What total amount of assets and liabilities and equity were included in Hardees' Consolidated Balance Sheets as of January 31, 2024, related to the Hardee's Funds?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
seasonal fluctuations and are traditionally higher during the spring and summer months because of factors such as increased travel during school vacations and improved weather conditions, which affect the public's dining habits.
Inflation and Middle East Conflict
Inflationary pressures on labor and commodity price increases directly impacted our results of operations during the year ended January 31, 2024 and January 31, 2023. We attempt to manage any inflationary costs and commodity price increases through selective menu price increases and changes in product mix. Competitive pressures, consumer spending levels and other factors may limit our ability to recover such costs increases in the future.
Beginning October 2023, certain of our Hardee's international markets began being impacted by a military conflict in the Middle East. As a result, international franchised restaurants same-store sales were impacted to varying degrees within the Middle East. Further continuation of this conflict could have an adverse impact on our business and results of operations.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the company consolidates the Hardee's National Advertising Fund (HNAF) and local co-operative advertising funds (Hardee's Co-ops), collectively known as the "Hardee's Funds". Hardees considers these funds as variable interest entities (VIEs) and identifies itself as the primary beneficiary.
As of January 31, 2024, Hardees included $28,066 of total assets and total liabilities and equity related to Hardee's Funds in its Consolidated Balance Sheets. This indicates the financial scale of these advertising funds and their impact on Hardees' overall financial reporting.
It is important to note that Hardees states it has no rights to the assets of the Hardee's Funds, other than those disclosed, and no obligation regarding the liabilities. Additionally, none of Hardees' assets serve as collateral for the creditors of these VIEs. This clarifies the relationship between Hardees and its advertising funds, highlighting that while Hardees consolidates these funds for financial reporting purposes, the assets and liabilities are distinct and separate from Hardees' core business operations.