CKE Restaurants Unit Sues Franchisees for Royalties, Fees
CKE Restaurants Inc.’s Hardee’s Food Systems Inc. unit has filed dozens of lawsuits seeking at least $10 million from franchisees of more than 100 restaurants for unpaid royalty and advertising fees.
But some of the franchisees are fighting back with lawsuits of their own. Several countersuits filed in federal court in Raleigh, N.C., claim that Hardee’s poor management and advertising strategy since 1993 have caused sales to plummet. They allege Hardee’s failed to provide the expertise in advertising, marketing and operations pledged in franchise agreements.
As a result, franchisees argue, they shouldn’t have to pay any or all of the fees sought by CKE, even though the Anaheim restaurant company purchased the Hardee’s chain one year ago.
A Madison, Wis., franchisee seeks more than $5 million from Hardee’s, claiming in his countersuit that the franchiser’s actions since 1993 violated a North Carolina law against unfair and deceptive trade practices.
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