Is there an exception to the equity ownership requirement for the Development Principal of a Hardees franchise?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
The Development Principal must own at least a 10% equity ownership interest in you, or in your general partner if you are a limited partnership, unless modified by us in our sole discretion. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publiclyheld entity as of the date of the first franchise-related agreement between you and us.) The Development Principal must be a member of the Continuity Group and have full control over the day-to-day development of the Franchised Restaurants. Unless you have named, and we have approved, a Multi-Unit Development Manager (discussed below), the Development Principal must: (1) devote full time and best efforts to the supervising development of the Franchised Restaurants; and (2) maintain his/her primary residence within a reasonable driving distance of the Development Territory, unless waived in writing by us. The Development Principal will be required to successfully complete our development training and any additional training required by us. If you are developing restaurants in multiple markets that are franchised
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 62–63)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the Development Principal typically must own at least a 10% equity ownership interest in the franchisee entity or its general partner if it's a limited partnership. However, there are exceptions to this requirement.
The equity ownership requirement does not apply if the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity on the date of the first franchise-related agreement between Hardees and the franchisee. Beyond this specific exception, Hardees retains the discretion to modify the 10% equity ownership requirement for the Development Principal.
This flexibility means that prospective Hardees franchisees who do not meet the standard equity ownership requirement may still be considered, depending on Hardees's assessment. It is important for potential franchisees to discuss their specific circumstances with Hardees to determine if a modification can be made.