What is the procedure for a Hardee's franchisee to develop their own advertising materials?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| upon receipt of invoice | |||
| Hardee’s Advertising | An advertising and promotional obligation (“APO”) in an amount set forth in your Franchise Agreement. Your APO will be up to 7% of Hardee’s Gross Sales. Currently, your APO is 5.5% of Hardee’s Gross Sales. (3) | Divided between HNAF, Regional Co-op and LSM (each as defined below) | |
| Hardee’s National Advertising Fund (“HNAF”) | Currently, 4.25% of Hardee’s Gross Sales | On the 10th day of each month | HNAF contributions are due on the 10th day of each month and are based on Gross Sales in the prior month. |
| Hardee’s Regional Cooperative (“Regional Co-op”) | If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, minimum of 0.5% of Hardee’s Gross Sales; however, your Regional Co- op can vote to increase each member’s contribution. | Same as royalty | We have the right, in our sole discretion, to establish a regional advertising and sales promotion cooperative in the regional area in which your Franchised Restaurant is located (“DMA”) to which you will be required to contribute. |
| Hardee’s Local Store Marketing (“LSM”) | Difference between your APO and the amount you contribute to HNAF and a Regional Co-op | Not paid to HR | You may develop advertising materials for your own use; however, we must approve these advertising materials in advance of use. LSM monies may be spent only for approved advertising. (4) |
| Interest | Interest on the amount owed from the date due until paid | When any payment is overdue | The interest rate is the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurant is located not to exceed 1.5% per fiscal period (or a portion of a fiscal period). |
| Secret Shopper, and other Quality Assurance (QA) Programs | All costs associated with the Secret Shopper programs or other QA programs as HR may require | As incurred | You must participate in programs initiated to verify customer satisfaction and/or your compliance with all operational and other aspects of the System. Currently, there is no charge for an initial QA audit; the cost of a second audit due to a deficiency is currently $211 per Restaurant which may be increased every year, although we do not anticipate the annual increase to exceed 30%. |
Source: Item 6 — OTHER FEES (FDD pages 29–36)
What This Means (2025 FDD)
According to Hardee's 2025 Franchise Disclosure Document, franchisees are permitted to develop their own advertising materials for local store marketing (LSM). However, Hardee's maintains control over brand messaging, requiring franchisees to submit these materials for approval before they can be used. This ensures that all advertising aligns with Hardee's brand standards and marketing strategies. The funds used for LSM are the difference between the franchisee's Advertising and Promotional Obligation (APO) and the contributions made to the Hardee's National Advertising Fund (HNAF) and any Regional Co-op. These LSM funds can only be used for advertising that has been approved by Hardee's.
This requirement for pre-approval is a common practice in franchising, allowing franchisors to maintain brand consistency and prevent franchisees from using misleading or inappropriate advertising. While franchisees have the flexibility to create materials tailored to their local market, they must adhere to the franchisor's guidelines. The APO, which can be up to 7% of gross sales, is divided among the HNAF, Regional Co-op, and LSM, with the current APO set at 5.5% of gross sales. The HNAF currently receives 4.25% of gross sales, while the Regional Co-op receives a minimum of 0.5% of gross sales, although this can be increased by a vote of the co-op members.
For a prospective Hardee's franchisee, this means that while you have some control over local advertising, you need to factor in the time and effort required to get materials approved by Hardee's. It is important to understand the specific guidelines and requirements for advertising material approval to ensure a smooth process. Additionally, franchisees should be aware of how their APO is allocated and how much is available for LSM activities. Understanding these financial obligations and approval processes is crucial for effective local marketing and overall business success as a Hardee's franchisee.