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A44/100FDD 2025

Hardee's — Litigation & Risk

Food & Beverage - Quick Service · FDD Items 3, 4 & 5

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Elevated Risk

9 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
44 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
6
Government-backed loans issued
Default rate
33.3%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$11.0M
Avg loan size
$1.8M
Participating lenders
6

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Tennessee
State whose law governs disputes — relevant if you're not based there

What drove the 44/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-1.8% YoY) indicates system contraction and shrinking market opportunity
  2. 02MINORNo average net income disclosure prevents assessment of actual profitability relative to $688k-$1.143M investment
  3. 03HIGHNine active/pending litigation cases including contract breaches, conversion claims, and data privacy breaches signal franchisor governance and operational issues
  4. 04MINORUnprotected territory creates direct competition risk from other Hardee's franchisees in same market
  5. 05MINORHigh royalty burden (4-5% of gross sales) on average revenue of $1.47M means $58.8k-$73.6k annual royalties with unknown net profitability
  6. 06MED20-year term locks franchisee into declining brand with limited flexibility
  7. 07HIGHPending litigation by franchisor against Arbor Capital Partners for breach and conversion suggests operational disputes with other franchise partners

Severity inferred from FDD text — not a regulatory or legal classification

Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.