Under what conditions might Hardees decide to close a restaurant, even if it is not contractually obligated to do so?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
We typically make decisions to close restaurants based on prospects for estimated future profitability. However, sometimes we are forced to close restaurants due to circumstances beyond our control (e.g., a landlord's refusal to negotiate a new lease). When restaurants continue to perform poorly, we consider a number of factors, including the demographics of the location and the likelihood of being able to improve an unprofitable restaurant. Based on the operators' judgment and a financial review, we estimate the future cash flows. If we determine that the restaurant will not, within a reasonable period of time, operate at break-even cash flow or be profitable, and we are not contractually obligated to continue operating the restaurant, we may decide to close the restaurant.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees may decide to close a restaurant if it is not contractually obligated to continue operating it and if the restaurant is not projected to be profitable. Hardees typically makes decisions to close restaurants based on prospects for estimated future profitability. However, sometimes Hardees is forced to close restaurants due to circumstances beyond their control such as a landlord's refusal to negotiate a new lease.
When restaurants perform poorly for an extended period of time, Hardees considers factors such as the demographics of the location and the likelihood of improving the restaurant's profitability. Hardees estimates future cash flows based on the operators' judgment and a financial review.
If Hardees determines that the restaurant will not operate at break-even cash flow or be profitable within a reasonable time frame, and if there is no contractual obligation to keep the restaurant open, Hardees may decide to close the restaurant. This decision-making process appears to be based on a combination of financial analysis and operational considerations.