In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Wendy’s franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Wendy’s franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Wendy’s outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

Section IV – News updates on the Wendy’s franchise opportunity

Section V – Presentation and analysis of Wendy’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average, median, high, and low gross sales for the 393 company and 5,190 franchise Wendy’s Restaurants that had at least 52 weeks of consecutive sales as of January 2, 2022

• 2021 average, median, high, and low gross sales for the 270 non-traditional franchise Wendy’s Restaurants (transportation, fuel, food court, and military) that had at least 52 weeks of consecutive sales as of January 2, 2022

• average weekly gross sales and average weeks open for the 9 traditional company and 174 traditional franchise Wendy’s Restaurants that opened in fiscal year 2020 or 2021

• 2021 average, median, high, and low gross sales, cost of sales, gross profit, other operating expenses, rent, and restaurant EBITDA for the 294 traditional company Wendy’s Restaurants that had at least 52 weeks of consecutive sales as of January 2, 2022

Section VI – Key ratios, comparables, computations, and analyses for the Wendy’s franchise opportunity (exclusive content for Platinum subscribers)

Section I – Wendy’s Franchise Costs

• Wendy’s franchise costs, based on Item 7 of the company’s 2022 FDD:

Application Fee:  $5,000

Training Expenses:  $26,000 to $100,000

Initial Technical Assistance Fee:  $50,000

Real Estate, Permits, Construction of Standard Prototype Restaurant, and Site Improvements:

• Cash Purchase:  $1,147,000 to $2,515,000
• Financing (3 months):  $271,000 to $551,000
• Leasing (3 months):  $24,000 to $63,500

Equipment:

• Cash Purchase:  $331,000 to $420,000
• Financing (3 months):  $11,000 to $18,000

Signage:

• Cash Purchase:  $58,000 to $100,000
• Financing (3 months):  $2,000 to $4,000

Technology:

• Cash Purchase:  $65,000 to $100,000
• Financing (3 months):  $3,000 to $4,000

Opening Inventory and Supplies:  $13,000 to $18,000

Additional Funds – 3 Months:  $150,000 to $192,000

Grand Opening Advertising:  $7,500 to $10,000

Security Deposit, Utilities, Licenses, and Other Prepaid Expenses:  $20,000 to $165,000

Insurance Cost:  $15,000 to $35,000

Total Estimated Initial Investment:

• If you pay cash for Land, Building, Site Improvements, Equipment, Signage, and Technology:  $1,887,500 to $3,693,000
• If you finance the Land, Building, Site Improvements, Equipment, Signage, and Technology:  $556,500 to $1,135,000
• If you lease the Land, Building, Site Improvements, and finance the Equipment, Signage, and Technology:  $329,500 to $647,500

Section II – Wendy’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Wendy’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Application Fee:  $5,000
• Royalty:  4% of Gross Sales
• National Advertising:  3.50% of Gross Sales
• Local and Regional Advertising:  0.50% of Gross Sales

Section III – Number of Franchised and Company-Owned Wendy’s Outlets

Franchised

2019

• Outlets at the Start of the Year:  5,457
• Outlets at the End of the Year:  5,495
• Net Change:  +38

2020

• Outlets at the Start of the Year:  5,495
• Outlets at the End of the Year:  5,520
• Net Change:  +25

2021

• Outlets at the Start of the Year:  5,520
• Outlets at the End of the Year:  5,535
• Net Change:  +15

Company-Owned

2019

• Outlets at the Start of the Year:  353
• Outlets at the End of the Year:  357
• Net Change:  +4

2020

• Outlets at the Start of the Year:  357
• Outlets at the End of the Year:  361
• Net Change:  +4

2021

• Outlets at the Start of the Year:  361
• Outlets at the End of the Year:  403
• Net Change:  +42

Section IV – News Updates on the Wendy’s Franchise

• Wendy’s President and CEO 2022 End of Year Letter

• Here’s How Wendy’s Hopes to Attract More Women, Franchisees of Color

• Wendy’s Largest Shareholder Proposes to Buy Company

• Wendy’s Unveils New “Global Next Gen” Design Standard

• Wendy’s Drive-Thru Lanes Struggle, While Chick-fil-A Has the Fastest Service, Report Says

• Wendy’s Ranked No. 15 on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Wendy’s Franchise (Item 19, 2022 FDD)

Part 1 – U.S. Average Gross Sales for the Period January 4, 2021 to January 2, 2022 (Fiscal Year 2021)

• As of the end of fiscal year 2021 (January 4, 2021 through January 2, 2022) (“Fiscal Year 2021”), excluding Wendy’s Restaurants located in U.S. Territories, there were 403 domestic Wendy’s Company Restaurants and 5,535 domestic Wendy’s Franchise Restaurants.

• As used in this Item, “Gross Sales” is defined as all income less: taxes, refunds, and amounts from coupon or discount programs.

• The Restaurant sales volumes for Franchise Restaurants are based on a combination of weekly sales data submitted by Wendy’s franchisees, as well as automated data generated by the Restaurant point of sale system. Wendy’s has not independently verified that these reports were true and correct.

• Wendy’s only includes Restaurants which had at least 52 weeks of consecutive sales within the past 12 months.

• In Part 1, 10 Company Restaurants and 345 Franchise Restaurants are excluded as they had less than 52 consecutive weeks of sales. Of these Restaurants, during Fiscal Year 2021, there were 8 Restaurants owned by one or more affiliates of Wendy’s that closed permanently and 58 Restaurants owned by Wendy’s Franchisees that closed permanently. No Restaurants closed after being open less than 12 months.

Company Restaurants

• Number of Restaurants:  393
• Average Annual Gross Sales:  $2,105,786
• Median Annual Gross Sales:  $2,072,255
• Range of Annual Gross Sales:  $893,377 to $4,183,704
• Number and Percent of Restaurants at or Above Average:  186 (47.3%)

Franchise Restaurants

• Number of Restaurants:  5,190
• Average Annual Gross Sales:  $1,892,827
• Median Annual Gross Sales:  $1,791,231
• Range of Annual Gross Sales:  $285,004 to $5,636,894
• Number and Percent of Restaurants at or Above Average:  2,247 (43.3%)

Part 2 – U.S. Average Gross Sales for Non-Traditional Franchise Restaurants Only for the Period January 4, 2021 to January 2, 2022 (Fiscal Year 2021)

• Non-Traditional Company sites are not included as the sample size is insufficient.

• Transportation includes airports, train stations, bus stations, and ferry stations. In Fiscal Year 2021, most Transportation sites were airports.

• Fuel includes gas/c-store combinations, highway service plazas, and travel centers/truck stops.

• Food Courts span hospitals, malls, and universities/colleges.

• Military is inclusive of sites at military bases.

Transportation

• Number of Restaurants:  16
• Average Annual Gross Sales:  $2,575,356
• Median Annual Gross Sales:  $2,366,779
• Range of Annual Gross Sales:  $1,032,170 to $5,636,894
• Number and Percent of Restaurants at or Above Average: 7 (43.8%)

Fuel

• Number of Restaurants:  227
• Average Annual Gross Sales:  $1,923,528
• Median Annual Gross Sales:  $1,797,238
• Range of Annual Gross Sales:  $582,664 to $4,099,044
• Number and Percent of Restaurants at or Above Average: 96 (42.3%)

Food Court

• Number of Restaurants:  17
• Average Annual Gross Sales:  $1,013,183
• Median Annual Gross Sales:  $1,062,150
• Range of Annual Gross Sales:  $513,003 to $1,669,152
• Number and Percent of Restaurants at or Above Average: 9 (52.9%)

Military

• Number of Restaurants:  10
• Average Annual Gross Sales:  $1,634,248
• Median Annual Gross Sales:  $1,695,925
• Range of Annual Gross Sales:  $285,004 to $3,619,554
• Number and Percent of Restaurants at or Above Average: 5 (50.0%)

Part 3 – New Builds Weekly Gross Sales for New Restaurants Completed in Fiscal Year 2020 or 2021

• Part 3 reflects Traditional Company and Franchise Restaurants opened in fiscal year 2020 or 2021.

Company Restaurants

• Number of Restaurants:  9
• Number of Markets That Opened New Restaurants:  5
• Average Weekly Gross Sales:  $40,400
• Average Weeks Open:  52
• Number and Percent of Restaurants at or Above Average:  7 (77.8%)

Franchise Restaurants

• Number of Restaurants:  174
• Number of Markets That Opened New Restaurants:  80
• Average Weekly Gross Sales:  $38,100
• Average Weeks Open:  48
• Number and Percent of Restaurants at or Above Average:  75 (43.1%)

Part 4 – Historic Sales, Costs of Sales, Selected Expenses, and Profits for Traditional Company Restaurants

• The table below provides the following categories of historical financial information for the Fiscal Year 2021 for the 294 Traditional Company Restaurants that were open and in continuous operation for at least 52 weeks as of January 2, 2022 (“Traditional Company-Owned”): (a) Gross Sales; (b) Cost of Sales; (c) Gross Profit; (d) Other Operating Expenses; (e) EBITDA before Rent; (f) Rent; and (g) EBITDA after Rent.

• Wendy’s only includes Company Restaurants which had at least 52 weeks of consecutive sales within the past 12 months.

• In Part 3, 10 Company Restaurants are excluded as they had less than 52 consecutive weeks of sales. Of these Restaurants, during Fiscal Year 2021, there were 8 Company Restaurants owned by one or more affiliates of Wendy’s that closed permanently. No Restaurants closed after being open less than 12 months.

Gross Sales

• Average:  $2,203,267 (100.0%)
• Median:  $2,147,824
• Range:  $1,158,899 to $4,192,494
• Number and Percent of Restaurants at or Above Average:  132 (44.9%)

Cost of Sales

• Average:  $705,542 (32.0%)
• Median:  $691,594
• Range:  $401,850 to $1,276,370
• Number and Percent of Restaurants at or Above Average:  137 (46.6%)

Gross Profit

• Average:  $1,497,725 (68.0%)
• Median:  $1,452,308
• Range:  $737,712 to $2,916,124
• Number and Percent of Restaurants at or Above Average:  132 (44.9%)

Other Operating Expenses

• Average:  $1,054,828 (47.9%)
• Median:  $1,025,930
• Range:  $752,876 to $1,821,281
• Number and Percent of Restaurants at or Above Average:  121 (41.2%)

Restaurant EBITDA Before Rent

• Average:  $442,898 (20.1%)
• Median:  $430,295
• Range:  -$72,157 to $1,458,069
• Number and Percent of Restaurants at or Above Average:  140 (47.6%)

Rent

• Average:  $48,041 (2.2%)
• Median:  $7,179
• Range:  -$73,045 to $234,503
• Number and Percent of Restaurants at or Above Average:  129 (43.9%)

Restaurant EBITDA After Rent

• Average:  $394,856 (17.9%)
• Median:  $379,285
• Range:  -$200,188 to $1,458,069
• Number and Percent of Restaurants at or Above Average:  143 (48.6%)

Additional Operating Expenses for Franchised Restaurants

• Royalty (4% of Gross Sales):  $88,131

• “Cost of Sales” includes restaurant level food and paper expenses, but does not include any unallocated costs/benefits related to beverage rebates.

• “Gross Profits” means “Gross Sales” minus “Cost of Sales.”

• “Other Operating Expenses” includes the following costs: labor, payroll taxes, advertising fees, promotion, outside services, operating supplies, maintenance and repair, utilities, office supplies, legal and accounting fees, insurance, real estate and personal property taxes, business operating licenses, non-product income or expense, and worker’s compensation.

• “Other Operating Expenses” as used in this table does not include any unallocated costs/benefits related to Company Restaurant employee bonus, management training salaries, and other restaurant support costs.

• “Other Operating Expenses” also does not include any amounts related to rent, depreciation and amortization, interest, and income taxes.

• Franchised Restaurants are also required to pay Royalty Fees that Company Restaurants do not have to pay. Royalty amounts generally comprise 4% of Gross Sales for Traditional Restaurants, but may be impacted by various incentive offerings.

• The occupancy costs paid will vary significantly depending on location. Traditional Company Restaurants operate at sites owned by Wendy’s and sites leased by Wendy’s from third parties. Of the 294 Company Restaurants analyzed, 130 are on property owned by Wendy’s affiliates.

• “EBITDA after Rent” means earnings before interest, taxes, depreciation, and amortization, minus rent. Depreciation, amortization, and interest will vary based upon the purchase price and required investment for the specific Restaurant.

Section VI – Wendy’s Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️