The fast-food burger sector has faced competitive challenges this year, which has led to several chain operators closing restaurant locations.

Economic issues such as low profit margins, decreased sales, and high operating costs are driving restaurant chains to close underperforming locations to improve their financial health.

Wendy’s will close 300 locations

Wendy’s in November revealed that it will close about 300 underperforming locations by the end of this year.

Another major burger chain, Hardee’s, is facing dozens of restaurant closures as a result of litigation that is forcing franchisees to close locations. In one case, Hardee’s parent CKE Restaurants Holdings is a plaintiff, and in another, it’s a defendant.

CKE Restaurants operates over 3,800 Hardee’s and Carl’s Jr. restaurants across 44 states and 43 countries. 

New York-based Hardee’s franchisee Paradigm Investment Group is battling franchisor CKE Restaurants Holdings over the parent’s demands that the franchisee’s restaurants stay open past 2 p.m., pay digital fees, and adhere to loyalty program mandates.

CKE Restaurants requires Paradigm to operate from 6 a.m. to 10 p.m., but the franchisee chooses to close at 2 p.m., Restaurant Business reported. The franchisor also requires Paradigm’s Hardee’s to offer third-party delivery, online ordering, and loyalty programs, which the franchisee refuses to implement.

Hardee’s seeks to terminate Paradigm’s franchise agreements

CKE Restaurants demanded that Paradigm make the changes and payments or it would terminate Paradigm’s franchise agreements. The franchisee refused, and CKE on Jan. 15 sent Paradigm a notice of default and termination, threatening to cancel the franchise agreements on April 15, Franchise Times reported.

Paradigm, which operates 76 Hardee’s franchise restaurants in Alabama, Florida, Mississippi, and Tennessee, sued the franchisor, CKE affiliate Hardee’s Restaurants LLC, on April 14, according to Justia.com , and the Hardee’s franchisor agreed not to terminate the franchise agreements while the case proceeds.

Paradigm sues Hardee’s Restaurants

In its lawsuit, Paradigm alleged that CKE was “acting in bad faith and threatening to steal a long-standing and well-performing franchisee’s investment,” as it sought to terminate the franchise agreements.

Paradigm accused the franchisor of using “heavy-handed” procedures to violate franchise agreements and seize lucrative outlets without cause, RetailWire reported.

A jury trial in the case is set for March 30, 2027, in the U.S. Court for the Middle District of Tennessee. Paradigm is seeking $35 millon in compensatory damages from Hardee’s, plus costs and fees, and seeks an injunction against terminating its franchise agreements, American Recruiters reported.

Hardee’s franchisee closes dozens of locations.

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ARC Burger closing dozens of locations

And now, another Hardee’s franchisee is closing dozens of locations as a result of a lawsuit filed against the franchise operator.

Hardee’s franchisee ARC Burger LLC, which is being sued by the hamburger chain’s franchisor, Hardee’s Restaurants LLC, for alleged breach of contract, closed 28 Midwestern locations on Dec. 20, KXEO Radio Inc. of Mexico, Mo., reported.

The franchisor and franchisee had not revealed specific locations that have closed as of Dec. 21.

ARC Burger LLC, which listed 80 locations on its website, closed its location at 2404 Central Ave. in Billings on Dec. 17 and followed that closure on Dec. 20 with the closing of its 608 N. 27th St. location, KTVQ-TV in Billings reported.

More closings:

• Casual Mexican restaurant chain closes more locations
• 79-year-old national trucking company closes down, no bankruptcy
• 65-year-old Home Depot rival shutters business permanently

The franchisee was expected to close several of its 16 locations in Missouri, KTVI-TV Fox2 in St. Louis reported.

“The anticipated closures of several Missouri locations are the result of independently owned and operated franchisee ARC Burger’s failure to cure its defaults under its franchise agreements, despite solid sales and our continued attempts over the course of many months to reach a resolution,” a Hardee’s Restaurants spokesperson said, according to KTVI.

“We understand the impact of restaurant closures on location employees and the community, and are working hard to find a path forward to reopen closed locations as soon as possible. We remain focused on ensuring long-term stability and growth for the Hardee’s brand,” the spokesperson said.

Hardee’s Restaurants sues ARC Burger

Hardee’s Restaurants, which is affiliated with Hardee’s and Carl’s Jr parent CKE Restaurants Holdings, filed the lawsuit against ARC Burger on Nov. 21, seeking to recover over $6.5 million in unpaid franchise fees and other obligations, according to Law.com. The franchisee allegedly defaulted on various payments, including royalties, advertising fees, and rent, beginning in December 2024.

The franchisor terminated ARC Burger’s franchise and sublease agreements in September 2025, KCTV-5 in Fairway, Kan., reported, but allowed the franchisee to continue operating temporarily.

States where ARC Burger operates Hardee’s

• Alabama
• Florida
• Georgia
• Illinois
• Kansas
• Missouri
• Montana
• South Carolina
• Wyoming

ARC Burger operated locations in Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming.

The franchisee purchased 80 Hardee’s locations in 2023 after the restaurants’ former owner, Summit Restaurant Holdings, closed 39 locations and filed for Chapter 11 bankruptcy.

Hardee’s lawsuit details

• Paradigm Investment Group files lawsuit against Hardee’s Restaurants LLC on April 14, 2025, seeking $35 million, plus costs and fees, and an injunction against terminating its franchise agreements.
• Hardee’s Restaurants LLC files lawsuit against ARC Burger on Nov. 21, 2025, seeking to recover over $6.5 million in unpaid franchise fees and other obligations.

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