After termination or expiration of the Development Agreement, can a Hardees developer continue to operate Hardees restaurants that were open and operating as of the termination/expiration date?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of this Agreement:
- A. Developer shall have no further right to develop or open Franchised Restaurants in the Development Territory, except that Developer shall be entitled to complete and open a Franchised Restaurant for which a Commitment Agreement has been fully executed. Termination or expiration of this Agreement shall not affect Developer's right to continue to operate Franchised Restaurants that were open and operating as of the date this Agreement terminated or expired.
- B. The limited exclusive rights granted Developer in the Development Territory shall terminate and HR shall have the right to operate or license others to operate Hardee's Restaurants anywhere in the Development Territory.
- C. Developer promptly shall return to HR all materials and information furnished by HR or its affiliates, except materials and information furnished with respect to a Franchised Restaurant for which there is an effective commitment agreement or a Franchised Restaurant which is open and operating pursuant to an effective franchise agreement.
- D. Developer and all persons and entities subject to the covenants contained in Section 12 shall continue to abide by those covenants and shall not, directly or indirectly, take any action that violates those covenants.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a developer's right to develop or open new franchised restaurants in the Development Territory ceases upon termination or expiration of the Development Agreement. However, this does not affect the developer's right to continue operating Hardees restaurants that were already open and operating as of the termination or expiration date.
This provision allows a Hardees developer to maintain their existing restaurant operations even after the Development Agreement concludes. The developer can continue to profit from restaurants they have already established. This protects the franchisee's investment in existing locations.
However, the limited exclusive rights granted to the developer in the Development Territory terminate, meaning Hardees has the right to operate or license others to operate Hardees Restaurants anywhere in the Development Territory. This means that while the developer can continue to operate existing restaurants, Hardees can establish new locations in the same territory through other franchisees or company-owned stores, potentially increasing competition.
Upon termination or expiration, the developer must return all materials and information furnished by Hardees, except those related to restaurants with an effective commitment agreement or those already open and operating under a franchise agreement. The developer and related parties must also continue to abide by non-compete covenants outlined in Section 12 of the agreement, preventing them from taking actions that violate those covenants.