Under the Hardees franchise agreement, what is the requirement for members of the Continuity Group and their spouses regarding the Franchisee's payment and performance?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
All members of the Continuity Group and their spouses, if applicable, shall jointly and severally guarantee Franchisee'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 Franchisee'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.
With respect to 10% Owners, Franchisee acknowledges that, unless otherwise agreed to in writing by HR, it is HR's intent to have individuals (and not corporations, limited liability companies or other entities) execute the Guarantee. Accordingly, if any 10% Owner is not an individual, HR shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Franchisee and their spouses, if applicable. (By way of example, if a 10% Owner of Franchisee is a corporation, HR has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation and their spouses, if applicable.)
If Franchisee, any guarantor or any parent, subsidiary or affiliate of Franchisee holds any interest in other restaurants that are franchised by HR or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to HR and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by HR in its sole discretion. For purposes of this Agreement, an affiliate of Franchisee is any company controlled, directly or indirectly, by Franchisee or Franchisee's parent or subsidiary.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, all members of the Continuity Group and their spouses must jointly and severally guarantee the franchisee's payment and performance under the franchise agreement. This means that each individual is fully responsible for the franchisee's obligations, and Hardees can pursue any one or all of them for the full amount owed. This obligation is formalized through a Guarantee and Assumption of Franchisee's Obligations.
Hardees retains the right to waive this guarantee requirement for some or all members of the Continuity Group or to limit the scope of the guarantee at its discretion. Hardees can also request personal financial statements from any guarantor periodically. For individuals who own 10% or more of the franchise ('10% Owners'), Hardees prefers that the guarantee be executed by individuals rather than corporations or LLCs. If a 10% Owner is a corporation, Hardees can require individuals with an ownership interest in that corporation and their spouses to execute the guarantee.
Furthermore, if the franchisee, any guarantor, or any affiliate holds interests in other restaurants franchised by Hardees or its affiliates, they must execute a cross-guarantee, ensuring payment of all obligations for those restaurants as well, unless Hardees waives this requirement in writing. If a guarantor ceases to be a member of the Continuity Group, a 10% Owner, or have an interest in the franchise, their obligations under the guarantee remain in effect unless Hardees releases them in writing. However, obligations regarding confidentiality and non-competition remain in effect for two years after such a release.