Under what conditions can Hardees waive the requirement for members of the Continuity Group and their spouses to execute the Guarantee and Assumption of Developer's Obligations?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
All members of the Continuity Group and their spouses, if applicable, shall jointly and severally guarantee Developer's payment and performance under this Agreement and shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee and Assumption of Developer's Obligations ("Guarantee"). Notwithstanding the foregoing, HR reserves the right, in its sole discretion, to waive the requirement that some or all of the previously described individuals execute the attached Guarantee and/or to limit the scope of the Guarantee. HR reserves the right to require any guarantor to provide personal financial statements to HR from time to time.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees retains the discretion to waive the requirement for some or all members of the Continuity Group and their spouses to execute the Guarantee and Assumption of Developer's Obligations. The Continuity Group typically includes the Development Principal, all holders of a direct or indirect interest of 10% or more in the Developer, 10% owners of the Developer's general partner (if the Developer is a limited partnership), and all 10% owners of a business entity that owns a controlling interest in the Developer. The Continuity Group must collectively own at least 51% of the ownership interests in the Developer.
Hardees also reserves the right to limit the scope of the Guarantee. This means that even if a full waiver is not granted, the extent of the financial responsibility assumed by the guarantors could be reduced. Hardees also retains the right to request personal financial statements from any guarantor at any time, allowing them to assess the financial capacity of the guarantors throughout the term of the agreement.
It's important to note that Hardees intends for the Guarantee to be executed by individuals rather than corporate entities. Therefore, if a 10% Owner is a corporation or LLC, Hardees can require individuals with an ownership interest in that corporation to execute the Guarantee instead. Furthermore, if a Developer or guarantor holds interests in other Hardees restaurants franchised by Hardees or its affiliates, they may be required to execute a cross-guarantee, unless Hardees waives this requirement in writing at its sole discretion. This cross-guarantee would cover the obligations for all such restaurants.