Wendys Franchise

Financing Details

Wendy's offers financing programs primarily through its affiliates, including leasing of company-owned restaurant properties and, in limited cases, direct or indirect financial assistance to existing franchisees. For leasing, terms vary, and a franchisee may sign a standard Lease or Sublease. Rent under a Sublease often exceeds the amount paid under the prime lease and includes a lease administration fee of at least $6,000 per year, subject to periodic increases. In certain situations, Wendy's or its affiliates may offer deferrals, loans, waivers, or setoffs to existing franchisees for ongoing obligations, rent, or real estate taxes. The interest rate for such financing is typically 8.5% simple annual. Prepayment penalties may apply for financing of $50,000 or more, or for loan terms of 3 years or longer, if the note is sold to a third-party purchaser, with an additional factor for terms longer than 7 years. Financing arrangements may be secured by satisfactory collateral, including the franchisee's business assets and personal assets.

Litigation Summary

Wendy's, through its current entity Quality Is Our Recipe, LLC and its predecessor Wendy's International, LLC, has faced several concluded lawsuits. These include four cases (James Graham, First Choice Federal Credit Union, Thomas Caracci, Jonathan Torres) related to credit card incidents that occurred between 2016 and 2017, all of which were settled and dismissed by 2021. Additionally, Wendy's predecessor, WIL, was involved in a concluded case in 2018 with the Washington Department of Financial Institutions regarding a lapsed franchise broker registration, which resulted in a consent order and payment of investigative costs. Another case involving WIL from 2016 (Juan Endara) related to payroll debit card fees was settled and dismissed. There is no pending litigation reported, nor any franchisor-initiated litigation involving the franchise relationship in the last fiscal year.

Renewal Conditions

To renew, Wendy's franchisees must provide written notice of their intent to renew between 12 to 18 months before the initial term expires. Franchisees must, at their own expense, renovate and modernize the Restaurant to meet Wendy's then-current standards and image. They must also have satisfied all monetary and contractual obligations to Wendy's and its affiliates in a timely manner throughout the initial term and be in substantial compliance with all agreement terms. Franchisees are required to demonstrate the right to possess the approved location for the renewal term, sign Wendy's then-current renewal franchise agreement (which may have different terms, including higher fees), pay a renewal fee of no more than 25% of the then-current Technical Assistance Fee, sign a general release of claims against Wendy's and its affiliates, and comply with any current training requirements for renewing franchisees.

Staffing Notes

Wendy's requires franchisees to maintain a competent, conscientious, and trained staff in sufficient numbers to promptly service customers, including having at least one manager on duty at all times. Franchisees are responsible for all employment decisions and functions, such as hiring, firing, establishing wages, disciplining, supervising, and record-keeping. Wendy's provides initial and ongoing training for franchisees, their Operators, and initial management employees and restaurant crew, which includes online, classroom, and on-the-job components. Franchisees pay an annual licensing fee for access to Wendy's online training programs (WeLearn). Wendy's also offers optional resources and tools on WeConnect to help franchisees with employment promises, labor guides, and crew forecasting, emphasizing the franchisee's responsibility to develop and manage their own employment processes in compliance with applicable laws.