Georgia Hardee’s Went Dark After a Second Buyout Failure

ARC Burger shut all 77 of its Hardee’s restaurants in mid-December 2025 after the burger chain sued over more than $6.5 million in unpaid fees. Georgia was the operator’s largest market, with more than 30 stores going dark even though the dining rooms were still selling food.

Those buildings had already failed once. A San Diego firm bought the leftovers of an earlier bankruptcy in 2023, then billed itself a seven-figure consulting fee while royalties to Hardee’s went unpaid. The brand is now taking the better boxes back as company stores.

Georgia Lost Its Hardee’s Map Overnight

For a lot of Georgia towns, Hardee’s was the biscuit counter and the late breakfast, not a national headline. When ARC Burger’s portfolio collapsed, the holes clustered in small cities and the outer metro, not just one bad neighborhood in Atlanta.

The Georgia Hardee’s locations that first closed stretched from Bouldercrest Road in Atlanta to Buford, Carrollton, Newnan, Bremen, and Franklin, then out through Rome, Calhoun, both McDonough stores, Stone Mountain, Warner Robins, Griffin, and three Valdosta-area addresses. A Hardee’s at 6671 Roswell Road in Sandy Springs, run by a different operator, stayed open.

Metro Atlanta lost almost its entire Hardee’s footprint in a few weeks. The remaining map is a scatter of stores that never belonged to ARC, plus whatever corporate kitchens the brand has been able to restaff.

GEORGIA TOWNS THAT LOST A HARDEE’S

• West Georgia: Carrollton, Newnan, Bremen, and Franklin were among the first to go dark in mid-December 2025.
• Northwest Georgia: Rome had two restaurants, with more stores in Calhoun, Adairsville, and East Ellijay.
• South metro: McDonough had two addresses, plus Griffin, Fayetteville, and Forsyth.
• South Georgia: Valdosta, Tifton, Thomasville, Moultrie, and Lakeland all sat in the same operator’s book.

More than 1,600 people across the ARC system lost their jobs just before Christmas. In towns where the biscuit drive-thru was one of a handful of sit-down options, the layoff was the whole local Hardee’s staff at once.

The Same Buildings Already Failed Once

ARC Burger was not a hometown operator that grew with the brand. High Bluff Capital Partners, which also owns Church’s Chicken, Quiznos, and Taco Del Mar, formed ARC to acquire 80 Hardee’s restaurants in August 2023. The seller was Summit Restaurant Holdings, which had already shut about 39 stores and gone into Chapter 11.

The purchase price was about $16 million. Three of the 80 locations closed soon after, leaving the 77 that later went dark. The amended complaint says ARC and Hardee’s signed 80 franchise agreements on August 15, 2023, and that Anand U. Gowda, High Bluff’s founder, signed 80 personal guarantees.

Gowda, Coady Smith, and Cary Devore are named as ARC’s members. All three are partners or board figures at High Bluff. The firm’s own portfolio page still describes ARC as the vehicle for those 80 Hardee’s restaurants.

THE PATH TO A DARK DRIVE-THRU

1. August 14, 2023: ARC and High Bluff sign a 10-year management consulting agreement.
2. August 15, 2023: Hardee’s and ARC sign 80 franchise agreements.
3. December 2024: ARC falls behind on royalties, advertising, rent, and other fees.
4. June 2025: Hardee’s sends its first notice of default, then a second in late August.
5. September 2025: Hardee’s terminates the franchise agreements but lets the stores keep running while both sides hunt for a buyer.
6. November 21, 2025: Hardee’s Restaurants LLC sues ARC and Gowda in Nashville federal court.
7. December 15 and 22, 2025: Hardee’s ends the post-termination deal, first for nine stores, then for the rest.
8. April 20, 2026: ARC files Chapter 7 in the Northern District of Georgia.

The same kitchens had now been through two failed owners in three years. Summit blamed long-term traffic declines and high occupancy costs in its own case. ARC later said the stores were in worse shape than it had been allowed to see.

A Million-Dollar Fee Sat Ahead of the Royalties

The franchise contracts required weekly royalties, ad-fund money, a digital tech fee, training fees, and, at subleased sites, rent and taxes. Hardee’s says those payments started slipping in December 2024 and that the unpaid stack, with interest, reached more than $6.5 million in unpaid fees, plus more than $10.5 million in early termination damages.

On the same week it became a franchisee, ARC signed a separate deal with its own owners. The management consulting agreement, dated August 14, 2023, required ARC to pay High Bluff the greater of $1 million or 5 percent of prior-year EBITDA each year, plus out-of-pocket costs, with unpaid fees accruing 10 percent interest. The term was 10 years and renewed on its own unless ARC accused High Bluff of gross misconduct or the ownership changed.

Wherever ARC’s profits were going, they were not being applied to past-due or ongoing fees owed to HR.

Amended complaint, Hardee’s Restaurants LLC v. ARC Burger LLC, U.S. District Court for the Middle District of Tennessee

The complaint also says “all signs” showed ARC was running the restaurants at a profit. That is the part that still stings in Georgia. The registers were ringing. The money was not arriving in Franklin, Tennessee, where CKE Restaurants Holdings, Hardee’s parent, keeps its offices.

WHERE THE TWO SIDES DISAGREE

• Hardee’s: ARC refused a workout, made only partial payments, and kept operating under the brand while the balance grew each week.
• ARC Burger: In a March 2, 2026 counterclaim, the operator said it was blocked from a full back-of-house inspection in 2023 and then faced failing equipment, old tech, and more than $10 million in unplanned repairs, plus weak marketing support and point-of-sale outages.

Judge Aleta A. Trauger denied Hardee’s bid to throw out that counterclaim on March 24, 2026. The fight did not last long as a live case. Gowda was dropped as a defendant on April 2, 2026. When ARC filed bankruptcy 18 days later, the Nashville suit was stayed.

Christmas Week Went Dark Across Nine States

Hardee’s terminated the franchise agreements in September 2025 and still let ARC operate, on the condition that ongoing bills stay current, while both sides looked for a buyer. The amended complaint says ARC did not stay current. The post-termination permission ended on December 15, 2025, for nine restaurants and on December 22, 2025, for the rest.

By mid-December, every ARC Hardee’s was closed. The stores sat in Alabama, Florida, Georgia, Illinois, Kansas, Missouri, Montana, South Carolina, and Wyoming. Hardee’s put the blame on the franchisee, not on empty dining rooms.

These closures are a result of 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 that would keep these restaurants open.

Hardee’s Restaurants, statement, December 2025

Solid, in the bankruptcy papers, meant $92.2 million in sales in the last full year, or nearly $1.2 million a store, down 3.5 percent from 2024. That is not a boom. It is also not a chain of empty rooms. The royalties, ad fees, and rent were a stacked claim on that cash, and so was High Bluff’s consulting bill.

South Carolina lost eight restaurants, in Charleston, Goose Creek, Summerville, Moncks Corner, St. George, Georgetown, Walterboro, and Hampton. Alabama’s only ARC store was at 1301 Maple Avenue in Geneva. Florida’s four, in Bonifay, Chattahoochee, Chipley, and Graceville, were later listed for a corporate restart.

Chapter 7 Left Creditors With Almost Nothing

ARC Burger LLC filed a Chapter 7 case in northern Georgia on April 20, 2026, case number 26-55202. Michael J. Bargar was named trustee. The petition listed between 5,001 and 10,000 creditors and said unsecured claims would likely recover nothing after costs.

THE BILL FROM A 77-STORE COLLAPSE

The creditor stack ran about 1,300 pages. The Georgia Department of Revenue was listed for $403,569. The South Carolina Department of Revenue was listed for almost $108,000. Former employees were listed for about $19,000 in unpaid wages. United Community Bank, the only secured creditor, took restaurant equipment it had financed.

A Chapter 7 filing of this size is a wind-down, not a rescue. The Nashville lawsuit froze. The people who made biscuits in Griffin and Goose Creek are unsecured names in a no-asset case.

Hardee’s Is Taking the Better Boxes In-House

Hardee’s did not wait on the trustee to put lights back in the windows it wanted. A company spokesperson said in April 2026 that 15 former ARC restaurants in Georgia, Missouri, and South Carolina had already reopened as corporate stores, part of a plan to assume ownership and resume operations at more than 40 of the closed sites.

By April 24, the company said more than 20 were back in those three states. Six of South Carolina’s eight ARC stores had reopened as corporate units. The Savannah Highway restaurant in Charleston and the Georgetown Hardee’s were listed as permanently closed. Job listings for Chipley and Graceville in Florida described those kitchens as now corporate owned.

WHAT HARDEE’S HAS PUT BACK ON THE MAP

• Mid-April 2026: 15 corporate reopenings confirmed in Georgia, Missouri, and South Carolina.
• Late April 2026: More than 20 former ARC stores back open in those same states.
• Company target: Ownership and operations at more than 40 of the 77 closed restaurants.
• Still dark: Small-town units the brand has not restaffed, including Georgetown, S.C., and Charleston’s Savannah Highway store.

The pattern is the one commercial landlords have been describing since the summer. The stronger real estate did not sit empty. Hardee’s stepped in as the tenant, which is a cleaner credit than a failed franchisee. The weaker boxes, the ones that already failed under Summit, are the ones still dark.

S&P Global Ratings said the ARC fight, and other franchisees missing royalties, fed an 8.7 percent year-over-year drop in the brand’s debt service coverage, while still calling the system a relatively stable performer among burger chains. Hardee’s listed 1,571 restaurants in its 2025 disclosure. The 2026 filing put the system at 1,485, with 1,287 franchised and 198 company-operated. ARC’s 77 stores were about 5 percent of the 2025 count, gone in a month.

A Second Operator Is Still in Court

ARC is not the only large Hardee’s operator in a fight with the franchisor. Paradigm Investment Group, which runs 76 restaurants in Alabama, Florida, Mississippi, and Tennessee, sued after default notices over digital fees, loyalty programs, and hours past 2 p.m. That case is set for a jury trial on March 30, 2027.

A 4 percent royalty on gross sales, plus ad spend, tech fees, and remodel demands, is the ordinary price of the brand. The ordinary price only works if store sales clear the stack. Hardee’s average store still sits well below McDonald’s, Wendy’s, and Burger King on unit volume, which is why a second distressed portfolio, Superior Star, later landed in its own bankruptcy with dozens of Hardee’s still on its books.

High Bluff’s other brands were not pulled into the Georgia filing. Church’s, Quiznos, and Taco Del Mar remain on the firm’s portfolio page beside the ARC Burger entry that never got a rewrite. Gowda is no longer a defendant in Nashville. The stores his company bought out of Summit’s wreckage are either corporate Hardee’s again, or empty.

In a lot of Georgia counties, the practical question is simpler than the docket. If the star is lit, it is probably a company crew. If the lot is empty, it is one of the boxes that already failed twice.