Under what conditions does Section 10.B apply to transfers of ownership interests in a publicly-held Hardees Developer entity?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- F. If Developer was a publicly-held entity as of the date of the first franchise-related agreement between Developer and HR or its affiliates, Section 10.B. shall be applicable to transfers of ownership interests in Developer only if the proposed Transfer would result in either: (1) 50% or more of Developer's voting securities being held by different shareholders than as of the date of the first franchiserelated agreement between Developer and HR or its affiliates; or (2) any change in ownership of Developer's voting securities whereby any existing shareholder of Developer acquires an additional 10% or more of Developer's voting securities; or (3) any change in the membership of the Continuity Group (unless such change is a permitted Transfer pursuant to Section 10.G.).
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Section 10.B, concerning transfer requirements, applies to transfers of ownership interests in a publicly-held Hardees Developer entity under specific conditions. If the Developer was a publicly-held entity when the initial franchise-related agreement was established with Hardees Restaurants (HR) or its affiliates, Section 10.B becomes relevant if certain changes in ownership occur.
Specifically, Section 10.B is triggered if a proposed transfer would result in one of the following scenarios: First, if 50% or more of the Developer's voting securities are held by shareholders different from those at the time of the first franchise-related agreement. Second, if any existing shareholder acquires an additional 10% or more of the Developer's voting securities. Finally, if there is any change in the membership of the Continuity Group, unless that change is a permitted transfer as outlined in Section 10.G.
In practical terms, this means that if a Hardees Developer is a publicly-held entity, any significant shift in ownership (50% or more) or a notable increase (10% or more) in an existing shareholder's stake will necessitate adherence to the transfer protocols detailed in Section 10.B. This ensures that Hardees maintains control over who its franchisees are, even in publicly traded entities, and that any substantial changes in ownership are subject to their review and approval. The Continuity Group clause further ensures stability in the leadership and management of the Developer entity.