The American fast-food chain Hardee's, famed for its charbroiled burgers and breakfast biscuits, has been quietly closing a number of its restaurant locations across the United States. The move comes amid significant legal and financial difficulties within its franchise network.
Franchisee Faces Multi-Million Dollar Lawsuit
In a significant development, two Hardee's restaurants in Billings, Montana have recently closed. The outlets, located at 2404 Central Avenue and 608 N. 27th Street, were operated by ARC Burger, the chain's largest franchisee. The location on N. 27th Street was scheduled for permanent closure on Saturday, 20 December 2025.
ARC Burger, which owns approximately 80 Hardee's outlets, is now at the centre of a major legal dispute. The parent company has filed a lawsuit alleging the franchisee failed to pay royalties, marketing fees, and rent, with the total sum owed reaching around $6.5 million. Reports indicate that 28 of ARC Burger's units are entangled in this conflict.
A Broader Pattern of Closures and Challenges
The shutdowns in Montana are not isolated incidents. They form part of a wider contraction of the Hardee's brand observed in recent months. Since early October, at least 15 additional stores have ceased operations in states including Minnesota, South Dakota, North Dakota, Illinois, and Iowa. Some locations in Georgia have also closed abruptly due to the ongoing franchisee disagreements.
Despite operating over 1,800 locations nationwide, Hardee's faces stiff market challenges. On average, its restaurants earn under $1.2 million annually, a figure that lags behind competitors like Wendy's ($2 million) and McDonald's ($3.9 million). The chain, along with rival Burger King, has contended with shrinking profit margins driven by intense competition, price wars, shifting consumer tastes, and rising operational costs.
Second Major Legal Battle Threatens More Shutdowns
In a separate legal clash, another major franchisee, Paradigm Investment Group, is suing Hardee's. Paradigm, which operates 76 restaurants across Alabama, Florida, Mississippi, and Tennessee, alleges the chain threatened to terminate its agreements. The dispute centres on new operational demands, including digital services and technology fees, as well as Paradigm's refusal to keep restaurants open past 2 p.m.
The franchisee argues these requirements were not part of its original contracts and could cause serious harm to its business. Hardee's is seeking to enforce compliance and proceed with terminating the agreements, a move that could lead to the closure of all Paradigm-owned locations if successful.
The financial strain on ARC Burger is particularly acute, as the company had purchased the restaurants just two years prior from the bankrupt previous owner, Summit Restaurant Holdings. These unfolding legal and financial troubles highlight the significant pressures facing some franchise networks in the competitive fast-food sector.
