ARC Burger, LLC, a significant franchisee of Hardee’s restaurants, has officially filed for Chapter 7 bankruptcy, a move that comes amid an ongoing legal dispute with the fast-food chain over considerable outstanding payments. The filing, made on April 20, 2026, details liabilities estimated to be more than £29 million, as revealed in court documents.
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The turmoil began when Hardee’s initiated a lawsuit against ARC Burger in November 2025, alleging that the franchisee had failed to fulfil its financial obligations, amounting to over £6.5 million, in accordance with franchise agreements. This legal action set into motion a series of events that culminated in the bankruptcy filing, classified under Chapter 7, which involves the liquidation of assets to repay creditors.
In its bankruptcy declaration, ARC Burger estimated it owes between 5,001 and 10,000 creditors. While liabilities are projected to range between £10 million and £50 million, its assets are estimated at only £500,001 to £1 million. This stark contrast raises concerns about the financial stability of the franchisee, which operates 77 Hardee’s locations across nine states in the US.
As part of the bankruptcy process, ARC Burger indicated that following the settlement of administrative expenses, there would be no funds available for unsecured creditors. This is a significant point, reflecting the dire financial straits the company finds itself in after years of issues related to outstanding payments to Hardee’s.
Hardee’s lawsuit, filed on November 21, 2025, accused ARC Burger of breaching contract conditions due to defaulting on several payments. According to the complaint, Hardee’s had made attempts to assist ARC with its financial difficulties, including proposing alternative payment plans for the overdue amounts. However, despite these efforts, ARC allegedly declined to engage in a payment agreement, further intensifying the strained relationship between the franchisee and the franchisor.
In the documents, Hardee’s claimed that even though ARC appeared to be successfully operating its restaurants, it failed to allocate profits towards the outstanding debts owed to the fast-food chain. Such actions prompted Hardee’s to terminate its franchise agreements with ARC in September 2025 while allowing the franchisee a transitional period to locate a buyer, provided that payments were kept up to date.
The lawsuit also highlights ARC’s ties to High Bluff Capital Partners, a private investment firm known for investing in various food brands, including Church’s Chicken and Quiznos. The firm established ARC in August 2023 to acquire a portfolio of Hardee’s franchised outlets, casting further doubt on the management and operational strategies in play.
Following the bankruptcy filing, a court order has temporarily paused Hardee’s litigation against ARC, pending the bankruptcy proceedings. Both parties were unreachable for comment at the time, leaving many questions about the future of the franchisee and its restaurant locations.
The unfolding situation emphasises the challenges faced within the fast-food franchise sector, particularly during economic fluctuations and shifts in consumer spending. It also sheds light on the complexities of franchise ownership, including the implications of contractual obligations and the risk associated with franchisee failure to manage finances effectively.
As the case progresses, it remains crucial for all stakeholders involved, including employees, creditors, and customers, to monitor the developments closely. The outcome will not only determine the fate of ARC Burger and its locations but may also set a precedent regarding franchisee obligations in similar disputes.