For what purpose may Hardee's LSM monies be spent?
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) |
Source: Item 6 — OTHER FEES (FDD pages 29–36)
What This Means (2025 FDD)
According to Hardee's 2025 Franchise Disclosure Document, Local Store Marketing (LSM) monies can only be used for approved advertising. While franchisees can develop their own advertising materials, Hardee's must approve these materials before they are used.
The amount allocated to LSM is the difference between the franchisee's total Advertising and Promotional Obligation (APO) and the amounts contributed to both the Hardee's National Advertising Fund (HNAF) and any Regional Co-op. The APO can be up to 7% of gross sales, but is currently 5.5%. The HNAF contribution is currently 4.25% of gross sales, and the Regional Co-op contribution is a minimum of 0.5% of gross sales if the restaurant is in an area covered by a Regional Co-op.
This means that the funds available for local store marketing can vary depending on the restaurant's gross sales, whether it is part of a regional co-op, and the co-op's contribution rate. The requirement for Hardee's to approve advertising materials ensures brand consistency but may also limit the franchisee's flexibility in responding to local market conditions. Franchisees should clarify the approval process and typical turnaround times for advertising materials to ensure they can effectively use their LSM funds.