One of the nation’s largest operators of a popular burger chain has filed for bankruptcy after months of legal disputes, unpaid franchise fees, and widespread restaurant closures across multiple states. The collapse reflects mounting pressure across the fast-food industry as franchisees grapple with rising costs, weaker consumer spending, and changing dining habits.
Franchise operator files Chapter 7 bankruptcy
ARC Burger, one of the largest Hardee’s franchisees in the country, filed for Chapter 7 bankruptcy liquidation on April 20, 2026, in the U.S. Bankruptcy Court for the Northern District of Georgia. The filing came after the company shut down all 77 of its Hardee’s restaurants in December 2025 following a dispute over unpaid royalties and other debts.
Court filings show the company reported more than $29 million in liabilities and estimated assets between $500,000 and $1 million. ARC Burger stated there would likely be no recovery for unsecured creditors.
The franchisee operated restaurants across Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming. More than 1,600 employees were reportedly affected by the closures.
Legal battle with Hardee’s intensified
The bankruptcy followed a lengthy dispute between ARC Burger and Hardee’s parent company over unpaid royalties, rent, advertising fees, and other franchise obligations.
Hardee’s sued ARC Burger in November 2025, alleging the franchisee owed more than $6.5 million after allegedly stopping payments in late 2024. According to court filings, the company had been allowed to continue operating temporarily while Hardee’s searched for potential buyers for the locations.
ARC Burger later argued it inherited struggling restaurants with deteriorating equipment and mounting repair costs after acquiring roughly 80 locations from bankrupt operator Summit Restaurant Holdings in 2023.
More franchise tension emerging
The ARC Burger collapse is not the only challenge facing the Hardee’s system. Another large franchisee, Paradigm Investment Group, which operates 76 Hardee’s restaurants in the Southeast, has been involved in a separate legal dispute with the company over operating requirements and technology mandates.
Despite the closures, Hardee’s has begun reopening some former ARC Burger restaurants under corporate ownership. The company reportedly plans to resume operations at more than 40 previously shuttered locations.
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