Additional Coverage:
A significant Hardee’s franchisee, ARC Burger, has filed for Chapter 7 bankruptcy protection following the closure of 77 of its restaurants. The closures occurred in December 2025 amid a legal dispute between Hardee’s and ARC Burger, which accused the franchisee of breaching franchise agreements.
ARC Burger had acquired these Hardee’s locations from Summit Restaurant Group in 2023. The affected restaurants spanned multiple states, including Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming.
According to the bankruptcy filing, ARC Burger’s liabilities range between $10 million and $50 million, with little prospect of recovery for unsecured creditors. This development contributes to the ongoing contraction of the Hardee’s footprint, which declined from 1,754 locations at the start of 2023 to 1,571 by the end of 2025.
The legal conflict centers on Hardee’s seeking over $6.5 million from ARC Burger in unpaid royalties, advertising fees, and other obligations. Hardee’s terminated its franchise agreements with ARC in September 2025, alleging that despite some locations appearing profitable, ARC was not applying funds toward outstanding fees.
ARC countered, asserting that it inherited a portfolio in poor condition when it purchased the restaurants during bankruptcy proceedings in 2023. The franchisee claims it faced failing equipment and deteriorated facilities, which led to unplanned repair costs exceeding $10 million.
In response to the closures, Hardee’s has announced plans to assume ownership and resume operations at more than 40 of the shuttered locations previously run by ARC Burger. The brand has already reopened several restaurants in Georgia, South Carolina, and Mississippi.
This is not the first recent dispute involving Hardee’s and its franchisees. Last year, the company took legal action against Paradigm Investment Group, another franchise operator, for allegedly failing to maintain brand standards.
Issues cited included the absence of third-party delivery options, loyalty programs, and failure to keep stores open during mandated hours of 6 a.m. to 10 p.m. Paradigm was accused of closing locations as early as 2 p.m. and accumulating over $230,000 in unpaid technology fees.
As Hardee’s works to stabilize its franchise network, the outcome of these legal battles and operational changes will likely shape the brand’s presence in several key markets moving forward.