Wendy's 2013 Annual Report Download - page 22

Wendy’s does not exercise ultimate control over purchasing for its restaurant system, which could harm sales or
profitability and the brand.
Although Wendy’s ensures that all suppliers to the Wendy’s system meet quality control standards, Wendy’s
franchisees control the purchasing of food, proprietary paper, equipment and other operating supplies from such
suppliers through the purchasing co-op controlled by Wendy’s franchisees, QSCC. QSCC negotiates national
contracts for such food, equipment and supplies. Wendy’s is entitled to appoint two representatives (of the total of
11) on the board of directors of QSCC and participates in QSCC through its company-owned restaurants, but does
not control the decisions and activities of QSCC except to ensure that all suppliers satisfy Wendy’s quality control
standards. If QSCC does not properly estimate the product needs of the Wendy’s system, makes poor purchasing
decisions, or decides to cease its operations, system sales and operating costs could be adversely affected and our results
of operations and financial condition or the financial condition of Wendy’s franchisees could be hurt.
Our international operations are subject to various factors of uncertainty and there is no assurance that
international operations will be profitable.
In addition to many of the risk factors described throughout this Item 1A, Wendy’s business outside of the
United States is subject to a number of additional factors, including international economic and political conditions,
risk of corruption and violations of the United States Foreign Corrupt Practices Act or similar laws of other countries,
differing cultures and consumer preferences, the inability to adapt to international customer preferences, inadequate
brand infrastructure within foreign countries to support our international activities, inability to obtain adequate
supplies meeting our quality standards and product specifications or interruptions in obtaining such supplies,
restrictions on our ability to move cash out of certain foreign countries, currency regulations and fluctuations, diverse
government regulations and tax systems, uncertain or differing interpretations of rights and obligations in connection
with international franchise agreements and the collection of royalties from international franchisees, the availability
and cost of land, construction costs, other legal, financial or regulatory impediments to the development and/or
operation of new restaurants, and the availability of experienced management, appropriate franchisees, and joint
venture partners. Although we believe we have developed the support structure required for international growth,
there is no assurance that such growth will occur or that international operations will be profitable.
To the extent we invest in international company-operated restaurants or joint ventures, we would also have the
risk of operating losses related to those restaurants, which would adversely affect our results of operations and financial
condition.
We rely on computer systems and information technology to run our business. Any material failure, interruption
or security breach of our computer systems or information technology may result in adverse publicity and
adversely affect the operation of our business and results of operations.
We are significantly dependent upon our computer systems and information technology to properly conduct
our business. A failure or interruption of computer systems or information technology could result in the loss of data,
business interruptions or delays in business operations. Also, despite our considerable efforts and technological
resources to secure our computer systems and information technology, security breaches, such as unauthorized access
and computer viruses, may occur resulting in system disruptions, shutdowns or unauthorized disclosure of
confidential information. A significant security breach of our computer systems or information technology could
require us to notify customers, employees or other groups, result in adverse publicity, loss of sales and profits, and
incur penalties or other costs that could adversely affect the operation of our business and results of operations.
Failure to comply with laws, regulations and third-party contracts regarding the collection, maintenance and
processing of information may result in adverse publicity and adversely affect the operation of our business and
results of operations.
We collect, maintain and process certain information about customers and employees. Our use and protection
of this information is regulated by various laws and regulations, as well as by third-party contracts. If our systems or
employees fail to comply with these laws, regulations or contract terms, it could require us to notify customers,
employees or other groups, result in adverse publicity, loss of sales and profits, increase fees payable to third parties,
and incur penalties or remediation and other costs that could adversely affect the operation of our business and results
of operations.
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