Wendy's 2015 Annual Report Download - page 21

insure, such as losses due to natural disasters or acts of terrorism. In addition, we currently self-insure a significant
portion of expected losses under workers compensation, general liability and property insurance programs.
Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses
could result in materially different amounts of expense under these programs, which could harm our business and
adversely affect our results of operations and financial condition.
Changes in legal or regulatory requirements, including franchising laws, payment card industry rules, overtime
rules, minimum wage rates, government-mandated health care benefits, tax legislation, federal ethanol policy
and accounting standards, may adversely affect our ability to open new restaurants or otherwise hurt our
existing and future operations and results.
Each Wendy’s restaurant is subject to licensing and regulation by health, sanitation, safety and other agencies in
the state and/or municipality in which the restaurant is located, as well as to Federal laws, rules and regulations and
requirements of non-governmental entities such as payment card industry rules. State and local government
authorities may enact laws, rules or regulations that impact restaurant operations and the cost of conducting those
operations. There can be no assurance that we and/or our franchisees will not experience material difficulties or
failures in obtaining the necessary licenses or approvals for new restaurants, which could delay the opening of such
restaurants in the future. In addition, more stringent and varied requirements of local governmental bodies with
respect to tax, zoning, land use and environmental factors could delay or prevent development of new restaurants in
particular locations.
Federal laws, rules and regulations address many aspects of our business, such as franchising, federal ethanol
policy, minimum wages and taxes. We and our franchisees are also subject to the Fair Labor Standards Act, which
governs such matters as minimum wages, overtime and other working conditions, along with the ADA, family leave
mandates and a variety of other laws enacted by the states that govern these and other employment law matters.
Changes in laws, rules, regulations and governmental policies, including the joint employer standard, could increase
our costs and adversely affect our existing and future operations and results.
Changes in government-mandated health care benefits under the Patient Protection and Affordable Care Act
(“PPACA”) are anticipated to continue to increase our costs and the costs of our franchisees. Our compliance with the
PPACA resulted in significant modifications to our benefits policies and practices. Because we experienced modest
enrollment and participation in our health plans by newly full-time employees in 2015, the cost increases did not
result in modifications to our business practices. However, future cost increases could be material and any future
compliance-related modifications to our benefits policies and practices, or to our business practices, could be
disruptive to our operations and impact our ability to attract and retain personnel.
Changes in accounting standards, or in the interpretation of existing standards, applicable to us could also affect
our future results.
We do not exercise ultimate control over purchasing for our restaurant system, which could harm sales or
profitability and the brand.
Although we ensure that all suppliers to the Wendy’s system meet quality control standards, Wendy’s
franchisees control the purchasing of food, proprietary paper, equipment and other operating supplies from such
suppliers through the purchasing co-op controlled by Wendy’s franchisees, QSCC. QSCC negotiates national
contracts for such food, equipment and supplies. We are entitled to appoint two representatives (of the total of 11) on
the board of directors of QSCC and participates in QSCC through its company-owned restaurants, but we do not
control the decisions and activities of QSCC except to ensure that all suppliers satisfy our quality control standards. If
QSCC does not properly estimate the product needs of the Wendy’s system, makes poor purchasing decisions, or
decides to cease its operations, system sales and operating costs could be adversely affected and our results of
operations and financial condition or the financial condition of Wendy’s franchisees could be hurt.
Our international operations are subject to various factors of uncertainty and there is no assurance that
international operations will be profitable.
In addition to many of the risk factors described throughout this Item 1A, Wendy’s business outside of the
United States is subject to a number of additional factors, including international economic and political conditions,
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