When purchasing a Hardees restaurant, will a sublease be executed at the closing of the transaction?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 10 — Financing (FDD pages 43–44)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee is purchasing one or more company-operated restaurants, Hardees will issue a sublease for each site that Hardees itself leases. This sublease is a standard commercial lease where the franchisee pays rent to Hardees for the use of the premises. The FDD specifies that these subleases do not contain any financing terms. At the closing of the transaction, the franchisee and Hardees will execute a sublease for each restaurant purchased, if applicable. The general form of the sublease is attached as Exhibit P to the Franchise Disclosure Document.
This arrangement is fairly common in franchise systems where the franchisor initially secures the property and then subleases it to the franchisee. This allows Hardees to maintain some control over the location and ensure it meets brand standards. For the franchisee, it simplifies the process of securing a location, as Hardees has already handled the initial lease negotiations. However, it's crucial for the franchisee to carefully review the terms of the sublease, including the rent, permitted use, maintenance responsibilities, and renewal options, to ensure they are acceptable.
It is important to note that this sublease arrangement applies specifically when purchasing company-operated restaurants. If a franchisee is developing a new Hardees location, they will typically need to secure their own lease or purchase the real property, subject to Hardees's approval. In either scenario, understanding the lease terms and obligations is a critical step in the franchise process.