Is there an exception to the equity ownership requirement for the Operating Principal of a Hardees franchise?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
The Operating 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, and be a person acceptable to both us and you. (This requirement does not apply if you were a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between you and us.) The Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant, including control over the standards of operation and financial performance. Unless you have named, and we have approved, a Multi-Unit Manager (discussed below), the Operating Principal must: (1) devote full time and best efforts to the supervision and conduct of the Franchised Restaurant and those other restaurants (that are franchised by us or our affiliates) operated by you in the same geographic market as the Franchised Restaurant; and (2) maintain his/her primary residence within a reasonable driving distance of the Franchised Restaurant, unless waived in writing by us. The Operating Principal will be required to successfully complete the FMTP and any additional training required by us. If you operate restaurants in multiple markets that are franchised by us or our affiliates, an individual meeting the above qualifications will serve as the Operating Principal in at least one market.
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 Operating Principal is generally required to have at least a 10% equity ownership interest in the franchisee entity or its general partner (if the franchisee is a limited partnership). However, Hardees may modify or waive this requirement at its sole discretion.
There is also an exception to the equity ownership requirement 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 the franchisee and Hardees. In this case, the Operating Principal is not required to own a 10% equity interest.
It's important to note that the Operating Principal must be a member of the Continuity Group and have full control over the day-to-day activities of the franchised restaurant, including operational standards and financial performance. The Operating Principal must also devote full time and best efforts to the supervision and conduct of the restaurant and maintain a primary residence within a reasonable driving distance, unless waived by Hardees. These requirements ensure that the Operating Principal is actively involved in managing the Hardees franchise.