Paradigm Investment Group, a 25-year Hardee’s franchisee, says it received a January “default” notice from parent CKE Restaurants demanding all 76 of its rural outlets adopt new tech fees and stay open until 10 p.m. To Paradigm, that’s a nonstarter. Its profits rely on a booming breakfast trade – one Alabama owner notes virtually no lunch customers – and Hardee’s average unit volume hovers under $1.2 million.
With little buffer, Paradigm warns these mandates would “gut” already thin margins. The question: Can small-town Hardee’s absorb new costs or will higher expenses squeeze them out?
Closure Threat
CKE’s January notice went further than a warning: it “reserved the right” to shutter or sell all 76 Paradigm-run Hardee’s in Alabama, Mississippi, Tennessee and Florida if Paradigm didn’t comply by April 15. Those 76 units equal roughly 5% of the chain’s U.S. system, so mass closures would rattle Hardee’s Southeast presence.
Paradigm has pushed back in court filings, accusing CKE of “heavy-handed” tactics that threaten “to steal” its well-established business. The franchisee stresses that 1,600 jobs and millions in local payroll hang in the balance – can either side afford a scorched-earth outcome?
Franchise Flashpoint
Paradigm’s ties to Hardee’s run deep: the Tennessee-based operator has run these locations since about 2000. But the partnership frayed as Hardee’s ownership churned through leaders. Paradigm CEO Don Wollan has grumbled that “every time a new CEO comes in and wants to take some goofy risk or try something different”, the chain forces untested mandates on franchisees.
Under its legacy agreements, Paradigm says it has sole control over store hours and pricing, making the newest tech fees (about $150 per store monthly) and extended hours not only unwelcome but illegal without re-negotiation.
Rising Pressures
Hardee’s corporate insists late-evening traffic and digital orders now drive a large slice of sales, justifying its mandates. Paradigm disputes those numbers. In court filings it notes its Alabama outlets “average less than 4 customers an hour after 2 p.m.” – making post-lunch hours largely loss-making. A deep labor crunch compounds the problem: Alabama’s workforce has roughly only 39 available workers for every 100 jobs, meaning Paradigm can’t easily staff new evening shifts.
Paradigm says extended hours would add huge labor and security costs without customers to pay them. Both sides are now trading charts in court over the math – but “who’s counting correctly?”
Lawsuit Lands
On April 14, Paradigm hit the legal brakes. It filed suit in U.S. District Court (case 3:25-cv-00419), asking a judge to block any termination of its franchise rights. Judge Waverly Crenshaw immediately ordered all parties to “maintain the status quo” pending an April 16 hearing, freezing CKE’s closure plans. Paradigm’s 118-page complaint lays out its case: $173 million invested and $87 million paid in royalties, and claims that the new tech fees and loyalty program were never disclosed in its agreements.
Southern Shockwaves
In many small Alabama towns, Hardee’s is a morning ritual. Locals are already noticing half-lit dining rooms closing by mid-afternoon. Paradigm warns that if CKE prevails, dozens more could simply vanish, erasing the region’s “biscuit economy.” The operator employs roughly 1,600 people and buys about $28 million a year from local suppliers, according to filings.
Economic-development officials quietly warn that losing dozens of storefronts could hollow out town centers still recovering from pandemic losses.
Voices from the Grill
Paradigm’s CEO is blunt about the feud. “Hardee’s was ‘ramming things down our throat’ which weren’t in the franchise agreement,” Don Wollan told Franchise Timesfoxbusiness.com. He says every new corporate mandate – from third-party delivery to late closing – feels like a risk to all he’s built. On the ground, long-time shift managers echo the pain.
They describe 9 p.m. as “profitless and risky,” with barely any customers and extra security costs in lonely parking lots. Hardee’s corporate, for its part, has argued Paradigm is uniquely out-of-step – “alone” in refusing modern standards.
Regulatory Ripples
Beyond Hardee’s, franchise lawyers are watching closely. Paradigm leans on a 2024 FTC staff letter warning that undisclosed tech fees can be “unfair” to franchisees. Experts say the case could redefine franchise playbooks: a ruling against Hardee’s might force chains to more carefully disclose rule changes, while a win for CKE could encourage fast-food brands to insist on digital upgrades without fresh approvals.
“It’s the broader question,” one attorney notes, “of where regulators draw the line between innovation and overreach.” Whatever happens here, chains from pizza to coffee will take notes on the limits of franchisor power.
Macro Market View
Hardee’s has been fighting headwinds. In the last decade the chain quietly shed about 200 U.S. stores, and its systemwide sales dipped roughly 5.3% last year. Analysts blame the slump on slow digital adoption and an over-reliance on breakfast sales that “droop sharply after noon.” Now CKE hopes that unified hours and new delivery options can raise average unit volumes – currently well below Burger King’s roughly $1.6 million mark.
Yet forcing that uniformity risks alienating franchisees already squeezed by wage inflation and supply shocks. In the end, the Paradigm battle has become a bellwether: can a legacy brand modernize without fracturing the foundation on which it was built?
Verdict Horizon
A federal court has set a mediation for Sept. 18, 2025 – less than two months to hammer out a truce. Industry observers speculate Hardee’s parent CKE might end up buying the 76 stores, finding new franchisees, or even granting exemptions to bad-fit locations. Paradigm says it’s open to compromise – maybe adopting some digital tools if the tech fees drop. Either way, franchises nationwide will be parsing every clause for clues about future power balances.
As one industry newsletter warned, “the fast-food industry watches closely” on how this rift resolves.