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Closing Restaurants Improves Sale Value

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The Situation

Long-term Hardee’s Franchisee had 145 restaurants, with approximately 50 restaurants losing money

  • The Franchisor is blocking the closure of poor-performing restaurants.
  • Hardee’s brand is running negative same-store sales comps.
  • The Franchisor is requiring remodels on almost all restaurants, which would require Capital Expenditures.
  • The Owners wanted to exit this Franchisee operation.
  • The Owners had a separate and legally unconnected 100-restaurant Hardee’s Franchise operation that was operating profitably.
  • The Secured Lender was facing virtually a zero baseline recovery on its $22 million debt.

How We Advised

Our experts engaged in negotiations with Brand on store closures and the sale of the Franchisee Business.

  • We facilitated engagement of a Real Estate Consultant to negotiate rent reductions as appropriate.
  • Our team facilitated engagement of an Investment Banker to market the Company for sale.
  • Franchisor consented to the closure of over 40 restaurants, which improved EBITDA by $4 million.
  • Real Estate Consultant saved on annual rents in negotiations.
  • The Investment Banker secured a Stalking Horse buyer.
  • The Company filed Chapter 11 and was sold, and secured lender’s recovery was over 70%; a $16 million improvement over the baseline recovery.
  • Owners continued to operate the profitable Hardee’s business.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

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