Do you want to start a restaurant business by buying Wendy’s franchise? If YES, here is how much it cost to open a Wendy’s franchise.
Wendy’s is a chain of fast food restaurants based in Dublin, Ohio and owned by the United States corporation Wendy’s International, Inc. There are over 6,715 Wendy’s restaurants worldwide.
The chain is famous for its chili. Also, it is known for its Frosty dairy desserts, their burgers are square, their fresh and never frozen ground beef, and its making of all sandwich items to order. Unlike most fast food chains, Wendy’s historically did not serve breakfast, except for stores in Puerto Rico.
The franchisor is Quality Is Our Recipe, LLC. One of the franchisor’s predecessors and intermediate corporate parents is Wendy’s International, Inc. The franchisor grants franchises for the operation of a distinctive style of quick-service restaurant.
The franchisor, along with some of its affiliates, also owns and operates Wendy’s Restaurants and on occasion leases and sells Wendy’s Restaurants as well as other real estate interests owned by the franchisor and/or its affiliates. Franchisees operate a quick-service restaurant which offers a limited menu of prepared to order food, including hamburgers, chicken sandwiches and complementary items.
How Much It Cost to Open a Wendy’s Franchise
- Financial Requirements
The minimum financial requirements for new multi-unit franchisees or franchisee groups are:
- Minimum net worth of at least $5,000,000 U.S. ($2,000,000 Canada).
- Minimum liquid assets of at least $2,000,000 U.S. ($1,000,000 Canada).
Detailed Financial Requirement/Cost Implication for Buying Wendy Franchise
- 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 Purchase
- Financing (3 months)
- Leasing (3 months)
Equipment and Signage:
- Cash Purchase
- Financing (3 months)
- Leasing (3 months)
- Opening Inventory and Supplies: $10,000 – $14,000
- Additional Funds – 3 Months: $150,000 – $175,000
- 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 $2,018,500 – $3,669,000
- Estimated Total: If franchisee finances the Land, Building, Improvements, Equipment and Signage $570,500 – $1,131,500
- Estimated Total: If franchisee leases the Land, Building, Improvements, Equipment and Signage $323,500 – $643,500
Below are other fees to note;
- Royalty: 4% of Gross Sales
- National Advertising: 3.5% of Gross Sales.
- Local and Regional Advertising: 0.5% of Gross Sales.
- Additional Training: Will vary under circumstances.
- Transfer: $5,000
- Renewal: An amount which is not greater than 25% of the then-current Technical Assistance Fee.
- Audit: Costs and expenses of audit, including travel, lodging, wages, accounting and legal costs, and interest on any understated amount.
- 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.
- Costs and Attorney’s Fees: Will vary.
- Continuous Operations Fees: Upon unapproved early termination of the Franchise Agreement, the sum of the average monthly royalty fee and the average Advertising Contribution due under the Agreement for the 12-month period prior to termination (or the average monthly royalty and the average Advertising Contribution due under the Agreement if operating less than 12 months) multiplied by the lesser of (i) 36 or (ii) the number of months remaining on the Term of the Franchise Agreement.
- 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 : $2,361.08 per Restaurant
- Payment System Support Services (WePayment): $23.00 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
Steps on How to Get Wendy’s Franchise
If you are interested in pursuing a Wendy’s franchise, please complete and submit Wendy’s Prospective Franchise Questionnaire on their website. This is a preliminary questionnaire only. A Prospective Franchise Application will be required if Wendy’s and the applicant agree to continue discussing franchise opportunities.
Depending upon the company’s review, and the existence of potential opportunities, Wendy will provide additional information about Wendy’s, including Wendy’s Franchise Disclosure Document (“FDD”) and a Prospective Franchise Application.
You may submit additional information and any questions to Wendy’s Franchise Development Department at:
The Wendy’s Company
Attn: Franchise Development Department
One Dave Thomas Blvd.
Dublin, OH 43017
Wendy’s Non-Traditional Development
One component of Wendy’s overall growth strategy is non-traditional development. Qualified franchisees can develop restaurants in special venues such as:
- College and University campuses
- Highway travel plazas
- Military bases
- Office buildings
These high-visibility, high-traffic locations offer convenient access to customers and may be an attractive investment opportunity for franchisees. Developers of the various venues understand that adding Wendy’s to their location provides a diverse menu with a variety of freshly made, great-tasting food.
Wendy’s non-traditional development team provides support and experience to franchisees pursuing non-traditional opportunities, including prototype restaurant elevations and layouts, kitchen equipment designs, and assistance with project proposals.
- Territory Granted
Franchisees will operate their Wendy’s Restaurant at a specific location approved by the franchisor and identified in the Franchise Agreement. Franchisees have no exclusive rights or territory associated with the operation of your Wendy’s Restaurant.
- Obligations and Restrictions
The franchisor strongly recommends that franchisees participate personally in the actual operation of the Wendy’s Restaurant. If the franchisee elects not to participate in the Wendy’s Restaurant’s day-to-day operations, an individual “Operator” must be designated to supervise the operation at all times.
The Operator must be approved by the franchisor, have the ability to operate and supervise the Wendy’s Restaurant, satisfy the franchisor’s educational, managerial and business standards, and maintain an ownership interest as the franchisor may specify.
Franchisees must use the Wendy’s Restaurant premises solely for the operation of the Franchised Business, to keep the business open and in normal operation for those hours and days as the franchisor may specify, and to refrain from using or permitting the use of the premises for any other purpose without first obtaining the franchisor’s written consent.
Franchisees also must operate the Wendy’s Restaurant in strict conformity with those methods, standards, and specifications as specified in the Manual or other writing.
- Term of Agreement and Renewal
The length of the initial franchise term is 20 years. The renewal term is for 10 years, if franchisees are in good standing and comply with renewal conditions.
- Financial Assistance
On occasion, the franchisor and / or its affiliates cooperate with various lenders in the lenders’ efforts to provide financing to qualified franchisees. The terms of financing offered by these lenders may vary depending upon many factors and, therefore, the financing terms must be discussed with the lenders directly.
The franchisor and/or its affiliates may in some situations offer its own leasing programs to new or existing franchisees who are in full compliance with their obligations to the franchisor and its affiliates.
As part of the disposition of certain Company Restaurants, the franchisor and/or its affiliates may lease or sublease a Wendy’s Restaurant to a franchisee. In limited circumstances, the franchisor or its affiliates may offer deferrals, loans, waivers, setoffs and other forms of financial assistance in unique instances to existing franchisees.
Franchisees receive on-going direct support from their skilled operators at the field level. They strive for A-level operations at every restaurant and provide the tools, resources and training to achieve superior customer service levels while maintaining restaurant level profit margins.
Wendy engage in multiple national media platforms throughout the year combined with local field marketing programs to provide a balanced marketing strategy that supports your market’s needs.
- Engineering & Real Estate
Varying levels from coaching to ‘hands on’ support options are available from their professional real estate and engineering teams who can assist with restaurant development including site selection, site layout, designs and initial and on-going construction services.
- Supply Chain Co-op
As a franchisee you will become a member of the Wendy’s independent Quality Supply Chain Cooperative who works with leading suppliers to provide Wendy’s restaurants with products and services that offer quality, consistency and value.
- Quality Assurance
The quality assurance department ensures that Wendy’s maintains a high level of food safety and quality standards through a rigorous on-going product and restaurant inspection process.
- Information Technology
Wendy’s seeks to provide an innovative customer experience through the use of the latest technology such as digital services and mobile ordering/ payment options as well as assistance for the franchisee with ordering and reporting programs through a restaurant back office system.
- Franchise Development
A highly dedicated franchise team fosters strong relationships working closely with franchisees on the administrative side of various contract matters such as the development of new restaurants, reimaging of existing restaurants, renewals, contract compliance and financial issues.
- Government Relations
The government relations team identifies issues of importance to Wendy’s and then works to communicate their point of view to Members of Congress and other government officials to ensure issues are clearly understood. Wendy’s PAC (Political Action Committee) is among one on the largest and most active in our industry.
- Franchise Advisory Council
Wendy’s senior leadership team values their relationship with the Franchise Advisory Council, elected by the franchisees, working closely with them on new initiatives as well as addressing concerns from the franchise community.