Wendy's 2014 Annual Report Download - page 14

The Company is involved in litigation and claims incidental to our current and prior businesses. We provide
accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have
adequate accruals 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 accruals 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 28, 2014, the Company had approximately 31,200 employees, including approximately 2,100
salaried employees and approximately 29,100 hourly employees. We believe that our employee relations are
satisfactory.
Item 1A. Risk Factors.
We wish to caution readers that in addition to the important factors described elsewhere in this Form 10-K, we
have included below the most significant factors that have affected, or in the future could affect, our actual results and
could cause our actual consolidated results during fiscal 2015, and beyond, to differ materially from those expressed in
any forward-looking statements made by us or on our behalf.
Our success depends in part upon the continued retention of certain key personnel.
There have been a number of changes in our senior management team beginning in 2011, including the
appointment of a new President and Chief Executive Officer in September 2011. We believe that over time our
success has been dependent to a significant extent upon the efforts and abilities of our senior management team. The
failure by us to retain members of our senior management team in the future could adversely affect our ability to build
on the efforts we have undertaken to increase the efficiency and profitability of our business.
Competition from other restaurant companies, or poor customer experience at Wendy’s restaurants, could hurt
our brand.
The market segments in which company-owned and franchised Wendy’s restaurants compete are highly
competitive with respect to, among other things, price, food quality and presentation, service, location, convenience,
and the nature and condition of the restaurant facility. If customers have a poor experience at a Wendy’s restaurant,
whether at a company-owned or franchised restaurant, we may experience a decrease in guest traffic. Further,
Wendy’s restaurants compete with a variety of locally-owned restaurants, as well as competitive regional and national
chains and franchises. Several of these chains compete by offering menu items that are targeted at certain consumer
groups or dietary trends. Additionally, many of our competitors have introduced lower cost, value meal menu options.
Our revenues and those of our franchisees may be hurt by this product and price competition.
Moreover, new companies, including operators outside the quick-service restaurant industry, may enter our
market areas and target our customer base. For example, additional competitive pressures for prepared food purchases
have come from deli sections and in-store cafes of a number of major grocery store chains, as well as from convenience
stores and casual dining outlets. Such competitors may have, among other things, lower operating costs, better
locations, better facilities, better management, better products, more effective marketing and more efficient
operations. Many of our competitors have substantially greater financial, marketing, personnel and other resources
than we do, which may allow them to react to changes in pricing and marketing strategies in the quick-service
restaurant industry better than we can. Many of our competitors spend significantly more on advertising and
marketing than we do, which may give them a competitive advantage through higher levels of brand awareness among
consumers. All such competition may adversely affect our revenues and profits by reducing revenues of
company-owned restaurants and royalty revenue from franchised restaurants.
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