What is the purpose of the assignment agreement in a Hardees franchise transfer?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that HR has entered into this Agreement in reliance on Franchisee's (and Franchisee'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. Accordingly, neither Franchisee nor any immediate or remote successor to any part of Franchisee's interest in this Agreement, nor any individual, partnership, corporation or other legal entity which directly or indirectly has an interest in Franchisee shall sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in Franchisee, this Agreement, the Franchise, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to Franchisee's operations under this Agreement (collectively "Transfer") without the prior written consent of HR, unless otherwise permitted by this Section.
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 Franchisee an opportunity to cure the breach.
- B. Franchisee shall advise HR in writing of any proposed Transfer, submit (or cause the proposed transferee to submit) a franchise application for the proposed transferee, submit a copy of all contracts and all other agreements or proposals and submit all other information requested by HR relating to the proposed Transfer. If HR does not exercise its right of first refusal pursuant to Section 18.J., the decision as to whether or not to consent to a proposed Transfer shall be made by HR in its sole discretion and shall include numerous factors deemed relevant by HR. These factors may include, but will not be limited to, the following:
- (1) The proposed transferee (and if the proposed transferee is not a natural person, all persons that have any direct or indirect interest in the transferee as HR may require) must demonstrate to HR's satisfaction extensive experience in high quality restaurant operations of a character and complexity similar to Hardee's Restaurants; must meet the managerial, operational, experience, quality, character and
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
Based on the 2025 Hardees Franchise Disclosure Document, the franchise agreement outlines specific conditions regarding the transfer of franchise ownership. Hardees retains significant control over who becomes a franchisee, emphasizing the importance of the franchisee's skills, financial stability, and character.
The agreement states that a franchisee cannot transfer any interest in their franchise without prior written consent from Hardees. This includes selling, assigning, or otherwise encumbering any part of the franchise, restaurant, or related assets. Any transfer without Hardees's approval is considered a breach of the agreement, potentially leading to termination of the franchise.
If a franchisee wishes to transfer their franchise, they must inform Hardees in writing and provide all relevant information about the proposed transferee, including a franchise application and copies of all related contracts. Hardees then has the discretion to approve or deny the transfer based on various factors, including the transferee's experience in restaurant operations and their ability to meet Hardees's standards. This ensures that any new franchisee is qualified to maintain the quality and standards of the Hardees brand.
The Hardees franchise agreement also includes restrictive covenants that apply during the term of the agreement and for two years after its expiration or termination. These covenants prevent the franchisee from engaging in any competitive restaurant business within a specified radius of a Hardees location. This protects Hardees's market share and prevents former franchisees from using their experience to directly compete with the brand.