Does Hardees have sole discretion in deciding whether to consent to a proposed transfer?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If HR does not exercise its right of first refusal pursuant to Section 10.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 a direct or indirect interest in the transferee as HR may require) must demonstrate to HR's satisfaction that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by HR or its affiliates; must meet the managerial, operational, experience, quality, character and business standards for a developer promulgated by HR from time to time; must possess a good character, business reputation and credit rating; must have an organization whose management culture is compatible with HR's management culture; and must have adequate financial resources and working capital, as determined by HR in its sole discretion, to meet Developer's development obligations under this Agreement.
HR, without any liability to Developer or the proposed transferee, has the right, in its sole discretion, to communicate and counsel with Developer and the proposed transferee regarding any aspect of the proposed Transfer.
- E. Whenever HR has expressly reserved in this Agreement a right and/or discretion to take or withhold an action, or to grant or decline to grant Developer a right to take or withhold an action, except as otherwise expressly and specifically provided in this Agreement, HR may make such decision or exercise its right and/or discretion on the basis of its judgment of what is in its best interests.
HR's judgment of what is in the best interests of the Hardee's System, at the time its decision is made or its right or discretion is exercised, can be made without regard to whether: (1) other reasonable alternative decisions or actions, or even arguably preferable alternative decisions or actions, could have been made by HR; (2) HR's decision or the action taken promotes its financial or other individual interest; (3) HR's decision or the action taken applies differently to Developer and one or more other developers or franchisees or HR company-operated or affiliate-operated operations; or (4) HR's decision or the action taken is adverse to Developer's interests.
HR will have no liability to Developer for any such decision or action.
HR and Developer intend that the exercise of HR's right or discretion will not be subject to limitation or review.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees has the authority to make decisions regarding proposed transfers of franchise ownership. Specifically, if Hardees does not exercise its right of first refusal, the decision to consent to a proposed transfer is made by Hardees in its sole discretion. Hardees will consider numerous factors it deems relevant. These factors can include the proposed transferee's experience, management culture, financial resources, and the sales price of the transfer.
Hardees also retains sole discretion in evaluating whether a potential transferee has adequate financial resources and working capital to meet development obligations. Hardees can communicate and counsel with the developer and the proposed transferee regarding any aspect of the proposed transfer without incurring liability. Hardees's decisions regarding transfers are made in its best interests, without regard to whether other decisions could have been made, whether the decision promotes its financial interests, whether the decision applies differently to the developer, or whether the decision is adverse to the developer's interests.
This discretion gives Hardees significant control over who becomes a franchisee and ensures that new franchisees meet Hardees's standards. However, Hardees's decisions are not subject to limitation or review, and Hardees will have no liability to the developer for any such decision or action. For a prospective franchisee, this means that the approval of a transfer is not guaranteed, even if the proposed transferee meets many of the standard requirements. A prospective franchisee should discuss with Hardees what specific factors they prioritize in evaluating potential transferees to better understand the likelihood of approval.