What was the total amount of royalties Hardees collected from franchised restaurants in fiscal year 2025?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchised restaurants and other revenue includes royalties, franchise fees, and rent revenue. Royalties from franchised restaurants are based on a percentage of net sales of the franchised restaurant and are recognized as earned. Royalties are typically billed and paid monthly and are usually 4% to 5% per restaurant. Franchise development and commitment fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement, once the restaurant has opened. Initial franchise fees, training fees, renewal fees and transfer fees are recognized as revenue over the contractual term of the franchise agreements, once the restaurant has opened. Upfront franchise fees are typically billed and paid when a new franchise agreement becomes effective or when an existing agreement is transferred to another franchisee. These franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Further, franchise fees are forfeited and recognized as revenue upon the termination of the related commitments to open new franchised restaurants, the franchised restaurants closing prior to the end of the contractual agreement or the franchised restaurants being acquired by the Company. Property revenues consist of rental income from properties we lease or sublease to franchisees. Property revenues are accounted for in accordance with applicable accounting guidance for leases (see Leases above). We present all revenue net of sales tax.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
Based on the 2025 Hardees Franchise Disclosure Document, specific details regarding the total amount of royalties collected from franchised restaurants during the fiscal year 2025 are not explicitly disclosed. However, the FDD does provide information on how royalties are calculated and recognized. Royalties from franchised restaurants are based on a percentage of the net sales of the franchised restaurant and are recognized as earned. The typical royalty percentage ranges from 4% to 5% per restaurant. These royalties are generally billed and paid on a monthly basis.
While the FDD does not state the exact total royalty amount collected in 2025, it does offer insight into the factors that can influence royalty payments. The document mentions that Hardees may provide reductions or deferrals of future royalties as a way to resolve franchise collection issues. Additionally, the FDD indicates that the company ceases accruing royalties from franchisees when the collectibility of such amounts is not reasonably assured. These factors suggest that the actual royalty revenue collected may vary based on the financial health and operational performance of individual franchise locations.
For a prospective Hardees franchisee, this means that while the royalty rate is generally between 4% and 5% of net sales, there could be instances where these payments are adjusted or deferred. It is important to understand the conditions under which such adjustments may occur and how they could impact the overall financial relationship with the franchisor. A potential franchisee should inquire directly with Hardees about the total royalties collected in recent years and the specific factors that have influenced these amounts. Understanding these details will help in assessing the potential financial obligations and the overall stability of the franchise system.