Hardee’s Shuts 77 Restaurants Across 8 States in Major Franchise Collapse

In the quiet rural heart of Geneva, Alabama, a single Hardee’s restaurant at 1301 Maple Avenue closed its doors on December 20, 2025, severing a vital link for a community of 4,242 residents where median household income hovers at $48,798 and nearly 30% live below the poverty line. This shutdown, part of a broader wave affecting 77 locations across eight states, underscores escalating tensions between Hardee’s corporate parent and franchisee ARC Burger LLC.

Hardee’s Lawsuit Ignites Closures

Hardee’s Restaurants LLC launched a lawsuit on November 21, 2025, in U.S. District Court for the Middle District of Tennessee, claiming ARC Burger owes over $6.5 million in unpaid franchise royalties, advertising fees, technology charges, sublease rent, property taxes, and interest. Defaults began as early as December 2024, despite two default notices and a proposed repayment plan from Hardee’s, which ARC allegedly rejected while operating profitably and making partial payments.

Corporate terminated ARC’s franchise and sublease agreements in September 2025 but permitted temporary operations contingent on full payments, as both sides sought a buyer. When ARC failed to comply, Hardee’s enforced closures on December 20, triggering immediate job losses and service gaps in rural areas.

ARC’s Rocky History

ARC Burger, formed by private equity firm High Bluff Capital Partners—which also holds Church’s Texas Chicken, Quiznos, and Taco Del Mar—acquired 81 Hardee’s sites in an August 2023 bankruptcy auction from Summit Restaurant Holdings. Summit had filed Chapter 11 in May 2023 after shuttering 39 locations due to low foot traffic and high costs. CKE Restaurants, Hardee’s parent, initially hailed High Bluff as an ideal partner for remodels and growth, but the alliance collapsed within two years.

Georgia bore the heaviest toll with 34 closures, eroding Hardee’s presence in small communities with few dining options. Other states hit include Missouri, Montana, Illinois, Florida, Kansas, South Carolina, and Wyoming, where many sites anchored local economies as key employers.

Hardee’s Deeper Struggles

The episode exposes systemic challenges for Hardee’s, which lags competitors with average annual unit volumes under $1.2 million—versus Wendy’s $2 million and McDonald’s $3.9 million. The brand ranks in the lowest quartile for profitability, sales per operating hour, and drive-thru speed, per industry data and franchisee court filings.

Lenders now deem Hardee’s too risky, blocking franchisees from funding remodels, tech upgrades, or expansion. Paradigm Investment Group, running 76 locations in Alabama, Florida, Mississippi, and Tennessee since 2000, sued Hardee’s on April 14, 2025, seeking $35 million in damages and an injunction against termination. Paradigm contests mandates like 6 a.m. to 10 p.m. hours, $150-$160 monthly tech fees, and required third-party delivery, arguing they erode profits. A jury trial is set for March 30, 2027.

CKE Restaurants Holdings, controlled by Roark Capital since 2013 alongside brands like Arby’s and Sonic, faces criticism for leadership instability and untested strategies.

Path Forward Amid Industry Pressures

Hardee’s vows to reopen sites quickly, prioritizing brand stability, though weak performance, lender hesitance, and infrastructure costs pose hurdles. The closures amplify job losses in vulnerable areas like Geneva, where alternatives are scarce.

These events mirror fast-food sector woes in 2024-2025, with inflation curbing spending and traffic dropping monthly. Chains like Starbucks (500 closures), Wendy’s (mid-double-digits), and Denny’s (70-90) have trimmed underperformers, signaling a push for viability amid shifting consumer habits and economic strain.