Under what conditions does Hardees have the right to reallocate the APO?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
HR has the right, following written notice to Franchisee, to reallocate the APO and to increase the APO; however, HR will not increase the APO by more than ½% of Gross Sales in any 12-month period. In addition, HR may not increase the APO above 7% of Gross Sales; however, this limitation on HR does not prevent the Franchised Restaurant's Regional Co-op from requiring a contribution, that when added to Franchisee's HNAF contribution, results in a total APO in excess of 7% of Gross Sales.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees has the right to reallocate the Advertising and Promotion Obligation (APO) following written notice to the franchisee. Hardees also has the right to increase the APO, but with certain limitations.
Specifically, Hardees will not increase the APO by more than one-half of one percent (0.5%) of Gross Sales in any 12-month period. Furthermore, Hardees is restricted from increasing the APO above seven percent (7%) of Gross Sales. However, there is an exception to this limit: the franchisee's Regional Co-op can require a contribution that, when combined with the franchisee's Hardee's National Advertising Fund (HNAF) contribution, results in a total APO exceeding the 7% cap.
In practical terms, this means that while Hardees can adjust the APO, franchisees have some protection against drastic increases. Franchisees should be aware that their total advertising obligations could potentially exceed 7% of gross sales if the Regional Co-op requires additional contributions. Franchisees should carefully monitor any notices from Hardees regarding changes to the APO and understand how these changes will affect their overall financial obligations.