements outlined in the Development Agreement, this could potentially lead to a default under the agreement. Item 9 indicates that territorial development and sales quotas are addressed in the Development Agreement under Sections 1-3 and Appendix A-B, and are further detailed in Item 12 of the FDD. Failure to meet these obligations could result in Hardees taking action, potentially including termination of the Development Agreement.
Furthermore, the 2025 HR Development Incentive Program outlines specific requirements that franchisees must meet to be eligible for incentives such as reduced initial franchise fees and reduced royalty and APO fees for the first three years. These requirements include signing a Franchise Agreement or Development Agreement by a specific date, opening newly-constructed restaurants by specified dates, remaining in compliance with existing agreements, obtaining approval for growth, and meeting financial and operational requirements. Failure to meet these requirements could result in the franchisee not receiving the development incentives.
Prospective Hardees franchisees should carefully review the Development Agreement and Franchise Agreement to fully understand their obligations and the potential consequences of failing to meet them. They should also inquire about the specific remedies Hardees may pursue in the event of a default, as well as any opportunities to cure a default before termination occurs. Understanding these aspects is crucial for making an informed decision about investing in a Hardees franchise.