Under what conditions can Hardees treat the franchise agreement as expired if the franchisee continues to operate after the initial term?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee continues to accept the benefits of this Agreement after the expiration of the initial term but does not satisfy the renewal conditions outlined in Section 2.C above then, at HR's sole option, this Agreement may be treated as: (a) expired as of the date of the expiration and Franchisee will be operating without a franchise or license to do so and in violation of HR's rights to the Marks, brand and System; or (b) continued on a month-to-month basis (an "Interim Period") and all of Franchisee's obligations will remain in full force and effect during the Interim Period as if the Agreement had not expired. Each Interim Period expires at the end of each calendar month unless this Agreement is renewed as provided for this Agreement. The Interim Period does not create any new franchise rights and upon expiration of the final Interim Period; provided Franchisee does not renew the rights licensed in this Agreement as specified in this Agreement, Franchisee will be bound by all post-term obligations as provided in this Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee continues to operate after the initial term expires but does not meet the renewal conditions, Hardees has the option to treat the agreement as expired. In this case, the franchisee would be considered to be operating without a franchise or license, which would be a violation of Hardees' rights to its trademarks, brand, and system.
Alternatively, Hardees can choose to continue the agreement on a month-to-month basis, referred to as an "Interim Period." During this Interim Period, all of the franchisee's obligations remain in full effect as if the agreement had not expired. Each Interim Period expires at the end of each calendar month, unless the agreement is formally renewed.
The Interim Period does not grant any new franchise rights, and upon the expiration of the final Interim Period, the franchisee will be bound by all post-term obligations outlined in the agreement, assuming they do not renew the rights licensed in the agreement as specified. This holdover provision gives Hardees flexibility while protecting its brand and system standards.