Under what circumstances does Hardees have the option to purchase assets from the franchisee?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. Upon the expiration or termination of this Agreement for any reason, HR will have the option to purchase from Franchisee some or all of the assets used in the Franchised Restaurant ("Assets").
HR may exercise its option by giving written notice to Franchisee at any time following such expiration or termination up until 60 days after the later of: (1) the effective date of termination or expiration; or (2) the date Franchisee ceases to operate the Franchised Restaurant.
As used in this Section 23, "Assets" shall mean and include, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (non-perishable products, materials and supplies) used in the Franchised Restaurant, and the real estate fee simple or the lease or sublease for the Franchised Location.
- C. The purchase price for the Assets ("Purchase Price") shall be their fair market value, (or, for leased assets, the fair market value of Franchisee's lease) determined as of the effective date of purchase in a manner that accounts for reasonable depreciation and condition of the Assets; provided, however, that the Purchase Price shall take into account the termination of this Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees has the option to purchase some or all of the assets of a franchised restaurant from the franchisee upon the expiration or termination of the franchise agreement for any reason. This includes leasehold improvements, equipment, vehicles, furnishings, fixtures, signs, inventory (non-perishable products, materials, and supplies), and the real estate or lease for the restaurant location.
Hardees can exercise this option by providing written notice to the franchisee within 60 days after the termination or expiration date, or the date the franchisee ceases operations, whichever is later. The purchase price will be the fair market value of the assets, accounting for depreciation and condition as of the purchase date, but also considering the termination of the agreement.
This clause ensures that Hardees can maintain control over restaurant locations and assets, allowing for a smooth transition if a franchise agreement ends. For a prospective franchisee, this means that upon exiting the Hardees system, they may be required to sell their restaurant assets back to Hardees, potentially impacting their exit strategy and financial returns. It is important to understand how the fair market value will be assessed and what recourse the franchisee has if they disagree with Hardees's valuation.