Fed-Up Wendy's Franchisees Go Independent

Owner-Operators Demand Stronger Voice in Decision-Making

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CHICAGO (AdAge.com) -– A group of powerful franchisees, fed up with marketing and management practices at ailing Wendy's International, are splitting off to create an independent owner-operator association. The association, which already has 760 stores as members, is demanding a bigger voice in decision-making, including advertising.
The revolt at the No. 3 fast-food chain includes some of Wendy's largest operators, who have hired the law firm Dady & Garner in Minneapolis to set up the group, to be named the Old Fashioned Franchisee Association.
The revolt at the No. 3 fast-food chain includes some of Wendy's largest operators, who have hired the law firm Dady & Garner in Minneapolis to set up the group, to be named the Old Fashioned Franchisee Association.


Law firm hired
The revolt at the No. 3 fast-food chain includes some of Wendy's largest operators, who have hired the law firm Dady & Garner in Minneapolis to set up the group, to be named the Old Fashioned Franchisee Association. While Wendy's has been held up as the gold standard for franchisee relations, the love affair has soured after more than a year of same-store sales declines at franchisee-owned stores. In April alone, same-store sales at Wendy's declined 5.2%.

"The top line is a lot of discontent among franchisees with current management, particularly over supply issues, decision-making issues and responsiveness to franchisee concerns," said Michael Garner, a partner at the firm. "Marketing is a big issue as well." He said the franchisees "feel they have a big positive contribution to that," adding that the group doesn't believe the chain's national advertising is working.

Advertising under fire
Wendy's advertising and marketing has been under fire for months as efforts begun more than a year ago under Chief Marketing Officer Ian Rowden have failed to spark positive traffic and sales. Interpublic Group of Cos.' McCann Erickson Worldgroup, New York, handles the "Do what tastes right" campaign.

"We have a great relationship with those committees and they bring forth the issues, thoughts and concerns from their constituents," said Denny Lynch, a spokesman for Wendy's. "No one is happy with our current sales environment and management is working very closely with the franchisee committees to address the same issues and other issues we bring before the committees."

'Listening tour'
Wendy's senior management team recently ended one of its regular 14-day "listening tours" where all franchisees were invited to attend and could speak directly with the management team," Mr. Lynch said. "It's not that they haven't had a chance to voice their opinion. It would be premature for us start speculating on what they want."

The franchisee group has an interim board, which Mr. Garner wouldn't identify. A first meeting is scheduled for later this month.

"There is a pervasive sense of urgency about these issues," Mr. Garner said. "Some of the guys have talked to Wendy's on an informal basis, but informal talks have not materialized or have not led to anything."
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