After termination of a Hardees franchise, what is the exception to the restriction on operating a similar business?

According to Hardees's 2025 Franchise Disclosure Document, after the termination of a franchise agreement, a franchisee is generally restricted from operating a similar restaurant business. This restriction applies for a continuous period of 2 years following the expiration, transfer, or termination of the agreement. The restriction applies to any restaurant business located within a 2-mile radius of the former Hardees location or any existing Hardees restaurant. The restrictions include owning, maintaining, operating, engaging in, granting a franchise to, advising, helping, making loans to, leasing property to, or selling the property to a similar restaurant. A similar restaurant is defined as one where sales of specific entrée items (hamburger, chicken, or breakfast sandwiches) are likely to account for 20% or more of the restaurant's sales during any part of the day, or one that features or promotes these items in its advertising, or operates in a quick-service format.

However, there is an exception to this restriction. The restriction does not apply to a franchisee's existing restaurant or foodservice operations, if any, which are identified in Appendix A of the franchise agreement. This means that if a franchisee already owns and operates a restaurant business before entering into the Hardees franchise agreement, that pre-existing business is exempt from the post-termination restrictions. Additionally, the restriction does not apply to other restaurants operated by the franchisee that are also franchised by Hardees or its affiliates. In other words, franchisees are free to operate other Hardees locations without violating the non-compete clause.

This exception is important for prospective Hardees franchisees to understand, especially if they already have existing restaurant businesses or plan to operate multiple Hardees franchises. It allows them to continue their existing operations or expand within the Hardees system without being unduly restricted after the termination of a single franchise agreement. Franchisees should carefully review Appendix A of their franchise agreement to ensure that any existing businesses they want to protect are properly identified and documented.