Hardee's franchisee files Chapter 7 bankruptcy
Burger chains are navigating dire economic issues today, closing underperforming locations and, in some cases, filing for bankruptcy protection.
Wendy's said it will close 5%-6% of its 5,831 U.S. restaurant locations listed on its website in 2026, or about 292 to 350 underperforming units, according to its Feb. 13 fourth-quarter earnings call.
"By closing consistently underperforming restaurants, we are enabling our franchisee partners to increase focus on locations with the greatest potential for profitable growth," Wendy's CEO Ken Cook said in the earnings call.
Farmer Boys franchisee files bankruptcy
Farmer Boys burger chain franchisee, Geddo Corp., which operates 12 California and Arizona restaurants, faced severe financial distress as it filed for Chapter 11 bankruptcy protection after merchant cash advance lender withdrawals from its accounts hindered its cash flow, preventing it from paying vendors.
The Riverside, Calif.-based fast-casual chain filed its petition in the U.S. Bankruptcy Court for the Central District of California in Santa Ana on March 31.
ARC Burger files for Chapter 7 liquidation
Business conditions were more devastating for Hardee's burger chain franchisee ARC Burger LLC, which filed for Chapter 7 bankruptcy liquidation, facing a breach-of-contract lawsuit filed by the operator's franchisor, and over $29 million in debt, Atlanta Business Chronicle reported.
The Marietta, Ga., debtor filed its petition, No. 26-55202, in the U.S. Bankruptcy Court for the Northern District of Georgia on April 20, 2026, according to PacerMonitor.
ARC Burger's creditors include Georgia Department of Revenue, owed $403,569 in taxes, and the company's employees, owed about $19,000, according to the Business Chronicle.
Robert Matthew Martin, attorney at Dentons US LLP, represents the debtor in the Chapter 7 case, according to Bankruptcy Observer.
ARC Burger bought 80 Hardee's stores
ARC Burger purchased 80 Hardee's locations in 2023 after the restaurants' former owner, Summit Restaurant Holdings, closed 39 locations and filed for Chapter 11 bankruptcy.
ARC Burger operated locations in Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming.
Hardee's Restaurants LLC filed a lawsuit against ARC Burger in the U.S. District Court for the Middle District of Tennessee on Nov. 21, 2025, seeking to recover over $6.5 million in unpaid franchise fees and other obligations, according to Law.com. The franchisee allegedly defaulted on various payments, including royalties, advertising fees, and rent, beginning in December 2024.
The franchisor terminated ARC Burger's franchise and sublease agreements in September 2025, KCTV-5 in Fairway, Kan., reported, but allowed the franchisee to continue operating temporarily.
Franchisee closes all locations
The franchisee closed all 77 locations in the Mountain West, Midwest, and Southeast regions of the U.S. that were operating after Hardee's filed the lawsuit against ARC.
The lawsuit has not been resolved, but the Chapter 7 bankruptcy filing invokes an automatic stay on all legal actions against the debtor while the bankruptcy case proceeds.
Another Hardee's franchisee, Paradigm Investment Group, is battling franchisor CKE Restaurants Holdings over the parent's demands that the franchisee's restaurants stay open past 2 p.m., pay digital fees, and adhere to loyalty program mandates.
CKE Restaurants requires Paradigm to operate from 6 a.m. to 10 p.m., but the franchisee chooses to close at 2 p.m. The franchisor also requires Paradigm's Hardee's stores to offer third-party delivery, online ordering, and loyalty programs, which the franchisee refuses to implement.
CKE Restaurants demanded that Paradigm, which operates 76 Hardee's franchise restaurants in Alabama, Florida, Mississippi, and Tennessee, make the changes and payments or it would terminate Paradigm's franchise agreements. The franchisee refused, and CKE on Jan. 15, 2025, sent Paradigm a notice of default and termination, threatening to cancel the franchise agreements on April 15, 2025.
Franchisee Paradigm sues Hardee's
Paradigm, sued the franchisor, CKE affiliate Hardee's Restaurants LLC, on April 14, 2025, according to Justia.com , and the Hardee's franchisor agreed not to terminate the franchise agreements while the case proceeds.
A jury trial in the case is set for March 30, 2027, in the U.S. Court for the Middle District of Tennessee. Paradigm is seeking $35 millon in compensatory damages from Hardee's, plus costs and fees, and seeks an injunction against terminating its franchise agreements, American Recruiters reported.
Related: High-end steakhouse chain files Chapter 11 bankruptcy
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This story was originally published April 20, 2026 at 7:09 PM.