Under what circumstances is Hardees not responsible for a licensee's loss of sales or lost profits?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
LICENSOR SHALL HAVE NO LIABILITY FOR DIRECT, INDIRECT, CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES WITH RESPECT TO ITS OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LICENSOR WILL NOT BE RESPONSIBLE FOR ANY LOSS OF SALES OR LOST PROFITS BY LICENSEE DURING THE PERIOD IN WHICH THE LICENSED PROGRAM OR CONTENT IS INACCESSIBLE OR INOPERATIVE. NOR WILL LICENSOR BE RESPONSIBLE FOR ANY LOSS OR INACCURACY OF DATA CAUSED BY THE LICENSED PROGRAM OR CONTENT. IN ANY EVENT, THE LIABILITY OF LICENSOR TO LICENSEE FOR ANY REASON AND UPON ANY CAUSE OF ACTION SHALL BE LIMITED TO THE AMOUNT PAID TO LICENSOR BY LICENSEE UNDER THIS AGREEMENT DURING THE TRAILING 12 MONTH PERIOD. THIS LIMITATION APPLIES TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING WITHOUT LIMITATION TO BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATIONS, AND OTHER TORTS. BOTH PARTIES UNDERSTAND AND AGREE THAT THE REMEDIES AND LIMITATIONS SET FORTH IN THIS ARTICLE 7 ALLOCATE THE RISKS OF PRODUCT AND SERVICE NONCONFORMITY BETWEEN THE PARTIES AS AUTHORIZED BY THE UNIFORM COMMERCIAL CODE AND OF OTHER APPLICABLE LAWS. THE FEES IN THIS AGREEMENT REFLECT, AND ARE SET IN RELIANCE UPON, THIS ALLOCATION OF RISK AND THE EXCLUSION OF CONSEQUENTIAL DAMAGES SET FORTH IN THIS AGREEMENT.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, Hardees, as the licensor, will not be held responsible for any loss of sales or lost profits incurred by the licensee under specific circumstances. Hardees is not liable for these losses during any period in which the licensed program or content is inaccessible or inoperative. Additionally, Hardees will not be held responsible for any loss or inaccuracy of data caused by the licensed program or content.
This limitation of liability is a significant consideration for prospective Hardees franchisees. It means that if the systems or content provided by Hardees are down or malfunctioning, resulting in a loss of sales or profits, the franchisee bears that financial risk. This is a fairly standard clause in franchise agreements, designed to protect the franchisor from unforeseen technical issues.
However, the document also states that the liability of Hardees to the licensee is limited to the amount paid to Hardees by the licensee under the agreement during the trailing 12-month period, regardless of the cause of action. This limitation applies to all causes of action, including breach of contract, breach of warranty, negligence, strict liability, misrepresentations, and other torts. This clause highlights the importance of understanding the technical support and system reliability measures Hardees has in place, as well as the potential financial impact of system downtime on a franchisee's business.
Prospective franchisees should carefully evaluate the potential risks associated with system inaccessibility and data loss, and consider what measures they can take to mitigate these risks. It would be prudent to inquire about the historical uptime of the licensed programs and content, as well as the support and recovery procedures in place in case of system failures. Understanding these aspects can help a franchisee better prepare for potential disruptions and their financial consequences.