Wendy's 2008 Annual Report Download - page 15

the Wendy’s trademarks and know-how in the operation of a Wendy’s restaurant at a specified location. Upon
execution of the International Agreements, the franchisee is required to pay a technical assistance fee. The
current technical assistance fee is US$30,000 for each restaurant. Currently, the franchisee is required to pay a
monthly royalty equal to 2% of the monthly gross sales of the restaurant, as defined in the International
Agreements, or US$1,000, whichever is greater, and a monthly service fee equal to 2% of the monthly gross
sales of the restaurant. In certain foreign markets, Wendy’s and the franchisee may sign a development
agreement under which the franchisee undertakes to develop a specified number of new Wendy’s restaurants
based on a negotiated schedule. Wendy’s may agree to modify the technical assistance and/or the monthly fees
conditioned on the franchisee meeting its annual development obligations.
See Note 7 and Note 26 of the Financial Statements and Supplementary Data included in Item 8 herein,
and the information under “Management’s Discussion and Analysis” in Item 7 herein, for further information
regarding reserves, commitments and contingencies involving franchisees.
Advertising and Promotions
Wendy’s participates in two national advertising funds established to collect and administer funds
contributed for use in advertising through television, radio, newspapers, the Internet and a variety of
promotional campaigns. Separate national advertising funds are administered for Wendy’s U.S and Canadian
locations. Contributions to the national advertising funds are required to be made from both company-owned
and franchised restaurants and are based on a percent of restaurant retail sales. In addition to the contributions
to the national advertising funds, Wendy’s requires additional contributions to be made for both company-
owned and franchised restaurants based on a percent of restaurant retail sales for the purpose of local and
regional advertising programs. Required franchisee contributions to the national advertising funds and for local
and regional advertising programs are governed by the Wendy’s Unit Franchise Agreement. Required
contributions by company-owned restaurants for advertising and promotional programs are at the same percent
of retail sales as franchised restaurants within the Wendy’s system. Currently the contribution rate for U.S. and
Canadian restaurants is generally 3% of retail sales for national advertising and 1% of retail sales for local and
regional advertising.
See Note 29 of the Financial Statements and Supplementary Data included in Item 8 herein, for further
information regarding advertising.
The Arby’s Restaurant System
Arby’s is the largest restaurant franchising system specializing in the roast beef sandwich segment of the
quick service restaurant industry. According to Nation’s Restaurant News, Arby’s is the 2nd largest sandwich
chain restaurant in the United States. We acquired our company-owned Arby’s restaurants principally through
the acquisitions of Sybra, Inc. in December 2002 and the RTM Restaurant Group in July 2005. We increase
the number of our company-owned restaurants from time to time through acquisitions as well as the
development and construction of new restaurants. There are over 3,700 Arby’s restaurants in the United States
and Canada. As of December 28, 2008, there were 1,176 company-owned Arby’s restaurants and 2,580 Arby’s
restaurants owned by 468 franchisees. Of the 2,580 franchisee-owned restaurants, 2,457 operated within the
United States and 123 operated outside the United States, principally in Canada.
ARG also owns the T.J. Cinnamonsconcept, which consists of gourmet cinnamon rolls, gourmet coffees
and other related products. As of December 28, 2008, there were a total of 144 T.J. Cinnamons outlets, 132 of
which are multi-branded with domestic Arby’s restaurants.
In addition to various slow-roasted roast beef sandwiches, Arby’s offers an extensive menu of chicken,
turkey and ham sandwiches, snack items and salads. In 2001, Arby’s introduced its Market Freshline of
premium sandwiches on a nationwide basis. Since its introduction, the Arby’s Market Fresh line has grown to
include fresh salads made with premium ingredients. Arby’s also offers Market Fresh wrap sandwiches inside a
tortilla wrap. In 2007, Arby’s added Toasted Subs to its sandwich selections, which is Arby’s largest menu
expansion since the 2001 introduction of its Market Fresh line. Arby’s initial lineup of Toasted Sub offerings
included four varieties on toasted ciabatta rolls: the French Dip & Swiss, the Philly Beef, the Classic Italian and
the Turkey Bacon Club. Additional varieties of the Toasted Subs are offered on a limited time basis.
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