Is Hardees required to segregate HNAF funds from its other monies?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
HR shall separately account for payments to HNAF but it shall not be required to segregate HNAF funds from its other monies. HR shall not use HNAF funds to defray any of its general operating expenses. HNAF may hire employees, either full-time or part-time, for its administration. HR and its affiliates may be reimbursed by HNAF for expenses related to its marketing programs including, without limitation, conducting market research, preparing advertising and marketing materials, and collecting and accounting for contributions. HR may spend in any fiscal year an amount greater or less than the aggregate contribution of all Hardee's Restaurants to HNAF during that year or cause HNAF to invest any surplus for its future use. A statement of monies collected and costs incurred by HNAF shall be prepared annually and shall be furnished to Franchisee within a reasonable period of time following a written request. HR or its designee will have the right to cause HNAF to be incorporated or operated through an entity separate from HR at such time as HR or its designee deems appropriate, and such successor entity shall have all rights and duties of HR pursuant to this Section 10.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees is not required to segregate the Hardee's National Advertising Fund (HNAF) funds from its other monies. However, Hardees must separately account for payments to HNAF. Furthermore, HNAF funds cannot be used to cover Hardees' general operating expenses.
This means that while Hardees can deposit HNAF contributions into the same bank accounts it uses for its general business operations, it must maintain separate accounting records to track HNAF monies. This provides a degree of transparency, allowing franchisees to see how much money is collected and how it is spent on advertising and marketing programs.
Hardees has the discretion to spend more or less than the aggregate contribution of all Hardee's Restaurants to HNAF during any fiscal year, and it can also invest any surplus for future use. An annual statement of monies collected and costs incurred by HNAF will be furnished to franchisees upon written request, providing further oversight.