Seventy-seven Hardee’s locations across nine states closed by the end of December 2025 after the chain sued its franchisee, ARC Burger LLC, for more than $6.5 million in unpaid royalties, rent, and marketing fees. The closures cost more than 1,600 jobs, and ARC Burger filed for Chapter 7 liquidation in April 2026. Hardee’s has since begun reopening some of the shuttered restaurants under corporate ownership.1QSR Magazine. 77-Unit Hardee’s Franchisee Files Chapter 7 Bankruptcy Amid Legal Fight With Franchisor
Where the Closed Restaurants Are
The 77 locations were spread across Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming.2Tallahassee Democrat. Hardee’s Florida Restaurants Closed Open Bankruptcy All of them had been operated by ARC Burger, a subsidiary of San Diego-based private investment firm High Bluff Capital Partners, which also owns Quiznos, Taco Del Mar, and Church’s Texas Chicken.3Bloomberg Law. Quiznos Owner Buys 80 Hardee’s Locations From Bankrupt Franchisee The 77 stores made up roughly 5% of Hardee’s remaining U.S. system, which had shrunk from 1,864 restaurants in 2019 to about 1,571 by early 2026.4Franchise Times. Financial and Legal Troubles Are Pushing More Franchisees Into Bankruptcy
Why the Restaurants Closed
ARC Burger stopped making required payments to Hardee’s parent company, CKE Restaurants, in December 2024. The missed payments covered royalties, advertising contributions, and rent. Hardee’s declared the franchisee in default in June 2025, and when ARC Burger did not cure the defaults, terminated the franchise and sublease agreements in September 2025.5Restaurant Business Online. Struggling Hardee’s Terminates Large Franchisee
The two sides then entered a forbearance agreement meant to keep the restaurants open while ARC Burger looked for a buyer or worked out its debts. According to Hardee’s, ARC Burger made one payment under that agreement and stopped again.5Restaurant Business Online. Struggling Hardee’s Terminates Large Franchisee Hardee’s said ARC Burger also refused to negotiate a workout, and that the debt kept growing while the restaurants continued generating what the company described as “solid sales.”61851 Franchise. Hardee’s Franchise Closures ARC Burger Lawsuit
In November 2025, Hardee’s sued ARC Burger in the U.S. District Court for the Middle District of Tennessee, alleging breach of contract and claiming more than $6.5 million in unpaid royalties, marketing funds, and rent.7Washington Times. Hardee’s Franchisee ARC Burger Files Chapter 7 Bankruptcy Amid $29M By mid-December, Hardee’s ended ARC Burger’s ability to operate the remaining stores, and every one of the 77 locations was closed by the end of the month.1QSR Magazine. 77-Unit Hardee’s Franchisee Files Chapter 7 Bankruptcy Amid Legal Fight With Franchisor
ARC Burger’s Counterclaim and Bankruptcy
In March 2026, ARC Burger filed a counterclaim alleging that Hardee’s had concealed operational problems with the restaurants when ARC Burger acquired them in 2023, including equipment failures and connectivity issues. The counterclaim also blamed leadership turnover at CKE Restaurants, which has cycled through three CEOs since 2023, for what it called “inconsistent execution and strategy.”1QSR Magazine. 77-Unit Hardee’s Franchisee Files Chapter 7 Bankruptcy Amid Legal Fight With Franchisor Hardee’s denied hiding operational problems in an early April 2026 response and maintained that the missed payments were the real issue.
On April 20, 2026, ARC Burger filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Northern District of Georgia.8Bankruptcy Observer. Bankruptcy Case: ARC Burger The filing listed liabilities of up to $50 million and between 5,001 and 10,000 creditors, with assets estimated at only $100,000 to $1 million.1QSR Magazine. 77-Unit Hardee’s Franchisee Files Chapter 7 Bankruptcy Amid Legal Fight With Franchisor ARC Burger indicated it expects no recovery for unsecured creditors. Among the creditors are former employees owed roughly $19,000 in unpaid wages and the Georgia Department of Revenue, which is owed about $403,000 in taxes.7Washington Times. Hardee’s Franchisee ARC Burger Files Chapter 7 Bankruptcy Amid $29M The Chapter 7 filing automatically froze the federal lawsuit between the two companies.9Restaurant Dive. ARC Burger Chapter 7 Bankruptcy Hardee’s Lawsuit Pause The case has been designated “no asset,” meaning the trustee has not yet identified property available to distribute to creditors.10Inforuptcy. Bankruptcy Case ARC Burger LLC
Which Locations Are Reopening
Hardee’s is taking over a portion of the closed restaurants directly. As of late April 2026, the company had reopened more than 20 locations under corporate ownership in Georgia, South Carolina, and Missouri. Hardee’s has said it expects to take over and reopen more than 40 of the 77 locations in total, and is evaluating additional sites for either corporate operation or placement with new franchise operators.11QSR Magazine. Hardee’s Reclaims Dozens of Restaurants in Wake of Large Franchisee’s Bankruptcy A company spokesperson said Hardee’s understands “the important role these restaurants play in the neighborhoods they serve” and is working to bring the brand back to affected communities.12AL.com. Popular Fast Food Restaurant Closing Dozens of Locations in 9 States Following Bankruptcy
That leaves roughly 30 or more locations without an announced future, particularly in Alabama, Florida, Illinois, Montana, Kansas, and Wyoming, where no reopenings have been announced.