Only one Hardee’s restaurant in Alabama has closed amid a nationwide franchisee dispute affecting 77 locations across eight states.
The Geneva, Alabama location at 1301 Maple Avenue shuttered on December 20, 2025, as part of mass closures stemming from a lawsuit between Hardee’s corporate parent and franchisee ARC Burger LLC.
Small City Loses Community Gathering Place
Geneva, a small city of approximately 4,242 residents in southeastern Alabama, lost its only Hardee’s location in the closure wave.
The restaurant served as both an employer and community gathering place in the rural county seat, where the median household income sits at $48,798 and nearly 30% of residents live below the poverty line.
Hardee’s Files Lawsuit Over $6.5 Million Debt
Hardee’s Restaurants LLC filed a lawsuit on November 21, 2025, in U.S. District Court for the Middle District of Tennessee, alleging ARC Burger owes more than $6.5 million in unpaid obligations.
The debt includes franchise royalties, advertising contributions, technology fees, rent for sublease locations, property taxes, and accrued interest accumulated over multiple months of non-payment.
Franchisee Defaulted on Payments Since December 2024
Court documents reveal ARC Burger began defaulting on payments as early as December 2024. Despite receiving two notices of default and a proposed repayment plan from Hardee’s corporate, the franchisee allegedly rejected the terms while continuing to operate restaurants profitably and making only partial payments toward outstanding obligations.
Corporate Terminates Agreements But Allows Temporary Operations
Hardee’s officially terminated ARC Burger’s franchise and sublease agreements in September 2025 due to the payment defaults.
However, the franchisor agreed to temporarily allow continued operations while both parties searched for a suitable buyer—an arrangement explicitly contingent on ARC maintaining current payments on all ongoing financial obligations.
Mass Closures Executed on December 20, 2025
When ARC Burger failed to meet these payment requirements, Hardee’s moved forward with mandatory closures.
The bulk of affected restaurants shuttered simultaneously on December 20, 2025, creating immediate job losses and service disruptions across multiple states where ARC operated locations under the Hardee’s brand.
High Bluff Capital Acquired Locations in 2023 Bankruptcy Auction
ARC Burger is owned by High Bluff Capital Partners, a private equity firm with restaurant holdings including Church’s Texas Chicken, Quiznos, and Taco Del Mar.
High Bluff formed ARC specifically to acquire 81 Hardee’s locations in a bankruptcy auction in August 2023, purchasing the restaurants from failed operator Summit Restaurant Holdings.
Previous Owner Summit Restaurant Holdings Filed Bankruptcy
Summit Restaurant Holdings had filed Chapter 11 bankruptcy protection in May 2023 after closing 39 locations, citing insufficient foot traffic and high operating costs.
At the acquisition, CKE Restaurants praised High Bluff as “the ideal partner” with capital for remodels and sales initiatives. The relationship deteriorated completely within just two years.
Georgia Suffers Worst Impact With 34 Restaurant Closures
While Alabama lost only one location, Georgia suffered the most severe impact with 34 Hardee’s restaurants closing statewide.
The closures represented ARC Burger’s largest geographic concentration and dealt a devastating blow to Hardee’s market presence across Georgia, where many locations served small communities with limited dining alternatives.
Eight States Affected by ARC Burger Shutdown
Other affected states include Missouri, Montana, Illinois, Florida, Kansas, South Carolina, and Wyoming. Many closed restaurants operated in rural markets and smaller cities where they functioned as significant employers and community gathering spaces, making the shutdowns particularly impactful for local economies beyond simple restaurant closures.
Hardee’s Struggles With Low Revenue Per Restaurant
The ARC Burger situation represents one symptom of broader problems plaguing the Hardee’s brand, which has struggled with declining sales, weak profitability, and deteriorating franchisee relationships.
Average Hardee’s restaurants generate under $1.2 million annually—far below Wendy’s $2 million and McDonald’s $3.9 million in comparable unit volumes.
Brand Ranks Last in Key Performance Metrics
Industry data shows Hardee’s ranks in the lowest quartile for average unit volume and profitability among competitors.
The brand places dead last in sales per operating hour and drive-thru speed of service within its competitive set, according to court documents filed by franchisees in separate litigation against the parent company.
Lenders View Hardee’s as Too Risky for Financing
Multiple franchisees report that lenders increasingly view Hardee’s as too risky for financing, creating capital constraints that prevent operators from investing in necessary remodels, technology upgrades, or expansion.
The weak financial performance has made it progressively difficult for franchisees to access traditional restaurant lending channels available to operators of competing brands.
Second Major Franchisee Sues for $35 Million
Paradigm Investment Group, operating 76 Hardee’s restaurants across Alabama, Florida, Mississippi, and Tennessee, filed its own lawsuit against Hardee’s on April 14, 2025.
The separate legal action seeks $35 million in compensatory damages and an injunction against franchise agreement termination, with a jury trial scheduled for March 30, 2027.
Paradigm Challenges Mandatory Operating Requirements
Paradigm’s lawsuit challenges operational requirements including mandatory extended hours from 6 a.m. to 10 p.m. daily, monthly technology fees of $150-$160 per restaurant, and forced participation in third-party delivery and digital services.
The franchisee argues these demands violate original agreements and destroy profitability at many locations.
Longtime Franchisee Blames Leadership Instability
Paradigm, a Hardee’s operator since 2000 describing itself as among the brand’s most profitable franchisees, alleges “ill-conceived decisions by brand leadership and recent extreme turnover in the C-suite ranks” have caused brand deterioration.
“Whenever a new CEO arrives and wishes to implement some untested strategy, we find ourselves dealing with the fallout for many years,” CEO Don Wollan stated.
Roark Capital Controls Parent Company CKE Restaurants
Hardee’s and sister brand Carl’s Jr. operate under CKE Restaurants Holdings, controlled by Atlanta-based private equity firm Roark Capital.
Roark acquired a majority stake in CKE in December 2013, adding the burger chains to an extensive restaurant portfolio including Arby’s, Dunkin’, Subway, Sonic, Jimmy John’s, and over 50 other franchise brands.
Corporate Seeks to Reopen Closed Locations
Hardee’s has stated it is “working hard to find a path forward to reopen closed locations as soon as possible” and remains “focused on ensuring long-term stability and growth for the Hardee’s brand.”
However, finding new franchisees faces substantial obstacles including weak brand performance, lender reluctance, geographic challenges, and infrastructure costs.
Closures Create Job Losses Across Eight States
Hardee’s acknowledged “the impact of restaurant closures on location employees and the community” in official statements. The 77-location shutdown represents significant job losses across eight states, with particularly severe effects in small communities like Geneva where limited alternative employment options amplify the economic consequences of losing major employers.
Industry-Wide Challenges Affect All Fast-Food Chains
The broader fast-food industry confronted difficult conditions throughout 2024-2025 as consumers reduced dining expenses due to inflation.
Restaurant traffic declined monthly throughout most of 2025, prompting numerous chains beyond Hardee’s to close underperforming locations, including Starbucks announcing 500 closures, Wendy’s targeting mid-double-digit percentages, and Denny’s planning 70-90 shutdowns.
Sources:
“Hardee’s to close 77 locations in the U.S. including AL.” Yahoo News, December 2025.
“65-year-old fast-food chain sues major operator after missing $6.5M in payments.” Yahoo Finance, December 2025.
“More Than 30 Hardee’s Restaurants Have Closed in Georgia.” Tone to ATL, December 2025.
“Covington Hardee’s location part of 77 nationwide closures.” The Covington News, December 2025.
“Hardee’s Launches Legal Battle with 77-Unit Franchisee as Financial Dispute Escalates.” QSR Magazine, December 2025.
“Bankrupt Hardee’s operator sells 81 restaurants to High Bluff Capital.” Restaurant Dive, July 2023.