Wendy's 2008 Annual Report Download - page 24

Our certificate of incorporation contains certain anti-takeover provisions and permits our board of
directors to issue preferred stock without stockholder approval.
Certain provisions in our certificate of incorporation are intended to discourage or delay a hostile takeover
of control of us. Our certificate of incorporation authorizes the issuance of shares of “blank check” preferred
stock, which will have such designations, rights and preferences as may be determined from time to time by
our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to
issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect
the voting power and other rights of the holders of our common stock. The preferred stock could be used to
discourage, delay or prevent a change in control of us that is determined by our board of directors to be
undesirable. Although we have no present intention to issue any shares of preferred stock, we cannot assure you
that we will not do so in the future.
Our certificate of incorporation prohibits the issuance of preferred stock to our affiliates, unless offered
ratably to the holders of our common stock, subject to an exception in the event that we are in financial
distress and the issuance is approved by our audit committee. This prohibition limits our ability to raise
capital from affiliates.
Risks Related to the Wendy’s and Arby’s Businesses
Growth of our restaurant businesses is significantly dependent on new restaurant openings, which
may be affected by factors beyond our control.
Our restaurant businesses derive earnings from sales at company-owned restaurants, franchise royalties
received from franchised restaurants and franchise fees from franchise restaurant operators for each new unit
opened. Growth in our restaurant revenues and earnings is significantly dependent on new restaurant openings.
Numerous factors beyond our control may affect restaurant openings. These factors include but are not limited
to:
•our ability to attract new franchisees;
•the availability of site locations for new restaurants;
•the ability of potential restaurant owners to obtain financing, which has become more difficult due
to current market conditions and operating results;
•the ability of restaurant owners to hire, train and retain qualified operating personnel;
•construction and development costs of new restaurants, particularly in highly-competitive markets;
•the ability of restaurant owners to secure required governmental approvals and permits in a timely
manner, or at all; and
•adverse weather conditions.
Although as of December 28, 2008, franchisees had signed commitments to open 493 Wendy’s or Arby’s
restaurants over the next seven years and have made or are required to make non-refundable deposits, we cannot
assure you that franchisees will meet these commitments and that they will result in new restaurants. See
“Item 1. Business—The Wendy’s Restaurant System—Franchised Restaurants” and “—The Arby’s Restaurant
System—Franchised Restaurants.”
Wendy’s and Arby’s franchisees could take actions that could harm our business.
Wendy’s and Arby’s franchisees are contractually obligated to operate their restaurants in accordance with
the standards set forth in agreements with them. Each brand also provides training and support to franchisees.
However, franchisees are independent third parties that we do not control, and the franchisees own, operate and
oversee the daily operations of their restaurants. As a result, the ultimate success and quality of any franchise
restaurant rests with the franchisee. If franchisees do not successfully operate restaurants in a manner consistent
with required standards, royalty payments to us will be adversely affected and the brand’s image and reputation
could be harmed, which in turn could hurt our business and operating results.
16