When preparing Hardees' consolidated financial statements, what is management required to evaluate regarding the company's ability to continue as a going concern?

According to Hardees' 2025 Franchise Disclosure Document, when preparing consolidated financial statements, management must evaluate whether conditions or events, when considered together, raise significant doubt about the company's ability to continue operating as a going concern for one year after the consolidated financial statements are available to be issued.

This evaluation is a standard accounting practice to ensure that the financial statements provide an accurate representation of the company's financial health and stability. It involves assessing various financial and operational factors that could impact Hardees' ability to meet its obligations and continue its operations in the foreseeable future. These factors may include, but are not limited to, the company's cash flow, profitability, debt levels, and any significant events or changes in the industry or market conditions.

For a prospective Hardees franchisee, this requirement highlights the importance of reviewing the financial statements and understanding the assumptions and judgments made by management in assessing the company's going concern status. While the evaluation is forward-looking and involves estimates, it provides valuable insights into the potential risks and uncertainties that could affect the company's financial performance and, consequently, the franchisee's investment. Franchisees should pay close attention to any disclosures related to going concern considerations and seek clarification from the franchisor or a financial advisor if needed.