26-05-2025
National burger chain at risk of closing MORE locations after explosive fallout with major franchisee
A major Hardee's operator is at risk of losing all 76 of its restaurants after the fast food giant accused it of repeatedly breaking the rules.
Paradigm Investment Group, which runs Hardee's locations across Alabama, Florida, Mississippi, and Tennessee, filed a lawsuit after the company threatened to terminate its franchise agreement.
Hardee's claims Paradigm refused to follow key brand standards — like offering third-party delivery, joining loyalty programs, and keeping locations open from 6am to 10pm.
Some stores reportedly closed at 2pm, skipping dinner hours entirely.
The franchisee also allegedly failed to pay tech fees, racking up more than $230,000 in unpaid charges, according to court documents.
In its defense, Paradigm says Hardee's knew about and accepted the changes, which it claims were necessary to keep the restaurants afloat.
If Hardee's prevails, Paradigm could lose all its restaurants and be forced to pay $13 million in damages in damages.
Hardee's, which has 1,800 restaurants in the US, has struggled for years, amid a sales slump, restaurant closures and franchisee bankruptcies. The company has closed 200 over the past decade, and 150 since 2021.
Hardee's franchisee Paradigm Investment Group is at risk of losing restaurants after filing a lawsuit against the fast food chain
Hardee's is the 10th largest fast-food burger chain in the US in terms of total sales. Each Hardee's store generates much less revenue than the likes of McDonald's, Wendy's and Burger King.
Paradigm has been a franchisee since 2000 and calls itself 'one of the most profitable and successful operators in the Hardee's brand.'
However, its business practices have been a red flag in Hardee's eyes since 2021.
For example, refusing to participate in loyalty programs may frustrate customers who cannot accumulate points when they visit certain restaurants.
The company sent a notice to the franchisee requesting the policies change last year.
However, Paradigm did not make the changes and Hardee's declared the franchisee was in default of its agreements in January.
'They were ramming things down our throat which weren't in the franchise agreement,' Paradigm CEO Don Wollan told the Franchise Times.
Hardee's sent Paradigm another notice in February and threatened to terminate its agreements on April 15, the day after they filed the lawsuit.
Each Hardee's restaurant makes less than $1.2 million year, and its yearly worldwide sales are just under $2 billion
Paradigm was right to say Hardee's has been struggling financially.
The chain has closed more than 200 restaurants over the past 10 years, including a beloved South Carolina location.
Each Hardee's restaurant make less than $1.2 million a year, with worldwide sales being just under $2 billion, according to Restaurant Business.
Another major franchisee, Summit Restaurant Holdings, closed 39 of 108 restaurants after filing for bankruptcy protection in 2023.
While Hardee's has continued to crumple, its competition has also been sinking.
McDonald's sales dropped 3.6 percent in its first quarter, while Burger King suffered a 1.3 percent North America sales dip after its franchisee Consolidated Burger Holdings filed for bankruptcy protection.
Other fast food chains that have fallen victim to inflation and restaurant closures include Subway and Jack in the Box.
