May 05, 2026|Franchise Frontlines
May 5, 2026 | United States District Court for the Middle District of Tennessee | Unpublished Memorandum
Executive Summary
In an unpublished memorandum, Judge Aleta A. Trauger of the United States District Court for the Middle District of Tennessee granted defendants’ motion to transfer a franchise enforcement dispute brought by Hardee’s Restaurants LLC to the United States District Court for the Middle District of Florida. Hardee’s sued Arbor Capital Partners, LLC, individual guarantors, and ACP Restaurant Management, Inc. for breach of a Hardee’s Franchise Agreement, Franchise Agreement Guarantee, Sublease Agreement, and Sublease Guarantee after the franchisee allegedly closed a franchised restaurant in Ocoee, Florida and failed to satisfy ongoing obligations. Defendants argued that the Tennessee court lacked personal jurisdiction over them for the Sublease claims, that venue was improper for those claims, and that the case should be transferred to Florida. Hardee’s argued that the Franchise Agreement’s forum provision applied to the broader franchise relationship, including the Sublease and guarantees. The court agreed with Hardee’s that the Franchise Agreement and Sublease were inextricably intertwined and that defendants had consented to personal jurisdiction and venue in Tennessee. But the court found the forum clause permissive rather than mandatory and transferred the case to Florida under 28 U.S.C. § 1404(a), concluding that the restaurant, defendants, property, relevant events, and Florida-law issues were centered there.
Relevant Background
Hardee’s Restaurants LLC is the franchisor of Hardee’s restaurants. In October 2014, Hardee’s and Arbor Capital Partners entered into a Franchise Agreement that gave Arbor a twenty-year license to operate a Hardee’s restaurant in Ocoee, Florida. The individual defendants and ACP Restaurant Management signed a Franchise Agreement Guarantee. At the time the parties entered the Franchise Agreement, Hardee’s was headquartered in Missouri. In 2017, Hardee’s moved its corporate headquarters to Franklin, Tennessee.
The Franchise Agreement contained a Missouri choice-of-law provision and a forum provision. The forum provision required the franchisee to file suit against Hardee’s only in the federal or state court where Hardee’s principal offices were located at the time suit was filed. It also allowed Hardee’s to file suit where its principal offices were located at the time suit was filed, where the franchisee resided or did business, where the franchised restaurant was or had been located, or where the claim arose. The franchisee consented to personal jurisdiction and venue in those courts. The Franchise Agreement Guarantee incorporated that forum provision by reference.
The parties also entered into a Sublease for the Florida restaurant premises. The Sublease had been executed roughly one month before the Franchise Agreement, but it became effective one day after the Franchise Agreement’s effective date and was entered in connection with the same restaurant transaction. The Sublease required the premises to be used solely and exclusively as a Hardee’s restaurant operated in accordance with the transaction documents. Those documents included the Franchise Agreement. The Sublease contained a Florida choice-of-law provision but did not contain its own forum-selection clause.
The agreements cross-referenced one another in several important ways. The Sublease identified the Franchise Agreement and related documents as part of the transaction documents, required operation of the premises as a Hardee’s restaurant in accordance with those documents, and treated default under the transaction documents as a default under the Sublease. The Franchise Agreement likewise gave Hardee’s the right to terminate if the franchisee remained in default under another agreement with Hardee’s or under a real estate lease relating to the franchised restaurant.
Hardee’s alleged that, in August 2023, the franchisee ceased operating and closed the restaurant in violation of the Franchise Agreement. The parties then engaged in discussions regarding the unauthorized closure, the condition of the premises, and the franchisee’s ongoing obligations under the Franchise Agreement and Sublease. Hardee’s later sent a notice of default and termination under the Franchise Agreement, a demand for payment, and a notice of default and termination under the Sublease. Hardee’s then filed suit in Tennessee seeking damages for breach of the Franchise Agreement, Sublease, and related guarantees.
Defendants moved for partial dismissal and transfer. They argued that the Tennessee court lacked personal jurisdiction over them for the Sublease claims because the Sublease did not contain a forum clause and because the defendants and restaurant were located in Florida. They also argued that venue was improper for the Sublease claims and, alternatively, that the entire case should be transferred to the Middle District of Florida.
Decision
The court first addressed personal jurisdiction. Defendants submitted declarations stating that they were Florida residents, that Hardee’s was not based in Tennessee when the agreements were signed, that negotiations did not occur in Tennessee, that they had not traveled to Tennessee for the business relationship, and that the entity defendants did not own or operate restaurants in Tennessee. Defendants argued that entering into the Sublease with Hardee’s did not create minimum contacts with Tennessee.
Hardee’s responded that defendants had consented to jurisdiction through the Franchise Agreement. Hardee’s emphasized the Franchise Agreement’s forum provision, which allowed Hardee’s to sue where its principal offices were located at the time suit was filed and documented the franchisee’s consent to jurisdiction and venue in those courts. Hardee’s argued that the Franchise Agreement and Sublease should be read together as part of the same integrated franchise transaction.
The court agreed with Hardee’s. It observed that, although clearer drafting could have avoided the dispute, the issue turned on contract interpretation. Under either Florida or Missouri law, related documents executed at or near the same time, in the course of the same transaction, and concerning the same subject matter may be read and construed together. The court found that the Sublease and Franchise Agreement satisfied that standard.
The court emphasized that the Sublease was entered pursuant to the asset-purchase transaction and the anticipated Franchise Agreement. The Sublease existed so the franchisee could operate the premises as a Hardee’s restaurant. It required the restaurant to be operated in accordance with the transaction documents, treated the Franchise Agreement as part of those documents, and made default under the Franchise Agreement a default under the Sublease. The Franchise Agreement also made a default under related agreements or real estate leases a basis for default or termination. In the court’s view, the documents were inextricably intertwined and had to be read together.
The court then applied the Franchise Agreement’s forum provision to the Sublease claims. Although the Franchise Agreement and Sublease contained different choice-of-law provisions and gave rise to different damages, those distinctions did not prevent the court from reading them together. The court found that the same alleged conduct—closing the restaurant, failing to operate, failing to pay, and failing to satisfy post-closure obligations—implicated both agreements. Because the Franchise Agreement’s forum provision covered “any disputes” and because the defendants had consented to jurisdiction and venue in the courts identified by that clause, the court held that defendants had consented to jurisdiction and venue in Tennessee for disputes arising under the franchise relationship, including the Sublease and Sublease Guarantee claims.
That ruling defeated defendants’ Rule 12(b)(2) and improper-venue arguments. The court held that the forum provision made a separate minimum-contacts analysis unnecessary. It also held that defendants could not object to venue as improper after consenting to venue in Tennessee through the related agreements.
The court then addressed transfer under Section 1404(a). The threshold issue was whether the case could have been brought in the Middle District of Florida. The parties did not dispute that it could. The defendants resided in Florida, the restaurant was located in Florida, and the Franchise Agreement’s forum provision permitted Hardee’s to file suit where the restaurant was located or where the franchisee resided or did business.
The court next evaluated the forum clause. It found that the clause was permissive, not mandatory. The clause allowed Hardee’s to sue in several possible courts and stated that the franchisee consented to jurisdiction and venue in those courts. It did not require exclusive litigation in Tennessee. Because the clause was permissive, the court applied the ordinary Section 1404(a) transfer analysis rather than treating the clause as controlling.
The court weighed the relevant private and public interest factors. Hardee’s choice of Tennessee weighed in favor of keeping the case there, but only modestly. Although Hardee’s was headquartered in Tennessee when it filed suit, the court found that the relevant conduct did not occur in Tennessee. The parties’ relationship had some connection to Tennessee because Hardee’s had moved its headquarters there, but the restaurant, premises, defendants, alleged closure, and property-condition issues were in Florida.
The court found that the location of events weighed heavily in favor of Florida. The Sublease had almost no connection to Tennessee and called for application of Florida law. Notices and rent payments under the Sublease were directed to addresses outside Tennessee. The claims focused heavily on the closure, condition, repair, restoration, and operation of the Florida restaurant premises. Although some communications about breach were sent from Tennessee, and Hardee’s felt the effects of the alleged defaults at its headquarters, the operative restaurant-level events occurred in Florida.
The court found the witness factor largely neutral because defendants did not specifically identify non-party witnesses whose testimony would be required. It also found the convenience-of-parties factor neutral. Although defendants were in Florida, and a related Florida state-court case had existed, that case had already reached a jury verdict, reducing concerns about simultaneous litigation.
The public factors favored transfer. Florida had a strong interest in the dispute because the restaurant and premises were in Florida and the Sublease called for Florida law. Tennessee had some interest because Hardee’s was headquartered there, but neither agreement called for Tennessee law. The court also noted that enforcement of any judgment would be more manageable in Florida.
After weighing the factors, the court concluded that transfer was warranted. The court found that transfer would not merely shift inconvenience from defendants to Hardee’s. Florida was a proper venue, the parties had consented to that venue, the defendants and restaurant were located there, the relevant events occurred there, and judgment enforcement would be more manageable there. The court therefore transferred the case to the Middle District of Florida.
Looking Forward
This decision offers a useful reminder that forum provisions and related franchise transaction documents need to work together. Hardee’s successfully defeated dismissal by showing that the Franchise Agreement and Sublease were part of the same integrated restaurant transaction. The court treated the agreements as inextricably intertwined and applied the Franchise Agreement’s forum provision to the Sublease claims. That is a favorable point for franchisors seeking to enforce related agreements as part of one franchise relationship.
But the transfer ruling provides an equally important drafting lesson. The forum provision gave Hardee’s multiple filing options and documented the franchisee’s consent to jurisdiction and venue in those courts. That was enough to defeat personal-jurisdiction and improper-venue challenges. It was not enough to prevent transfer because the clause was permissive rather than mandatory. If a franchisor wants to lock venue in its home forum, it should use clear mandatory language and should avoid relying on a permissive clause that merely allows suit in several places.
Franchisors should also coordinate dispute-resolution provisions across the full transaction set. Franchise deals often include a Franchise Agreement, personal guarantees, subleases, asset-purchase agreements, development agreements, equipment leases, financing documents, collateral assignments, software agreements, and amendments. If those documents contain different choice-of-law provisions, inconsistent forum provisions, or missing venue language, defendants may use those gaps to challenge jurisdiction, seek dismissal, or transfer the case. The court in this case resolved the issue in Hardee’s favor, but it also noted that clearer drafting could have avoided the litigation.
The case is particularly relevant where franchisors sublease restaurant premises or otherwise control real estate. Real estate documents may involve local law, local property conditions, local witnesses, and local enforcement issues. Even if the Franchise Agreement selects the franchisor’s home forum, a court may still conclude that the practical center of a sublease dispute is the state where the restaurant is located. Franchisors should consider whether they want all disputes centralized in one forum or whether real estate-specific disputes should be litigated where the property sits. Either approach can be reasonable, but the contract documents should say so clearly.
The decision also illustrates the difference between personal jurisdiction, venue, and transfer. Consent to jurisdiction and venue may prevent dismissal, but it does not always prevent transfer. A court may still weigh convenience, witnesses, location of events, applicable law, local interests, and judgment enforcement under Section 1404(a). Franchisors should not assume that winning the jurisdictional argument ends the forum fight.
For franchise enforcement, the case underscores the value of cross-default provisions. The court relied on language making default under the Franchise Agreement relevant to the Sublease and default under related leases relevant to the Franchise Agreement. Those provisions helped show that the agreements were interdependent. Franchisors using real estate or financing documents should preserve that architecture so that abandonment, nonpayment, closure, and failure to maintain the premises can be addressed comprehensively.
The ruling also shows why post-closure documentation matters. Hardee’s alleged unauthorized closure, negotiations over the premises, notices of default and termination, a demand for payment, unpaid rent and taxes, repair and restoration costs, and liquidated damages. Those allegations tied the Franchise Agreement and Sublease together and gave the court a concrete basis to treat the dispute as one integrated franchise relationship. Franchisors should maintain a disciplined record when a franchisee closes or abandons a location, including notices, premises condition reports, rent and tax records, communications, and remediation costs.
This decision should not be read as weakening forum-selection clauses. The clause did what a permissive clause does: it secured consent to personal jurisdiction and venue in the franchisor’s selected forum. The problem for Hardee’s was that the clause did not require the case to remain there. The practical takeaway is more precise: permissive forum clauses are useful, but mandatory forum clauses provide stronger protection when a franchisor wants to avoid transfer.
Taken together, Hardee’s Restaurants v. Arbor Capital Partners is a strong drafting and enforcement reminder for franchisors. Related agreements should be integrated intentionally, cross-default provisions should be clear, guarantees should incorporate dispute-resolution provisions, and forum clauses should say exactly what the franchisor intends. Where the goal is optionality, permissive language may work. Where the goal is certainty, mandatory language is better.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
