80 Hardee’s Restaurants Shut Down as $16.5M Deal Implodes and 2,000 Jobs Vanish

By December 31, 2025, 77 Hardee’s restaurants shuttered across eight states, from Montana to Florida, leaving drive-thru lanes empty and loyal customers without their go-to spots. This wave of closures marked one of the biggest single-franchise failures in recent fast-food history, exposing deep rifts between the chain and its operators.​

The $6.5 Million Lawsuit

The downfall traced back to a federal lawsuit filed by Hardee’s Restaurants LLC against franchisee ARC Burger on November 21, 2025, in Tennessee court. Hardee’s sought over $6.5 million for unpaid franchise royalties, advertising fees, technology charges, rent on 28 subleased sites, taxes, and interest—payments ARC Burger halted in December 2024. Instead of settling, ARC Burger shut down all 77 locations it ran.​

Hardee’s filings alleged ARC Burger operated these outlets profitably yet withheld funds, raising questions about cash management or deliberate standoffs amid contract disputes. ARC had bought the 80-site portfolio for $16.5 million in August 2023 from bankrupt Summit Restaurant Holdings, backed by High Bluff Capital Partners, which manages brands like Church’s Chicken and Quiznos. Within two years, the entire group collapsed.​

Widespread Closures and Job Losses

The shutdowns hit Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming hardest, with Georgia losing over 30 sites. In Hampton, South Carolina, the December 20 closure idled 17 workers at a spot that had been the county’s first fast-food outlet and a local fixture.

Across the 77 units, typically staffed by 20-30 people each, between 1,540 and 2,310 jobs disappeared. Those locations had generated roughly $77 million to $154 million in annual sales, based on $1-2 million per unit, stripping revenue from communities where Hardee’s anchored breakfast crowds and youth hiring.​

Hardee’s attributed the outcome to ARC Burger’s refusal to address defaults despite strong sales and prolonged talks. The chain now seeks new franchisees for the empty properties.​

Franchisee Revolt Escalates

Tensions extended beyond ARC. Paradigm Investment Group, a 25-year operator of 76 Hardee’s in Alabama, Florida, Mississippi, and Tennessee employing about 1,600, countersued Hardee’s on April 14, 2025, demanding $35 million. CEO Don Wollan criticized “heavy-handed” mandates like $150-$160 monthly technology fees introduced in 2021, forced loyalty programs, third-party delivery, and hours stretched to 10 p.m.

Paradigm’s filing highlighted stark economics: many units averaged under four customers per hour after 2 p.m., with one Alabama site logging just $19 in half-hour sales versus $239 at breakfast. Labor costs often outpaced such revenue, rendering late shifts unviable. The suit branded Hardee’s a “distressed brand” lagging competitors in average unit volume, profitability, sales per hour, and drive-thru speed, with lenders shying away.​

Systemwide Struggles

Hardee’s 2024 U.S. sales fell 5.3% to $1.831 billion across 1,574 locations, down 36 net units from 2023. Average unit volume stood at $1.146 million, trailing Wendy’s $2.098 million, McDonald’s roughly $3.9 million, and even sister chain Carl’s Jr. at $1.43 million.

Parent CKE Restaurants, under Roark Capital since 2013, saw four CEOs in five years, six CFOs, and four CMOs since 2017, signaling leadership churn. Broader pressures mirrored the woes: third-party delivery commissions of 15-30%, soaring ingredient costs and produce price volatility, and labor shortages squeezed margins, breaching loan covenants.​

Summit’s 2023 Chapter 11 bankruptcy had already closed 39 of these sites, a red flag ignored when High Bluff acquired them. Re-franchising vacant spots now faces hurdles in a brand lenders avoid.​

Industry Echoes and Future Stakes

Hardee’s woes reflected fast-food tremors: Wendy’s shut about 140 sites in 2024 with more to come; Jack in the Box closed 86; Denny’s shuttered 70-90 in 2025; two Burger King operators with over 200 units bankrupt in 2023-2024; Starbucks planned 500 North American closures in a $1 billion overhaul.

A March 30, 2027, jury trial in Paradigm’s case could set precedents on franchisors’ power to add fees and rules beyond original deals, influencing technology, hours, and programs chainwide. Facing a $35 million lawsuit from Paradigm while seeking to recover $6.5 million from ARC Burger, Hardee’s grapples with enforcement, litigation, and revival amid franchisee distrust. The outcome will test whether fast-food’s resilience holds as unit economics clash with corporate demands, potentially reshaping operator relations industrywide.