Under the Hardees franchise agreement, is a franchisee permitted to deduct or withhold any royalty fees, advertising contributions, or other monies payable due to alleged non-performance by HR?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Failure by Franchisee to have sufficient funds in the Account shall constitute a default of this Agreement. Franchisee shall not be entitled to set off, deduct or otherwise withhold any royalty fees, advertising contributions, interest charges or any other monies payable by Franchisee under this Agreement on grounds of any alleged non-performance by HR of any of its obligations or for any other reason.
F. Interest
If any payments by Franchisee due to HR are not received by HR by the date due, Franchisee, in addition to paying the amount owed, shall pay HR interest on the amount owed from the date due until paid at the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurant is located, not to exceed 1.5% per fiscal period (as defined by HR from time to time) or a portion of a fiscal period. Payment of interest by Franchisee on past due obligations is in addition to all other remedies and rights available to HR pursuant to this Agreement or under applicable law.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, franchisees are not permitted to deduct or withhold royalty fees, advertising contributions, or any other payments due to Hardees based on alleged non-performance or any other reason. The franchise agreement explicitly prohibits franchisees from setting off, deducting, or withholding any payments.
This means a Hardees franchisee must continue to pay all required fees, even if they believe Hardees is not fulfilling its obligations under the franchise agreement. Failure to make sufficient funds available for electronic transfer constitutes a default of the agreement.
If a franchisee fails to make payments on time, Hardees can charge interest on the outstanding amount. This interest will be calculated from the date the payment was originally due until it is paid, at the maximum rate permitted by law in the state where the franchised restaurant is located, but not exceeding 1.5% per fiscal period. This interest charge is in addition to any other remedies Hardees may pursue under the agreement or applicable law.