Is there a provision for Hardees to terminate the franchise agreement without cause?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
r where the claim arose. For Illinois franchisees, as provided in the Illinois Franchise Disclosure Act, any provision in the Development Agreement that designates jurisdiction in a forum outside of Illinois is void. | | w. Choice of law | Section 22.A | Subject to applicable state law, Tennessee law applies. For Illinois franchisees, as provided in the Illinois Franchise Disclosure Act, Illinois law governs your agreement. |
FRANCHISE AGREEMENT
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| a. Length of the franchise term | Section 2.A. | 20 years from the date the Franchised Restaurant opens |
| b. Renewal or extension of the | Section 2.B. | You can renew for 10 years or 5 years, at your option. |
| term | ||
| c. Requirements for you to renew or extend | Section 2.B. | Requirements include: give timely notice; sign general release; comply with training requirements; be in good standing; not be in default under any agreement between you and HR and its affiliates; remodel; demonstrate right to remain in possession of the Franchised Location; and pay a renewal fee. You also must sign our then-current form of Franchise Agreement, the terms of which likely will differ from your original Franchise Agreement, including, without limitation, those relating to royalty fees and advertising obligations. |
| Provision | Section in Franchise Agreement | Summary |
| -------------------------------------------------- | ------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| d. Termination by you | Not Applicable | |
| e. Termination by us without | Not Applicable | |
| cause | ||
| f. Termination by us with cause | Section 21 | We may terminate upon default, which includes, but is not limited to, remaining in default beyond any applicable cure period under any agreement with us or our affiliates, including any Development Agreement. |
| g. "Cause" defined-curable defaults | Section 21.B. | You have 10 days to cure monetary defaults. You have 30 days to cure defaults other than those discussed in paragraph h. |
| h. "Cause" defined-non-curable defaults | Sections 21.A., 21.B.(3) & 21.C. | Non-curable defaults include: closure of the Franchised Restaurant for more than 5 days; insolvency; bankruptcy; execution levied on your business or property; foreclosure; material breach of covenants; transfer without our prior written consent; material misrepresentation; falsification of reports; failure to open the Franchised Restaurant within 60 days after opening is authorized; imminent danger to public health or safety; loss of possession of the Franchised Location; felony conviction; breach of any representation or warranty; default beyond cure period under other agreements with HR or its affiliates, under any real estate or equipment lease or financing instrument relating to the Franchised Restaurant or with any vendor or supplier to the Franchised Restaurant; default after receipt of 2 or more notices of default within previous 12 months; and receipt of second consecutive failing score on an inspection. |
| i. Your obligations on termination/nonrenewal | Section 22 | Obligations include: payment of amounts due; return OPM; delete all electronic copies of the OPM and all other materials and information furnished by us that are in your possession; continued observance of covenants; discontinue use of Proprietary Marks; unless we otherwise direct, complete de-identification of the Franchised Restaurant; and, upon termination based on your default, payment of future lost royalties. |
| j. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 64–69)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees does not have the right to terminate the franchise agreement without cause. Both the Development Agreement and the Franchise Agreement specify that Hardees can only terminate the agreement upon default by the franchisee.
Termination with cause is outlined in Section 13 of the Development Agreement and Section 21 of the Franchise Agreement. These sections detail various events that constitute a default, which include both curable and non-curable defaults. Curable defaults, such as monetary defaults, can be rectified within a specified period (10 days for monetary defaults and 30 days for other defaults). Non-curable defaults, however, provide immediate grounds for termination.
Non-curable defaults under the Franchise Agreement include events like the closure of the Franchised Restaurant for more than 5 days, insolvency, bankruptcy, material breach of covenants, unauthorized transfer, material misrepresentation, falsification of reports, failure to open the Franchised Restaurant within 60 days after opening is authorized, imminent danger to public health or safety, loss of possession of the Franchised Location, felony conviction, breach of any representation or warranty, default beyond cure period under other agreements with HR or its affiliates, under any real estate or equipment lease or financing instrument relating to the Franchised Restaurant or with any vendor or supplier to the Franchised Restaurant; default after receipt of 2 or more notices of default within previous 12 months; and receipt of second consecutive failing score on an inspection. These conditions provide Hardees with specific and justifiable reasons for terminating the franchise agreement, protecting both the brand and the network from franchisees who fail to meet their obligations.