Under what circumstances related to insolvency or bankruptcy can a Hardees franchise agreement be terminated?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to the grounds for termination that may be stated elsewhere in this Agreement, HR may terminate this Agreement, and the rights granted by this Agreement, upon written notice to Franchisee without an opportunity to cure upon the occurrence of any of the following events:
(2) Franchisee is insolvent or is unable to pay its creditors (including HR); files a petition in bankruptcy, an arrangement for the benefit of creditors or a petition for reorganization; there is filed against Franchisee a petition in bankruptcy, an arrangement for the benefit of creditors or petition for reorganization, which is not dismissed within 60 days of the filing; Franchisee makes an assignment for the benefit of creditors; or a receiver or trustee is appointed for Franchisee and not dismissed within 60 days of the appointment.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees Restaurants LLC ('HR') can terminate the franchise agreement if the franchisee becomes insolvent or is unable to pay its creditors, including HR. This also applies if the franchisee files a petition in bankruptcy, an arrangement for the benefit of creditors, or a petition for reorganization.
Hardees can also terminate the agreement if a petition in bankruptcy, arrangement for the benefit of creditors, or petition for reorganization is filed against the franchisee and is not dismissed within 60 days of filing. Further grounds for termination include the franchisee making an assignment for the benefit of creditors, or if a receiver or trustee is appointed for the franchisee and is not dismissed within 60 days of the appointment.
These conditions are standard in franchise agreements to protect the franchisor's brand and financial interests. If a franchisee is in severe financial distress, it can negatively impact the Hardees brand's reputation and the ability of the franchisee to meet its obligations under the franchise agreement. The 60-day dismissal period provides a window for the franchisee to resolve the financial issues before Hardees terminates the agreement.