What are the specific obligations of a Hardees franchisee regarding the maintenance of accurate financial records (Item 9), and how does the franchisor's reporting requirements (Item 9) support these obligations?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to use computerized cash and data capture and retrieval systems that meet HR's specifications and to record sales of the Franchised Restaurant electronically or on tape for all sales at or from the Franchised Location. Franchisee shall keep and maintain, in accordance with any procedures set forth in the OPM, complete and accurate books and records pertaining to the Franchised Restaurant sufficient to fully report to HR. Franchisee's books and records shall be kept and maintained using generally accepted accounting principles ("GAAP"), if Franchisee uses GAAP in any of its other operations, or using other recognized accounting principles applied on a consistent basis which accurately and completely reflect the financial condition of Franchisee. Franchisee will preserve all of its books, records and state and federal tax returns for at least 5 years after the later of preparation or filing (or such longer period as may be required by any governmental entity) and make them available and provide duplicate copies to HR within 5 days after HR's written request.
Franchisee shall, at Franchisee's expense, submit to HR, in the form and manner (which may be through an online portal or website) prescribed by HR: (i) a monthly profit and loss statement and balance sheet for the Franchised Business (both of which may be unaudited) within 30 days after the end of each month, and (ii) a quarterly profit and loss statement and balance sheet for Franchisee (both of which may be unaudited) within 30 days after the end of each fiscal quarter (as defined by HR from time to time) during each fiscal year (as defined by HR from time to time). HR shall have the right, to be exercised in its sole discretion, to require that Franchisee provide HR profit and loss statements and balance sheets at other times as requested by HR. Each statement and balance sheet shall be signed by Franchisee or by Franchisee's treasurer or chief financial officer attesting that it is true, correct and complete and uses accounting principles applied on a consistent basis which accurately and completely reflect the financial condition of Franchisee.
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, franchisees must use computerized systems meeting Hardees's specifications to record all sales electronically. Franchisees are obligated to maintain complete and accurate books and records pertaining to the franchised restaurant, sufficient to fully report to Hardees. These records must be kept using generally accepted accounting principles (GAAP) if the franchisee uses GAAP in its other operations. If not using GAAP, the franchisee must use other recognized accounting principles applied consistently to accurately reflect their financial condition.
Hardees requires franchisees to preserve all books, records, and state and federal tax returns for at least five years after preparation or filing, or longer if required by a governmental entity. These records must be made available and duplicate copies provided to Hardees within five days of a written request. This ensures Hardees can review the franchisee's financial performance and compliance with the franchise agreement.
To support these obligations, Hardees requires franchisees to submit monthly and quarterly profit and loss statements and balance sheets. These reports, which may be unaudited, are due within 30 days after the end of each month or fiscal quarter. Hardees retains the right to request these statements at other times as needed. Each statement must be signed by the franchisee or their treasurer or chief financial officer, attesting to its truthfulness, correctness, and completeness, and confirming the use of consistent accounting principles. These reporting requirements enable Hardees to monitor the franchisee's financial health and ensure compliance with accounting standards, thereby supporting the franchisee's obligation to maintain accurate financial records.