Business Franchises - INACTIVE

Dave Thomas' dream was to provide value, taste and options to his chain of restaurants. After working as a KFC franchisee for a couple of decades, Thomas decided to go it alone with the opening of his first Wendy's restaurant in 1969.

Seeing the potential to franchise his chain Thomas made franchising available in 1972 and Wendy's, as an entity, has never looked back.

Costs

Start up costs on a Wendy's franchise is not cheap, in fact, it might be a little higher than a few of the major franchises out there. If one were to consider buying the land required for their building and starting a franchise from scratch, the price tag could run as high as $1.9 to $3.3 million dollars. One the low end, those wishing to lease and add a building might be looking in the range of around $300,000 to $500,000.

The thing to remember is that this price tag includes everything to get one started down the road.

Inclusion

Wendy's requires new franchisees to attend a 5 to 5 ½ month course of study; one of the most intensive programs of all franchises. The goal is to maintain the Wendy's standard and leverage the franchisee's chances of success. During this training, franchisees (or their representatives) will learn how to be successful from a financial and quality assurance stand point.

Remember, Wendy's cooks their food to order, so knowing their process is important to the success of the franchise as a whole. The startup estimate also includes the cost of advertising, payroll for the first few months, and the actual food and supplies needed to start.

Long term costs

Wendy's requires a royalty fee of 4% of gross, or $1,000 a month, whichever is greater, and it doesn't end there. Franchisees are expected to pay in a little over 3% of gross for National advertising and .75% for local. So your average monthly contribution to the Wendy's franchise could be as high as 8% of your gross sales.

The good news is Wendy's has a long track record of advising the prospective franchisee on location and best practice, which again, helps ensure the new franchisee's success.

Cons

While 8% of gross might not seem too bad of a price to pay, there are other factors to consider when seeking a Wendy's franchise. Here are a few items that might not sit well with everyone:

• No exclusive territories- A franchisee license will not buy you an exclusive territory. This means you will still be in competition with other Wendy's and other Wendy's brands. While Wendy's does their best to "spread things out", this does not mean a franchisee is guaranteed that they will not be in direct competition with another store.


• Cost of startup- Wendy's prides its self on quality, but the stark reality is their startup costs run around 20 - 30% higher than many other hamburger franchises. Still, there is something to be said for their approach to training and how well they look out for their franchisees versus some of the less expensive brands.


• Waxing and Waning- Things have stabilized in the Wendy's world over the last couple of decades, but Wendy's has a long history of doing well punctuated by periods of irrelevance as a chain and a franchise. Franchisees are encouraged to stay active beyond their 8% contribution to advertising. One must still be on the look out to make sure their franchise does not dip back into a mediocre rating compared to other chains.

With over 6,500 nationally, Wendy's is a fair bit smaller than some of their competition (MacDonald's boasts over 14,000 stores in the US and 25,000 Subway sandwich shops). The quality and dining experience Wendy's offers is, however, as unique and filled with quality as it beloved founder. While a bit pricier than some other chains, Wendy's has a franchise program second to none.