DUBLIN, OHIO —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
In a bitter letter, 16 franchisees who own about 24 percent of the U.S. franchised branches of the 6,015-restaurant system accused Wendy’s board and senior executives of mismanagement, poor communications and a failure to heed owner-operators’ input about a potential sale of the company. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
In the Sept. 8 letter to chairman James Pickett and the other directors, the franchisees faulted Wendy’s management for allegedly inadequate product or operational testing and downsizings of items and portions despite the operators’ prior objections. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
The allegations, including that the franchisor had made incomplete or inaccurate communications that could have been “intentional or simply due to gross neglect or sloppiness,” were disputed by Pickett in a Sept. 14 reply. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Both letters came to light Sept. 18, the same day that an unnamed source quoted by The Wall Street Journal indicated that more than a dozen prospective bidders had signed confidentiality agreements with Wendy’s in connection with their potential interest in acquiring the company. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Pickett’s letter invited the franchisees to communicate with him and Wendy’s chief executive Kerrii Anderson about the testing and communications complaints, but said the company needed “specific input for constructive consideration of these and any other issues you may have.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
The dissidents claimed that franchisees had been left out of decisions being made by a special committee of directors that is to recommend a strategic direction that could include a sale of Wendy’s. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Only one of the potential bidders for Wendy’s has identified itself: the parent of the Arby’s sandwich chain, Trian Cos. Its nonexecutive chairman, Nelson Peltz, who heads investment funds that own 9.8 percent of Wendy’s International, has indicated that his group would be willing to pay as much as $3.6 billion, or $41 per share, for Wendy’s. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
The franchisees’ letter also leveled accusations of “an apparent lack of concern or even oversight by the board of directors,” and said that “as a result of this decline, the company has become vulnerable and is now up for sale.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
The franchisees, whose outlets are in various parts of the country, emphasized that the board’s strategic decisions about the company’s fate would have “enormous consequences” for operators, and said that the board “may well reap a very public renunciation long before any sale can be concluded” if it chooses “to ignore the input of the bulk of the franchise community.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
The letter also included recommendations that the board require Wendy’s management to source any new products from North American producers using North American labor. The franchisees also urged that the basic pricing structure of the chain’s Super Value Menu not be changed, and they requested that the company not enter into any long-term buying contracts. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Pickett, in his reply, said the franchisees appeared to be “under some misconceptions” regarding their domestic-sourcing advice because “historically, part of our fish processing has been done in China [and] the process in that regard is unchanged.” He confirmed that pricing strategies were under evaluation, as were purchasing contract considerations, but he gave no details. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Anderson’s rebuttal memo emphasized that decisions about products, pricing and contracts are made with customers and the entire Wendy’s system in mind. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Commenting on his decision to join the other 15 franchisees in writing to Wendy’s board, Darrell Valenti, whose Tampa, Fla.-based Valenti Management is a 120-unit Wendy’s operator in the mid-Atlantic and mid-South regions, said the franchisees “want to have more input into possible restructuring” that would have “a profound effect on the value of our franchise investments.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“We have a lot at stake,” he said. “The substantive issue is getting more two-way communication on issues that severely impact franchisees and the value of their restaurants. I don’t think that has been done.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Valenti declined to discuss specifics regarding portion sizes or other details the letter cited. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
One irate signer of the letter, who requested anonymity in discussing it, alleged that the only thing members of Wendy’s board “care about is their stock prices.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“We’re losing money,” he said, “and they don’t care because they want to sell the company. We’re the stupid ones for letting them do it.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
The franchisee said his sales had been flat all year as speculation swirled about a sale. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
In its annual report for 2006, Wendy’s said U.S. franchisees’ same-store sales last year rose 0.6 percent after declining 3.1 percent in 2005. The 4,638 domestic franchised Wendy’s at the end of 2006 had average annual sales of nearly $1.28 million, up from more than $1.26 million in the prior year, when there were 35 more franchised outlets, Wendy’s reported. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
In their separate written rebuttals, both Pickett and Anderson insisted they had provided ample opportunity for franchisees to participate in decisions that had yet to be made. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Pickett’s denied that an acquisition of Wendy’s was inevitable. In his reply he wrote that the franchisees’ “conclusion that the company ‘is now up for sale’are at best misunderstandings on your part and presume conclusions in advance even of deliberation.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Anderson’s memo said initiatives intended to further Wendy’s pursuit of a turnaround will be discussed in meetings this month and next of the Franchise Advisory Council and Wendy’s National Advertising Program and again at Wendy’s annual convention in late January. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Mark Behm, owner of 61 Wendy’s branches in Michigan and president of the Franchise Advisory Council, supported Pickett’s claim that Wendy’s had listened to franchisees about the brand’s strategic direction. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“Management has had a series or regional meetings that explained the strategic plan for the year,” Behm said. The meetings gave all franchisees plenty of opportunities to ask questions, he added. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“Obviously, it’s a difficult time,” Behm said. “This leadership team has their set of challenges, but they can’t be accused of not communicating.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Behm said the council he heads listens to input from all franchisees before advising Wendy’s on decisions about such matters as portion sizes, pricing and supply contracts. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“It’s hard to make a decision that pleases everybody,” he said. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Behm declined to state which products may have been reduced in size or were under consideration for reductions, citing competitive reasons. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“Everybody industrywide is reevaluating portion sizes these days,”he said. “Wendy’s has been a little slow to do it. This goes on all the time.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Likewise, Roger Webb, owner of 39 Wendy’s in Florida and Alabama and president of Wendy’s National Advertising Program, defended the franchisor by saying the industry constantly weighs cost pressures against portion sizes, especially of proteins. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Regarding the dissidents’ objection to new long-term purchasing contracts, Webb said some pacts must be longer-term than a few months to get a better deal. —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
“This is a bump in the road,”Webb said. “We don’t want to make a soap opera out of this. Wendy’s in general is a proud group of people. We grew up with Dave Thomas’s vision of quality and want to be the best.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.
Pickett’s letter to the dissidents also defended the company’s directors and said that “to suggest that we are not concerned or engaged would be uninformed, flatly wrong and disappointing, particularly in light of the special steps we have taken to reach out to you.” —Amid Wendy’s franchisees’ uncertainties about the future ownership of the brand, the angry operators of more than 1,100 branches of the No. 3 burger chain have blamed the Dublin-based franchisor for causing them financial troubles.