Wendy's 2012 Annual Report Download - page 12

of a franchise agreement. Several states require registration and disclosure in connection with franchise offers and sales
and have “franchise relationship laws” that limit the ability of franchisors to terminate franchise agreements or to
withhold consent to the renewal or transfer of these agreements. In addition, Wendy’s and its franchisees must
comply with the federal Fair Labor Standards Act and similar state and local laws, the Americans with Disabilities Act
(the “ADA”), which requires that all public accommodations and commercial facilities meet federal requirements
related to access and use by disabled persons, and various state and local laws governing matters that include, for
example, the handling, preparation and sale of food and beverages, the provision of nutritional information on menu
boards, minimum wages, overtime and other working and safety conditions. Compliance with the ADA requirements
could require removal of access barriers and non-compliance could result in imposition of fines by the United States
government or an award of damages to private litigants. We do not believe that costs relating to compliance with the
ADA will have a material adverse effect on the Company’s consolidated financial position or results of operations. We
cannot predict the effect on our operations, particularly on our relationship with franchisees, of any pending or future
legislation.
Changes in government-mandated health care benefits under the Patient Protection and Affordable Care Act
(“PPACA”) are also anticipated to increase our costs and the costs of our franchisees. Our Compliance with the
PPACA may result in significant modifications to our employment and benefits policies and practices. Because of the
absence of final implementing regulations, we currently cannot predict the timing or amount of those cost increases or
modifications to our business practices. However, the cost increases may be material and such modifications to our
business practices may be disruptive to our operations and impact our ability to attract and retain personnel.
Environmental and Other Matters
The Company’s past and present operations are governed by federal, state and local environmental laws and
regulations concerning the discharge, storage, handling and disposal of hazardous or toxic substances. These laws and
regulations provide for significant fines, penalties and liabilities, sometimes without regard to whether the owner or
operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances.
In addition, third parties may make claims against owners or operators of properties for personal injuries and property
damage associated with releases of hazardous or toxic substances. We cannot predict what environmental legislation or
regulations will be enacted in the future or how existing or future laws or regulations will be administered or
interpreted. We similarly cannot predict the amount of future expenditures that may be required to comply with any
environmental laws or regulations or to satisfy any claims relating to environmental laws or regulations. We believe
that our operations comply substantially with all applicable environmental laws and regulations. Accordingly, the
environmental matters in which we are involved generally relate either to properties that our subsidiaries own, but on
which they no longer have any operations, or properties that we or our subsidiaries have sold to third parties, but for
which we or our subsidiaries remain liable or contingently liable for any related environmental costs. Our
company-owned Wendy’s restaurants have not been the subject of any material environmental matters. Based on
currently available information, including defenses available to us and/or our subsidiaries, and our current reserve
levels, we do not believe that the ultimate outcome of the environmental matters in which we are involved will have a
material adverse effect on our consolidated financial position or results of operations.
The Company is involved in litigation and claims incidental to our current and prior businesses. We provide
reserves for such litigation and claims when payment is probable and reasonably estimable. We believe we have
adequate reserves for continuing operations for all of our legal and environmental matters. We cannot estimate the
aggregate possible range of loss due to most proceedings being in preliminary stages, with various motions either yet
to be submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases
seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement
discussions or judicial or arbitral decisions is thus inherently difficult. Based on our currently available information,
including legal defenses available to us, and given the aforementioned reserves and our insurance coverage, we do not
believe that the outcome of these legal and environmental matters will have a material effect on our consolidated
financial position or results of operations.
Employees
As of December 30, 2012, the Company had approximately 44,000 employees, including approximately
2,800 salaried employees and approximately 41,200 hourly employees. We believe that our employee relations are
satisfactory.
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