A MAJOR rival to McDonald’s could be forced to shut down dozens more of its restaurants after a bitter legal row with a top franchisee.
Hardee’s, which operates 1,800 locations across the US, is locked in a fierce battle with Paradigm Investment Group, a firm that runs 76 Hardee’s outlets across Alabama, Florida, Mississippi, and Tennessee.
The burger giant has accused Paradigm of repeatedly breaking franchise rules — including failing to stay open during agreed hours, not paying tech fees, and refusing to offer delivery or join loyalty programmes.
In some cases, locations were reportedly closing as early as 2pm, missing key dinner trade.
Paradigm is fighting back in court, claiming the company was fully aware of the changes and even tolerated them.
It says the adjustments were necessary to keep restaurants afloat and blames Hardee’s for financial struggles affecting the wider brand.
If Hardee’s wins the case, Paradigm could lose all of its stores and face damages of up to £10.2 million ($13 million).
“They were ramming things down our throat which weren’t in the franchise agreement,” Paradigm CEO Don Wollan told the Franchise Times.
Court documents reveal Paradigm has racked up more than £180,000 ($230,000) in unpaid tech fees alone, as tensions between the two sides have continued to grow.
Hardee’s maintains that it gave the franchisee multiple chances to get back on track — but says its warnings were ignored.
The row has come at a difficult time for Hardee’s.
The fast food brand has already shuttered more than 200 locations in the past decade, with over 150 closures since 2021.
In comparison to rivals, Hardee’s continues to lag behind.
While McDonald’s, Wendy’s and Burger King generate far higher sales per store, Hardee’s individual outlets take in under £940,000 ($1.2 million) annually. Total global sales for the brand sit just under £1.6 billion ($2 billion).
Another major Hardee’s franchisee, Summit Restaurant Holdings, filed for bankruptcy protection in 2023 and shut down 39 of its 108 restaurants, adding to the chain’s mounting woes.
The wider fast food industry has been battling rising costs and changing consumer habits.
Even giants like McDonald’s have not been spared — the company saw a 3.6 percent drop in US sales in the first quarter of the year, while Burger King suffered a 1.3 per cent dip after one of its large franchisees also went under.
Subway and Jack in the Box have also been forced to shut restaurants in recent years due to soaring inflation, higher wages, and stiff competition.
For Hardee’s, the conflict with Paradigm only adds to an already shaky foundation.
What was once considered one of its most successful partners now risks being wiped out completely.
Paradigm, which has held its franchise licence since 2000, insists it was doing what it could to stay profitable.
But its refusal to join loyalty schemes or follow delivery standards may have turned off customers and left it out of step with the wider brand.
Hardee’s sent its first formal notice in 2023 asking Paradigm to make changes.
When that was ignored, the company declared the group in default early this year and gave a final warning in February.
The threat to terminate its agreements came in mid-April — the day after the lawsuit was filed.
With court proceedings underway, the future of Paradigm’s 76 restaurants, and the jobs that come with them — hangs in the balance.
The case could have major consequences not just for the operator, but for Hardee’s itself as it tries to claw back stability in an increasingly competitive market.
AlamyThe threat to terminate its agreements came in mid-April — the day after the lawsuit was filed[/caption] Subway and Jack in the Box have also been forced to shut restaurants in recent years due to soaring inflation, higher wages, and stiff competition Read More Details
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