Wendy's 2014 Annual Report Download - page 9

Raw Materials and Purchasing
As of December 28, 2014, five independent processors (five total production facilities) supplied all of Wendy’s
hamburger in the United States. In addition, five independent processors (eight total production facilities) supplied all
of Wendy’s chicken in the United States.
Wendy’s and its franchisees have not experienced any material shortages of food, equipment, fixtures or other
products that are necessary to maintain restaurant operations. Wendy’s anticipates no such shortages of products and
believes that alternate suppliers are available. Suppliers to the Wendy’s system must comply with United States
Department of Agriculture (“USDA”) and United States Food and Drug Administration (“FDA”) regulations
governing the manufacture, packaging, storage, distribution and sale of all food and packaging products.
Wendy’s has a purchasing co-op relationship agreement (the “Wendy’s Co-op”) with its franchisees which
establishes Quality Supply Chain Co-op, Inc. (“QSCC”). QSCC manages, for the Wendy’s system in the United
States and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and
equipment under national agreements with pricing based upon total system volume. QSCC’s supply chain
management facilitates the continuity of supply and provides consolidated purchasing efficiencies while monitoring
and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the United States and
Canada.
Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC.
Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations.
Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the
excess to its members in the form of a patronage dividend.
Quality Assurance
Wendy’s quality assurance program is designed to verify that the food products supplied to our restaurants are
processed in a safe, sanitary environment and in compliance with our food safety and quality standards. Wendy’s
quality assurance personnel conduct multiple on-site sanitation and production audits throughout the year at all of
our core menu product processing facilities, which include beef, poultry, pork, buns, french fries, Frosty®dessert
ingredients, and produce. Animal welfare audits are also conducted every year at all beef, poultry, and pork facilities to
confirm compliance with our required animal welfare and handling policies and procedures. In addition to our facility
audit program, weekly samples of beef, poultry, and other core menu products from our distribution centers are
randomly sampled and analyzed by a third-party laboratory to test conformance to our quality specifications. Each
year, Wendy’s representatives conduct unannounced inspections of all company and franchise restaurants to test
conformance to our sanitation, food safety, and operational requirements. Wendy’s has the right to terminate
franchise agreements if franchisees fail to comply with quality standards.
Trademarks and Service Marks
Wendy’s or its subsidiaries have registered certain trademarks and service marks in the United States Patent and
Trademark Office and in international jurisdictions, some of which include Wendy’s®, Old Fashioned Hamburgers®
and Quality Is Our Recipe®. Wendy’s believes that these and other related marks are of material importance to its
business. Domestic trademarks and service marks expire at various times from 2015 to 2024, while international
trademarks and service marks have various durations of 10 to 15 years. Wendy’s generally intends to renew
trademarks and service marks that are scheduled to expire.
Wendy’s entered into an Assignment of Rights Agreement with the Company’s founder, R. David Thomas,
and his wife dated as of November 5, 2000 (the “Assignment”). Wendy’s had used Mr. Thomas, who was Senior
Chairman of the Board until his death on January 8, 2002, as a spokesperson and focal point for its products and
services for many years. With the efforts and attributes of Mr. Thomas, Wendy’s has, through its extensive investment
in the advertising and promotional use of Mr. Thomas’ name, likeness, image, voice, caricature, endorsement rights
and photographs (the “Thomas Persona”), made the Thomas Persona well known in the United States and
throughout North America and a valuable asset for both Wendy’s and Mr. Thomas’ estate. Under the terms of the
Assignment, Wendy’s acquired the entire right, title, interest and ownership in and to the Thomas Persona, including
the sole and exclusive right to commercially use the Thomas Persona.
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