The fast-food landscape is becoming increasingly competitive, with rising costs and shifting consumer preferences impacting even established chains. Now, a 65-year-old fast-food chain sues major operator after closures, highlighting the financial pressures faced by franchisees and the brands that support them. The lawsuit reveals a growing tension between franchisors and franchisees, as iconic brands struggle to maintain their nationwide footprint.
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Official guidance: IRS — official guidance for 65-year-old fast-food chain sues major operator after closures
Background Context
CKE Restaurants, the parent company of Hardee’s and Carl’s Jr., is currently embroiled in a legal dispute with one of its major franchisees. The 65-year-old fast-food chain sues major operator after closures, alleging significant financial defaults. This action comes amid a broader trend of restaurant closures affecting even well-known quick-service brands. Hardee’s, known for its charbroiled burgers, has seen closures in multiple states, contributing to the chain’s shrinking presence. Sister brand Carl’s Jr. has also experienced closures, including over 20 locations in Australia last year and one in Georgetown, Texas.
The lawsuit filed by Hardee’s against ARC Burger in the U.S. District Court for the Middle District of Tennessee accuses the franchisee of failing to meet its financial obligations. ARC Burger operates 77 Hardee’s locations across several states, including Alabama, Florida, and Illinois. High Bluff Capital Partners owns ARC Burger, which also has holdings in other restaurant chains like Church’s Chicken and Quiznos. The 65-year-old fast-food chain sues major operator after closures, reflecting the financial strain on both the franchisor and franchisee. This situation is further complicated by a management consulting agreement requiring ARC Burger to pay High Bluff Capital Partners a substantial annual fee.
Details of the Hardee’s Lawsuit
According to the lawsuit, Hardee’s claims that ARC Burger has failed to meet payment obligations since December 2024. The outstanding debt allegedly exceeds $6.5 million, encompassing royalties, advertising contributions, technology and training fees, rent, taxes, and accrued interest. Despite Hardee’s issuing two notices of default and proposing a repayment plan, ARC Burger reportedly refused the terms. The 65-year-old fast-food chain sues major operator after closures, citing that partial payments were made, but the outstanding balance remains substantial.
Hardee’s alleges that ARC Burger is profitably running the restaurants but still failing to fulfill its financial obligations. The management consulting agreement between ARC Burger and High Bluff Capital Partners, requiring significant annual payments, further complicates the financial picture. In September 2025, Hardee’s terminated ARC Burger’s franchise agreement but allowed the franchisee to continue operating the locations temporarily while a buyer was sought, contingent upon payments being made. This 65-year-old fast-food chain sues major operator after closures, highlighting the complex relationship between franchisors and franchisees when financial difficulties arise.
Franchise Disputes and Industry Risks
The lawsuit against ARC Burger is not an isolated incident for Hardee’s. Earlier this year, Paradigm Investment Group, a long-time operator of 76 Hardee’s restaurants, sued the chain over new operational requirements. Paradigm claimed these requirements were not part of the original agreement, leading Hardee’s to countersue to terminate the franchise rights. This 65-year-old fast-food chain sues major operator after closures, adding to a history of franchisee disputes.
The franchising model, while offering brand recognition and established systems, carries inherent risks. Data from the U.S. Bureau of Labor Statistics indicates that a significant percentage of new restaurants close within their first year. Long-term survival is even more challenging, with many restaurants shutting down within five years. The 65-year-old fast-food chain sues major operator after closures, underscoring the financial vulnerabilities within the restaurant industry and the potential for disputes between franchisors and franchisees. The success of a franchise depends on various factors, including location, management, and adherence to brand standards.
Broader Fast-Food Industry Challenges
Hardee’s isn’t alone in facing challenges. Several other major fast-food chains have recently announced closures or filed for bankruptcy. Wendy’s plans to close approximately 300 restaurants nationwide. Burger King shuttered multiple locations after a major franchisee filed for bankruptcy, and Arby’s has closed at least 14 locations across eight states. These closures reflect broader industry trends, including rising costs, evolving consumer habits, and increased competition. This 65-year-old fast-food chain sues major operator after closures, but it is symptomatic of the issues plaguing the restaurant industry.
The fast-food industry is constantly evolving, and brands must adapt to stay relevant. This includes menu innovation, technology adoption, and a focus on customer experience. Franchisees also play a crucial role in the success of a brand, and maintaining a strong relationship between franchisor and franchisee is essential. The 65-year-old fast-food chain sues major operator after closures, which may serve as a cautionary tale for other franchise systems, emphasizing the need for clear communication, fair agreements, and proactive support to navigate challenging economic conditions.
The lawsuit filed by Hardee’s against ARC Burger underscores the financial pressures and potential conflicts within the fast-food franchising model. As the 65-year-old fast-food chain sues major operator after closures, the outcome could have significant implications for both parties and the broader industry. The case highlights the importance of financial transparency, adherence to franchise agreements, and proactive communication in navigating the challenges of the restaurant business.
Legal Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for legal guidance.
Sources: Information based on credible sources and industry analysis.
Financial Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a qualified financial advisor before making investment decisions.
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