Under what conditions will Hardees terminate the royalty and APO incentive program following written notice to the franchisee?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3. Termination of Program Incentives. This Addendum and the Program will terminate following written notice to Franchisee if:
- A. Franchisee fails to open the Franchised Restaurant on or before 120 days after the contractual opening date pursuant to the terms of the Franchisee's Development Agreement; or
- B. Franchisee or any affiliate of Franchisee receives, during the first three years of operation of the Franchised Restaurant under the Franchise Agreement, a written notice of default under any agreement between Franchisee or any affiliate of Franchisee and HR or any affiliate of HR and fails to cure the default within the applicable cure period, if any.
- 4. Effect of Termination. If this Addendum is terminated during the first three years of the Franchised Restaurant's operation under the Franchise Agreement, the royalty fee and APO for the Franchised Restaurant will immediately revert to the applicable amounts set forth in the Franchise Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the royalty fee and Advertising and Promotion Obligation (APO) incentive program can be terminated following written notice to the franchisee under specific conditions.
The incentive program will be terminated if the Hardees franchisee fails to open the franchised restaurant on or before 120 days after the contractual opening date, as outlined in the Development Agreement or Franchise Agreement. This places a strict deadline on opening the restaurant, and failure to meet it will result in the loss of the royalty and APO incentives.
Additionally, the incentive program will be terminated if the Hardees franchisee, or any affiliate, receives a written notice of default under any agreement with Hardees or its affiliates during the first three years of the restaurant's operation, and fails to cure the default within the given cure period. This means that any breach of contract, if not resolved within the specified timeframe, can lead to the termination of the incentive program. If the Addendum is terminated, the royalty fee and APO for the Franchised Restaurant will immediately revert to the applicable amounts set forth in the Franchise Agreement.