Under what conditions can Hardees reallocate advertising contributions, and what is the maximum increase allowed in a 12-month period?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| upon receipt of invoice | |||
| Hardee’s Advertising | An advertising and promotional obligation (“APO”) in an amount set forth in your Franchise Agreement. Your APO will be up to 7% of Hardee’s Gross Sales. Currently, your APO is 5.5% of Hardee’s Gross Sales. (3) | Divided between HNAF, Regional Co-op and LSM (each as defined below) | |
| Hardee’s National Advertising Fund (“HNAF”) | Currently, 4.25% of Hardee’s Gross Sales | On the 10th day of each month | HNAF contributions are due on the 10th day of each month and are based on Gross Sales in the prior month. |
| Hardee’s Regional Cooperative (“Regional Co-op”) | If your Franchised Restaurant is in an area covered by a Regional Co-op, currently, minimum of 0.5% of Hardee’s Gross Sales; however, your Regional Co- op can vote to increase each member’s contribution. | Same as royalty | We have the right, in our sole discretion, to establish a regional advertising and sales promotion cooperative in the regional area in which your Franchised Restaurant is located (“DMA”) to which you will be required to contribute. |
| Hardee’s Local Store Marketing (“LSM”) | Difference between your APO and the amount you contribute to HNAF and a Regional Co-op | Not paid to HR | You may develop advertising materials for your own use; however, we must approve these advertising materials in advance of use. LSM monies may be spent only for approved advertising. (4) |
Source: Item 6 — OTHER FEES (FDD pages 29–36)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, franchisees have an advertising and promotional obligation (APO) that can be up to 7% of gross sales. Currently, this obligation is set at 5.5% of gross sales, and it is divided among the Hardees National Advertising Fund (HNAF), Regional Co-op, and Local Store Marketing (LSM). The FDD specifies the current contribution to HNAF is 4.25% of gross sales. For franchisees in a Regional Co-op area, the minimum contribution is 0.5% of gross sales, but the Regional Co-op can vote to increase each member's contribution. The amount allocated to LSM is the difference between the franchisee's APO and the contributions to HNAF and the Regional Co-op.
Hardees retains the right to establish a regional advertising and sales promotion cooperative in the regional area where a franchised restaurant is located, requiring franchisees to contribute to it. The document does not explicitly state a maximum amount the Regional Co-op can increase contributions in a 12-month period, nor does it specify conditions under which Hardees can reallocate funds between HNAF, Regional Co-op, and LSM. The Regional Co-op has the ability to vote to increase each member's contribution.
Prospective franchisees should inquire with Hardees about the specific conditions under which advertising contributions can be reallocated and if there are any limitations on how much the Regional Co-op can increase contributions within a given timeframe. Understanding these conditions is crucial for budgeting and financial planning, as changes in advertising contribution allocations can impact a franchisee's profitability.