Hardee’s franchisee Paradigm sues over termination threats and tech fees

A longtime Hardee’s franchisee and the fast-food chain are in the midst of a legal battle.

Paradigm Investment Group, a franchise of over 25 years with more than six dozen Hardee’s restaurants across Alabama, Florida, Mississippi and Tennessee, hit CKE Restaurants Holdings-owned Hardee’s with a lawsuit in mid-April. 

In the lawsuit, the franchise claimed Hardee’s has "threatened to take Paradigm’s restaurants without justification for pennies on the dollar." 

Paradigm said it received a notice of default and termination from Hardee’s in mid-January informing the franchisee that the chain "considered Paradigm to be in default of the Franchise Agreements with respect to several business practices that had been in dispute over three years."

The notice said Paradigm was in default since it did not pay a monthly "technology fee," use third-party delivery, or use Hardee’s app or loyalty program. Additionally, some of its stores did not abide by certain hours, according to the lawsuit.

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"In the Notice of Default, HR [Hardee’s Restaurants] announced that failure to comply with all of its demands on or before April 15, 2025, would result in termination of all of the Franchise Agreements and would result in Paradigm owning HR some $13 million in liquidated damages and that HR could exercise its rights to acquire the stores for a reduced value," Paradigm’s filing said.

However, Paradigm contends it had "been justified in its decision not to participate" in Hardee’s "unlawful demands" and that Hardee’s was "mistaken in its belief that Paradigm has materially breached" its franchise agreements with the chain.

It argued the technology fee, loyalty and app program and third-party delivery program were not part of its franchise agreements. 

Paradigm alleged those requirements were added through updates to Hardee’s operations manual.

When it came to hours of operation, Paradigm argued that closing some of its restaurants in the afternoon instead of keeping them open until 10 p.m. "does not cause any monetary harm" to Hardee’s and instead "benefits" the chain financially. 

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Those restaurants have performed better in terms of sales, profitability and employee retention compared to when they stayed open full hours, the franchisee argued, adding various factors made full hours not feasible for them. 

Paradigm also claimed many corporate-owned Hardee’s locations do not follow the 6 a.m. to 10 p.m. minimum operating hours. 

Paradigm CEO Don Wollan told the Franchise Times that Hardee’s was "ramming things down our throat which weren’t in the franchise agreement." 

In the lawsuit, the franchisee further contended that Hardee's told a lender in 2022 that Paradigm was in "good standing under each franchise agreement," something that Paradigm argued negated Hardee’s current claims.

Paradigm asked the court for a declaratory judgment in its favor and for an injunction on the termination of its franchise agreements, among other things.

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CKE Restaurants was unable to comment due to the case being an active legal matter. 

The company owns the Hardee’s and Carl’s Jr. fast-food brands.

Roark Capital Group acquired a majority stake in CKE back in 2013.