Is Wendys melting? Up to 116 stores collapsed or taken over by management in just eight years

“This is why so many Wendy’s Franchisees want out because there are so many stores which are closing that the majority of the ones left are on a road to nowhere and they will never get their money back. Also of great concern is that FCA (Franchise Council of Australia) has just given Wendy’s an accolade for “Franchisor of the Year”, yet here is evidence that they have an atrocious record!”

smartcompany.com.au
December 10, 2014

Is Wendys melting? Up to 116 stores collapsed or taken over by management in just eight years
Andrew Sadauskas

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A former franchisee of ice cream and hot dog chain Wendys claims a total of 116 franchisees nationwide have either collapsed or been taken over by management over the past eight years.

The revelation comes after SmartCompany reported in September a number of Wendys Victorian franchisees had been listed for sale on online marketplaces. The news broke just days after Singapore-based Global Yellow Pages subsidiary Global Food Retail Group agreed to purchase the franchise network.

The stores listed as being up for sale through Seek Commercial included Lilydale Marketplace, Dandenong, Geelong Market Square, South Morang, Rowville and Wheelers Hill, with some offered for as little as $59,000.

One store was listed as having takings of $4500 per week with “low rent”, averaging out to just $80.35 per hour over a 56 hour trading week.

According to a list obtained by SmartCompany, an additional 116 stores have either collapsed or been taken during the past eight years.

The revelation comes after Wendys won the Australian Established Franchisor of the Year prize in the National Franchise Council of Australia awards in October.

SmartCompany understands the stores include one in Tasmania, three in the Australian Capital Territory, four in the Northern Territory, 23 in Queensland, 41 in New South Wales, 19 in Victoria, 12 in South Australia and 13 in Western Australia.

In the Australia Capital Territory, the stores include Belconnen Mall, Tuggeranong and Woden.

The Northern Territory outlets are Alice Plaza, Casuarina 3, Nightcliff and Yeperenye.

The 23 Queensland franchisees listed include Australia Fair, Burleigh West, Cannonvale, Capalaba Central, Chermside, Emerald 2, Garden City, Garden City 2, Gladstone, Helensvale, Indooroopilly 2, Innisfail, Kippa Ring, Maroochydore, Mooloolaba, Mt Ommaney, Nambour, Pacific Fair, Port Douglas, Robina, Rydges Yeppoon, Smithfield Cairns and Toombul.

The 41 stores in NSW include Albury, Armidale, Ballina, Bankstown, Bankstown 2, Bathurst, Birkenhead Point, Bonnyrigg, Broadway, Campsie, Cessnock, Chatswood, Chullora, Coffs Harbour, Corrimal Court, Dubbo, Emu Plains, Erina, Griffin Plaza, Hill Homemaker Centre, Kotara, Kotara 2, Lake Haven, Liverpool, Malvern 2, Mittagong, Mudgee, Muswellbrook, North Rocks, Orange, Parkes, Penrith Plaza, Port Central, Port Macquarie, Raymond Terrace, Richmond Marketplace, Shellharbour, Singleton, Warriewood, Warringah Mall and Winston Hills.

Victoria franchises include Broadmeadows, Croydon, Endeavour Hills, Forrest Hill Chase, Fountain Gate 1, Fountain Gate 3, Greensborough, Greensborough 2, Langtree Mall, Langwarrin, Malvern, Malvern 2, Northcote, Pakenham, Point Cook, Rosebud, Southland, Swan Hill and Victoria Gardens.

The South Australian stores include Barossa Valley, Berri, Glenelg Bayside, Glenelg Moseley St., Norwood, Port Adelaide, Port Lincoln, Renmark, Roxby Downs, Southern Cross 2, Tea Tree Plus and West Lakes 1.

The Western Australian stores are Armadale, Belmont Forum, Booragoon, Carousel 2, Esperance, Fremantle, Innaloo, Karratha, Mirrabooka, Phoenix, Riverton, Warnbro Fair and Whitford City. The list also includes a Tasmanian store in Mowbray.

Peter Coventry, a former Wendys franchisee who claimed $1 million at mediation after a store lockout in March, told SmartCompany he is not surprised by a large number of Victorian franchises appearing on the market.

“You are indeed correct in your observation that there are a surprising number of Wendy’s Stores for sale and some as cheap as $1.00 after expenses (Airport West in Victoria),” Coventry says.

“This is why so many Wendy’s Franchisees want out because there are so many stores which are closing that the majority of the ones left are on a road to nowhere and they will never get their money back. Also of great concern is that FCA (Franchise Council of Australia) has just given Wendy’s an accolade for “Franchisor of the Year”, yet here is evidence that they have an atrocious record!”

SmartCompany contacted both the FCA and Wendys but did not receive a response prior to publication.

Are you a former franchisee or know more about the situation at Wendys? Email me at ua.moc.ynapmoctrams|saksuadasa#ua.moc.ynapmoctrams|saksuadasa.

Comments
1. Narelle
The Wendys franchisee who sold his store for $1, then went on to pay all fees and associated charges (legals, training etc) to get out, because he figured that to stay in the store until the end of lease would have sent him bankrupt, so this way it cost him $20,000 odd but he was far better off in the long run. Imagine investing your life savings to get into the business and then have to buy your way out in desperation . The conduct of both Wendys and the former CEO Rob McKay has been nothing short of disgraceful. Whether the new owner has the wherewithal to put Wendys franchisees on a better trajectory remains to be seen. Those of us who have been around a while are sceptical. With the franchise failure rate in Australia being far higher in most systems than people realise, and the real failure rates carefully hidden behind "churn" models and well organised franchise fraud. Franchisors still continue to drive franchisees to the wall to the point where they can terminate franchise agreements or the franchisee throw up their arms, leaving behind them assets worth 10 times what they will get when they are sold for in a fire sale or the franchisor steals them leaving the business trading with a new wide eyed franchisee. We now see big franchisors like wendys or Bakers delight that have been around a while running out of fodder, collapsing and having to shut down units under the weight of their own flawed business models. It wont be long, we will see Australia's most successful bakery chain fall its sword. I hope it takes the FCA with it, their record of endorsing good franchisors is almost as atrocious as Wendys treatment of its franchisees.

http://www.smartcompany.com.au/growth/franchising/44996-is-wendys-melting-up-to-116-stores-collapsed-or-taken-over-by-management-in-just-eight-years.html


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