Wendy’s is up (at least it was until the coronavirus pandemic swept the nation). The burger giant grew sales 5.9% in the fourth quarter of 2019 and 4.4% for the full year. With those numbers, it’s not surprising people want to get into the Wendy’s game. But how much does it cost to franchise a Wendy’s? What do you need to start the business? And how are you going to touch base with the company’s franchise arm? This guide will tell you all there is to know about setting-up your Wendy’s franchise.
Wendy’s Store Franchise and Market
Dave Thomas started Wendy’s operations in 1969. Just three years later, Wendy’s opened it doors for franchisees. The first franchise opened in Indianapolis, Indiana. From there, Wendy’s expanded its operations to Canada. And by 2020, after five decades, Wendy’s reached a total of more than 6,790 units globally.
The fast-food restaurant became famous for its square-shaped burgers, which, according to Thomas, allows the consumers to see the true quality of their meat. Also, the shape symbolizes that the company does not cut corners.
Wendy’s, as a company, is known to initiate programs that could improve the QSR industry. In 2018, they shared that they would outsource their tomatoes from greenhouse farms for their North American restaurants. They also build restaurants that feature ‘Smart 55’ design. These structures have a smaller footprint than a conventional Wendy’s restaurant.
To date, Wendy’s is still included in the most sought-after QSRs on a global scale, together with McDonald’s, Burger King, Subway, and KFC.
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How Much Does a Wendy’s Franchise Cost?
Let’s talk about Wendy’s franchise cost. How much do you need to shell out as an initial investment?
It will be between $318,850 – $3,689,350. This may vary depending on leasing, financing, or paying for the land, structure, materials, including the signage.
You can find the breakdown of the projected initial investment for Wendy’s, which covers the first quarter of your operations.
Initial Cost Breakdown
Name of Fee
Low
High
Application Fee
$5,000
$5,000
Training Expenses
$26,000
$100,000
Initial Technical Assistance Fee
$50,000
$50,000
Real Estate, Permits, Construction of Standard Prototype Restaurant and Site Improvements: Cash PurchaseFinancing (3 months)Leasing (3 months)
$1,240,000 $271,000 $24,000
$2,515,000 $551,000 $63,500
Equipment and Signage:Cash PurchaseFinancing (3 months)Leasing (3 months)
$375,000$16,000N/A
$620,000$26,000N/A
Opening Inventory and Supplies
$10,000
$16,000
Additional Funds – 3 Months
$150,000
$192,000
Grand Opening Advertising
$7,500
$10,000
Security Deposit, Utilities, Licenses and Other Prepaid Expenses
$20,000
$165,000
Insurance Cost
$10,000
$35,000
Estimated Total: If franchisee pays for Land, Building, Improvements, Equipment and Signage
$1,893,850
$3,689,350
Estimated Total: If franchisee finances the Land, Building, Improvements, Equipment and Signage
$565,850
$1,131,350
Estimated Total: If franchisee leases the Land, Building, Improvements, Equipment and Signage
$318,850
$643,850
Ongoing Cost Breakdown
It is also essential to consider the additional fees that a franchisee might incur during operations. This includes Royalty Fees, National and Local Advertising, and Training, to name a few. You can check the list below for the ongoing fees when you franchise a Wendy’s restaurant.
Fees
Type of Fee
Amount
Royalty
4% of Gross Sales
National Advertising
3.5% of Gross Sales.
Local and Regional Advertising
0.5% of Gross Sales.
Transfer
$5,000 minimum
Renewal
An amount which is not greater than 25% of the then-current Technical Assistance Fee.
Late Fee/Interest
$100 plus interest on the overdue amount from the date it was due until paid, at the(i) rate determined by the franchisor, or(ii) maximum legal rate, whichever is less.
Development Agreement – Development Obligations Fee
Only applicable to development agreement. Upon failure to open restaurant in accordance with development schedule, $5,000 monthly payment beginning in the first month after required open date until earlier of (a) actual open date of restaurant and (b) 10 years from required open date of restaurant and, if franchisees previously paid a development fee, $50,000 or the then-current Technical Assistance Fee will be forfeited from the amount paid.
Review of Proposed Offering Materials of Franchisee
$10,000 or a greater amount necessary to reimburse Wendy’s for its legal, accounting, and other costs.
Aloha – Software Maintenance and Hosting Services Fee
Software Maintenance Fee ($500 per restaurant per year); Hosting Service Fee ($25 per restaurant per month).
Cyber Insurance Policy Premium Payment
A per restaurant fee of $360, which the per-restaurant amount is subject to change on an annual basis according to overall policy premiums.
Foundational Security Products and Services
$3,903.08 – $5,403.08 per restaurant.
Payment System Support Services (WePayment)
$23 per restaurant for Payment System Support Services and Payment Device Support Services; and a one-time charge of $377.40 for Deployment Services and Configuration Services.
The Audit, Attorney’s Fees, Indemnification, Rent, and Training costs may vary depending on the scope of services. The detailed list of fees can be found from Wendy’s Franchise Disclosure Document.
How Do I Start a Wendy’s Store Franchise?
If you want to start your own Wendy’s franchise, you can visit their website to learn more about the requirements.
Before a franchisee can start its operations, the operator, together with the management and the crew should complete an initial training program. This must satisfy the franchisor’s requirements. The training will usually take about at least 20 weeks. The franchisor may recommend additional courses and training programs for on-boarding team members.
Franchisees will operate on Wendy’s pre-approved locations, and the former will not have exclusive rights with the operation of the fast-food restaurant. The franchisor encourages the franchisee to be involved in the day-to-day operations of the restaurant. Otherwise, an operator, upon the franchisor’s approval, must be designated to manage and supervise the restaurant.
Note, the initial franchise agreement is good for 20 years and can be renewed for ten years, provided that the franchisee is in good standing with Wendy’s.
If you want to be a part of this global brand, and if you believe you are eligible to cover Wendys’ franchise cost, go ahead and take the next step.
