Hardee's Franchisee ARC Burger Chapter 7 Bankruptcy

This filing marks a dramatic escalation following a contentious 2025 lawsuit from Hardee's franchisor (CKE Restaurants) over alleged unpaid royalties, advertising fees, rent, and other obligations totaling more than $6.5 million on certain locations. ARC Burger's troubles highlight ongoing financial pressures in the fast-food franchise sector.

Typical Hardee's restaurant exteriors — many ARC Burger locations resembled these before widespread closures in late 2025

From One Bankruptcy to Another

ARC Burger, backed by private equity firm High Bluff Capital Partners (which also owns brands like Church's Chicken, Quiznos, and Taco Del Mar), acquired approximately 80 Hardee's restaurants in 2023. These locations came out of the Chapter 11 bankruptcy of the previous franchisee, Summit Restaurant Holdings, which had closed dozens of sites before filing.

High Bluff purchased the portfolio for about $16 million, betting on a turnaround. However, by late 2024, payments to the franchisor reportedly faltered. Hardee's filed a breach-of-contract lawsuit in November 2025 in the U.S. District Court for the Middle District of Tennessee, accusing ARC Burger of defaults despite "solid sales" at many locations.

The franchise agreement was terminated, leading ARC Burger to close all its Hardee's locations in December 2025 — impacting roughly 77 sites across states including Georgia (its largest market with ~34 locations), Alabama, Florida, Illinois, Missouri, and others. Hardee's described the closures as resulting from the franchisee's failure to cure defaults, not a chain-wide issue.

Some closed locations have since begun reopening under corporate ownership as part of Hardee's strategy to resume operations at over 40 former ARC sites.

Hardee's signature menu items, including thickburgers, breakfast biscuits, and wraps — popular offerings that continued generating sales even amid the franchisee's disputes.

Details of the Chapter 7 Filing

In the April 20, 2026, Chapter 7 liquidation petition, ARC Burger LLC listed more than $29 million in debts. Creditors include:

• The Georgia Department of Revenue (owed approximately $403,569 in taxes).
• Employees (owed about $19,000 in total).
• Hardee's and related entities stemming from the ongoing lawsuit and terminated franchise agreements.

Chapter 7 bankruptcy involves the appointment of a trustee to liquidate non-exempt assets and distribute proceeds to creditors. Unlike Chapter 11 reorganization, this filing signals the likely end of ARC Burger as an operating entity, with assets sold off to satisfy debts where possible.

The filing comes months after the mass closures, suggesting the company could no longer sustain operations or litigation costs amid mounting obligations.

What Is Chapter 7 Bankruptcy?

Illustration of Chapter 7 bankruptcy filing process — a liquidation proceeding where a trustee sells assets to pay creditors.

The December 2025 closures affected an estimated 1,600 jobs across ARC Burger's network. The bankruptcy filing notes a relatively modest $19,000 owed to employees, but many workers faced sudden layoffs, lost wages, and uncertainty during the holiday period.

In Georgia and other affected states, local communities saw familiar Hardee's signs go dark, disrupting routines for customers who relied on the chain for quick, affordable meals. Some locations featured memorial-style tributes from loyal patrons after closures.

Hardee's exterior hi-res stock photography and images - Alamy

Example of a Hardee's location with community tributes after closure — similar scenes played out at many ARC Burger sites in late 2025.

the Fast-Food Franchise Sector

This is not an isolated incident for Hardee's. The brand has navigated franchisee challenges before, including the 2023 Summit bankruptcy that created the opportunity for ARC Burger's acquisition. Rising operational costs, labor shortages, changing consumer habits, and franchise fee structures continue to strain smaller and mid-sized operators.

Hardee's parent company, CKE Restaurants, has emphasized that the issues stem from specific franchisee defaults rather than systemic problems with the brand. The company is actively working to reopen many locations under direct or new operator control, aiming to minimize long-term disruption to the Hardee's footprint.

Private equity involvement in fast food — as seen with High Bluff — often brings aggressive acquisition strategies but can also lead to high debt loads and pressure to deliver quick returns, sometimes clashing with the steady cash-flow realities of restaurant operations.

In Chapter 7

a trustee will oversee asset liquidation, creditor claims, and potential distributions. Hardee's may pursue remaining claims through the bankruptcy process. For customers, many shuttered locations are expected to reopen gradually under new management, preserving access to Hardee's menu favorites.

This case serves as a cautionary tale for franchisees in a competitive industry: even with strong underlying sales, failure to meet franchisor obligations can lead to rapid termination, closures, and eventual liquidation.

Note: Bankruptcy filings and court dockets provide the most authoritative details; developments may evolve as the case proceeds in the Northern District of Georgia.