Under what conditions can Hardees terminate the franchise agreement without providing an opportunity to remedy the default?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ction 21.B.(1), if Franchisee defaults in the payment of any monies owed to HR or its affiliates when such monies become due and payable and Franchisee fails to pay such monies within 10 days after receiving written notice of default, then this Agreement will terminate effective immediately upon expiration of that time, unless HR notifies Franchisee otherwise in writing.
- (3) If Franchisee has received 2 or more notices of default within the previous 12 months, HR shall be entitled to send Franchisee a notice of termination upon Franchisee's next default within that 12-month period under this Section 21.B. without providing Franchisee an opportunity to remedy the default.
- (4) In addition to the other provisions of this Section 21.B., if HR reasonably determines that Franchisee becomes or will become unable to meet its obligations to HR or its affiliates under this Agreement, HR may provide Franchisee written notice to that effect and demand that Franchisee provide those assurances reasonably designated by HR, which may include security or letters of credit for the payment of Franchisee's obligations to HR and its affiliates.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, there are specific instances where Hardees can terminate the franchise agreement without offering the franchisee an opportunity to correct the issue. If a Hardees franchisee fails to achieve a passing score on two consecutive inspections, Hardees has the right to terminate the agreement. The initial inspection report serves as a notice of default, and if the subsequent inspection, conducted at least 30 days later, also results in a failing score, Hardees can issue a written notice of termination without allowing the franchisee a chance to improve.
Additionally, if a Hardees franchisee receives two or more default notices within a 12-month period, Hardees is entitled to issue a termination notice for any subsequent default within that same 12-month period, without providing an opportunity to remedy the new default. This means that repeated instances of non-compliance, even if individually minor, can accumulate and lead to termination without a chance for correction.
Furthermore, if a Hardees franchisee fails to provide assurances demanded by Hardees, regarding their ability to meet financial obligations, within 30 days of receiving written notice, the agreement can be terminated immediately without further notice. These conditions highlight the importance of maintaining consistent operational standards and financial stability to avoid potential termination of the Hardees franchise agreement.