A Nevada-based investment group is suing Hardee’s to keep control of some 76 Hardee’s restaurants in three states, including 62 in Alabama.

Paradigm Investment Group, a previous “Franchisee of the Year” award-winner with the company, has filed a federal lawsuit against Hardee’s Restaurants, saying the company is “acting in bad faith and threatening to steal a long-standing and well-performing franchisee’s investment” by moving to terminate its franchise agreements.

According to the 43-page lawsuit, filed in the Middle District of Tennessee on April 14, Paradigm says that Hardee’s sent Paradigm a notice of default and termination January 15.

The notice came because the franchisee refused to use online ordering, implement third-party delivery, participate in the brand’s loyalty program and pay technology fees of $234,346.

According to Hardee’s, Paradigm’s locations do not adhere to standard business hours and close after lunch hours.

Hardee’s threatened to exercise its option to purchase all of the franchisee’s restaurants at reduced value and said Paradigm would owe more than $13 million in liquidated damages and lost future royalties,

According to court documents, Paradigm is one of the largest Hardee’s franchisees.

In an interview with Franchise Times, Paradigm CEO Don Wollan said the suit came after excessive turnover at the franchise’s executive level.

“Every time a new CEO comes in and wants to take some goofy risk or try something different that we instinctually know isn’t going to work, we’re left pulling shrapnel out of our body for several years,” he said.

The suit goes into several of the issues.

For example, Hardee’s allowed modified hours during the COVID-19 pandemic but issued a directive to return to standard business hours three years ago.

Paradigm used one Alabama location to show why its restaurants close early.

In the suit, Paradigm said its Hartselle location shows the benefit, as it has more store revenue closing early, which allows it to adequately staff the breakfast shift, going from $2,758 in average daily sales in 2021 working 16 hours a day, to $3,699 in average daily sales closing early.

This allowed Paradigm to cope with a “massive labor shortage” in Alabama.

At the same time, according to the suit, Hardee’s has 16 franchise-owned stores in the greater Birmingham area, which also do not “adhere to the minimum operating hours standard in many of its corporate locations.”

As for the technology fee, loyalty program and third-party delivery, those weren’t in the franchise agreement, Paradigm contends. Hardee’s unilaterally changed the operating manual to compel franchisees to comply.

“They were ramming things down our throat which weren’t in the franchise agreement,” said Wollan in the Franchise Times interview.

“And once you allow them to do that … You’ve got to create a business reason for me to want to opt into it, right? But what you can’t do is shove it down my throat. And once I let you shove it down my throat, I’ve created a precedent, and what would stop you from trying to force-feed every fee that you could imagine down to me?”

According to Paradigm’s website, it owns Hardee’s locations in Albertville, Alexander City, Andalusia, Montgomery, Atmore, Bay Minette, Decatur, Boaz, Bridgeport, Brundidge, Camden, Eufaula, Evergreen, Huntsville, Flomaton, Florala, Foley, Mobile, Grand Bay, Greenville, Gulf Shores, Hampton Cove, Hartselle, Hope Hull, Jackson, Loxley, Luverne, Madison, Meridianville, Millbrook, Monroeville, Moulton, New Hope, Opp, Pratt Cobbs Ford, Prattville, Priceville, Rainsville, Rogersville, Saraland, Selma, Athens, St. Stephens, Tallassee, Theodore, Thomasville, Troy, Tuscumbia, and Wetumpka.