"Refranchising these markets will accelerate their development and will allow the company to focus its own development efforts in its core markets," says CKE president and CEO Andrew F. Puzder. "It will also help the company allocate its financial and operational resources more efficiently and thereby facilitate our growth plans for company-operated restaurants. We are in various stages of negotiations with potential and existing franchisees for the sale of the great majority of these restaurant locations. Most of the proposed transactions also include a development agreement. We are very encouraged by the level of interest we are seeing in the future of our Hardee's brand. We believe we are on the cusp of significant growth for both Hardee's and Carl's Jr. and it is encouraging to find so many qualified individuals who share our vision," he says.
As part of the program's launch, the company recently sold 18 units in eastern Atlanta, to franchise entity Biscuits and Burgers, LLC. As part of the transaction, Biscuits and Burgers, LLC has committed to build 25 new Hardee's restaurant locations in eastern Atlanta over the next seven years. The company intends to co-develop the Atlanta market.
The franchisees purchasing the 18 eastern Atlanta restaurants, Steve Rosenfield and Buddy Brown, currently operate Hardee's restaurants in Montana and Wyoming, as well as Carl's Jr. restaurant locations in Colorado and California. With the purchase of these additional restaurants, Rosenfield and Brown now own 50 restaurants under the Hardee's and Carl's Jr. flag. Rosenfield owns an additional 21 Carl's Jr. restaurants with a different partner.
"The Hardee's turnaround over the past few years is undeniable," franchisee Steve Rosenfield. "And we look forward to expanding our investment in the brand through our recent purchase of these 18 restaurants in eastern Atlanta, as well as building new Hardee's locations over the next seven years in this market."
A second recent refranchising transaction involved the sale of seven units in southern Alabama and Georgia, to franchise entity Ponder Enterprises, Inc., which intends to develop more restaurants in this market.
The franchisees purchasing the southern Alabama and Georgia restaurants, Dan Ponder, and Ernest Ponder, currently operate Hardee's restaurants in Alabama, Florida, and Georgia, and the purchase of these seven restaurants brings the total number of Hardee's restaurants owned by Ponder Enterprises, Inc. to 21. Dan Ponder serves as a member of CKE's board of directors.
"CKE has committed itself to strategic growth, and the Hardee's refranchising program seeks to achieve just that," franchisee and director Dan Ponder says. "As a director of the company, I support the initiative, and as a franchisee, I'm pleased to expand my ownership in Alabama and Georgia with the purchase of these seven restaurants."
CKE's Puzder adds, "These transactions are very positive for the company and are further proof that the Hardee's brand is well beyond the turnaround stage and is now firmly in a growth mode. We are pleased to enter into these refranchising and development agreements, and look forward to completing the refranchising of more than 200 restaurants in a number of our Hardee's markets."
As of the fourth fiscal quarter endeing Jan. 29, 2007, CKE Restaurants, Inc., through its subsidiaries, had a total of 3,105 franchised or company-operated restaurants in 43 states and in 13 countries, including 1,087 Carl's Jr. restaurants, 1,906 Hardee's restaurants and 96 La Salsa Fresh Mexican Grill restaurants.
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