How does Hardees recognize revenue related to contributions to advertising funds by franchisees?

According to Hardees's 2025 Franchise Disclosure Document, revenue from franchisee contributions to advertising funds is recognized as it is earned. These advertising funds include contributions to the Hardee's National Advertising Fund (HNAF), Hardee's Co-ops, the Carl's Jr. national advertising fund, and certain international advertising funds, which are collectively referred to as the "Advertising Funds".

In practical terms, this means that Hardees recognizes the revenue from these contributions as the advertising services are provided or the advertising campaigns run. The contributions themselves are based on a percentage of sales from the franchised restaurants. This revenue recognition method aligns the franchisor's income with the ongoing advertising and marketing efforts that benefit the entire franchise system.

For a prospective Hardees franchisee, this indicates that a portion of their sales will be allocated to these advertising funds, and Hardees will recognize this as revenue as the advertising benefits are realized. The franchisee should ensure they understand the percentage of sales allocated to these funds and how the funds are used to support the Hardees brand and drive sales.