We have been meaning to do a Wendy's franchise Review for quite some time just never got
around to it.
So today - Wendy's Franchise - is it a good investment choice, do they have a dark history
the few people know about and is there a subliminal message hidden in their logo - today on Franchise
city.
Wendy's is unquestionably one of the most iconic food brands out there.
Founded by Dave Thomas in Columbus Ohio in 1969 at one time Wendy's was the third largest
burger chain with over 6500 locations.
Can you guess who the 2 top burger chains are ahead of Wendy's?
If you answered McDonalds and Burger King you are correct.
A lot of people think Wendy's is still owned by founder Dave Thomas and his family who
started Wendy's.
But thats not the case.
Now Dave, who was an Orphan and high school dropout started the restaurant with the lofty
goal of having a place for his 5 kids to work eventually grew the chain to the fast food
giant it is today.
Now for the hidden history of Wendy's most of you don't know.
In 2008 Wendy's franchise was purchased by Triarc Companies for 2.34 billion.
Now Mr. Thomas had since passed away but the remaining family was apparently not happy
at this news.
Thomas' daughter Pam Thomas Farber said "It's a very sad day for Wendy's, and our family.
We just didn't think this would be the outcome," If her father were alive to hear news of the
buyout, "he would not be amused," she said.
Triarc was started way back in 1884 as the Deisel-Wemmer company, literally started with
one man rolling cigars in his basement and now buying Wendy's for over 2 billion.
True story.
How could a cigar company make so much money?
Now believe it or not pretty much everybody smoked cigars back in the day but when the
much healthier "cigarette" option became popular many people switched and thus began the demise
of the once very successful company, and really the demise of the once flourishing cigar industry
into the niche market it is today.
So eventually the company was delisted and sold off, new blood introduced and DWG began
to acquire controlling interests in other companies like propane, maintenance and storage,
textiles and steel.The driving force behind these million dollar acquisitions was a man
named Vic Posner who was not very well liked as he had a knack for hostile takeovers and
was one of the first to practice a leveraged buyout, often buying companies and installing
himself as chairman and president making him one of the highest paid executives of his
time.
He also got in trouble for using millions of dollars in company money for lavish vacations
and hotel stays for he and his family.
Very interesting story he ended up being sued by the SEC and shareholders, investigated
for fraud and all manner of things but let's get back to Wendy's!
Cut to 1993 DWG changed its name to Triarc companies and sold several holdings deciding
to now focus on food and beverage.
1997 Triarc acquires Snapple from Quaker Oats, check this out they paid $300 million
for Snapple while not that long before Quaker Oats had purchased the brand for 1.7 Billion
that is a big loss of 1.4 billion they lost selling Snapple.
Triarc later acquired Arby's and ultimately in 2008 acquired Wendy's changing it's name
from Triarc to Wendy's Arby's group.in 2011 they sold Arby's and became ----tada-----
The Wendy's company, Wendy's International LLC.
So an interesting history for sure but is a Wendy's franchise a good investment?
Let's take a look.
Taken from their 2018 Franchise Disclosure Documents the cost to invest in a Wendy's
franchise is $2,018,500 to $3,654,000 if you purchase for cash, $570,500 to $1,127,000
if you finance,and $323,500 to $628,500 if you lease.
Wendy's franchise Royalties amount to 4% of Gross sales, national advertising 3.5% of
gross sales, local advertising .5%
There are a few lawsuits in the FDD ranging from Wendy's allegedly misrepresenting trans-fats
in their foods,to Wendy's being sued by shareholders for "unjust enrichment" "acting in bad faith"
and gross mismanagement regarding the Triarc merger.
More recently back in 2016 as you may have heard Wendy's franchise got into trouble for
a massive data breech that affected over 1000 of their locations.
Wendy's first claimed only 300 restaurants were affected, then finally admitting that
over 1000 stores had been affected and customers names, credit or debit card information and
more was stolen.
Wendy's tried twice to have that one dismissed and finally agreed to settle for an undisclosed
amount.
You may have seen certain Wendy's in you area getting a makeover.
That is part of a company wide initiative to update their stores.
But some franchisees are not happy with that.
Back in 2014 Wendy's largest franchisee, Davco, who owned 140 Wendy's franchise locations
refused to perform the updates stating The capital costs required for these projects
�substantially exceed DavCo�s income and internally generated cash flow,� And these
renovations aren't cheap costing franchisees between $450,000 to as much as $1.9 million
per store.
Wendy's sued Davco to try and force them to perform the renovations but eventually they
got out of the situation by selling their stores to NPC.
Now for you investors, the 2018 FDD does show an increase in revenue for stores that performed
the renovations.
Wendy's has also had some negative press for refusing to join the Fair Food Program which
has been called �one of the great human rights success stories of our day�and helps
Florida's tomato workers with better wages and working conditions including monitoring
of harassment and other injustices . Now Walmart has joined the fair Food program, McDonalds,
Taco Bell, Subway and all it costs is one single penny per pound of tomatoes.
That small amount helps workers in a big way.
Now Wendy's decision was to just start buying tomatoes from Mexico and a lot of people are
unhappy.
The website boycott-wendys.org has some very eye opening information regarding working
conditions with a quote from Harper's Magazine describing subhuman conditions, with workers
forced to work without pay, trapped for months at a time in scorpion-infested camps, often
without beds, fed on scraps, and beaten when they tried to quit.
Now this type of behavior may have been what the Thomas family was worried about.
Come on Wendy's it's a penny a pound take a hint from what happened to Tim Hortons in
Canada, another big corporation that put money first and has had a real tough time in the
media lately.
some of you might remember in 2005 a customer claimed she found a human finger in her Chili
at Wendy's that cost the chain an estimated 21 million dollars.
Fingerlady was found guilty of conspiracy and grand theft and was sentenced to 9 years
in prison.
Apparently her husband, who was sentenced to 12 years, had gotten the finger from a
co-worker who had cut it off in an accident.
Wendy's has been selling off their company owned stores to franchisees they sold 223
stores in 2015 and 302 stores in 2016.
maybe they don't want to spend money
on renovations?
Before we wrap up Wendy's recently updated their logo can you see a subliminal message
hidden somewhere?
If you look really close you can see the word "MOM" in the ruffled collar of Wendy.
Wendy's said it was not intentional.
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Thanks for watching.