Cold burns: Another franchisee comes forward claiming mistreatment by Wendys, Andrew Sadauskas

I estimate that there's roughly a 100 stores under extreme financial duress that will struggle to survive. These poor Franchisees running at huge losses will of course pour good money after bad to try and avoid breaching their Franchise Agreements and subsequently losing their homes. They will either be working in their stores for zero return or working other jobs to earn money to keep their stores afloat. Most of the old management have been 'let go' but the compliance police (the state BC's) are still putting out the rhetoric and positive spin. They've retained one of their internal legal eagles as she is very adept at sending breach notices to Franchisees and charging Franchisees $660.00 on every occasion…..a great revenue stream for the Franchisor!

www.smartcompany.com.au
January 14, 2015

Cold burns: Another franchisee comes forward claiming mistreatment by Wendys
Andrew Sadauskas

Wendy%27s.jpg

Another former franchisee of ice cream and hot dog chain Wendys Supa Sundaes has come forward, claiming mistreatment at the hands of the fast food chain.

It comes a week after Peter O’Neill, a former Tasmanian state trainer for the company, shared the heartbreaking tale of how the dream of owning a fast food business led to losing his job, and later divorce and suicide.

As SmartCompany recently reported, 116 Wendys stores have either collapsed or been taken over by management over the past eight years. By late last year, Victorian stores were being advertised with an asking price as low as $59,000.

Along with O’Neill, former South Australian franchisee Trevor Banks previously received a letter stating his contract with the chain would not be renewed, while another former franchisee, Peter Coventry, had the locks on his two Alice Springs stores changed during a dispute with the company.

Rupinder Singh, who became the Wendys franchisee in the south east Perth suburb of Armadale from 2008 to 2012, is the latest former franchisee to come forward.

As with other former franchisees, Singh claims his experiences with Wendys were initially positive, but quickly soured.

SmartCompany understands by March 2011, Singh was becoming concerned that his lease at the Armadale Shopping City shopping complex, which he sublet through Wendys, was set to expire that December.

The fast food chain eventually stopped responding to Singh’s calls on the matter and allegedly took no action on the matter until January 2012.

At that point, Singh says he was asked to agree to a five-year lease at significantly higher rent, along with a $120,000 fitout of the store. He claims he was placed under a significant amount of pressure to sign the deal and was blocked from directly renegotiating his lease with the shopping centre owners.

When he refused to sign, Singh claims Wendys repossessed all his stock, fittings and equipment without paying him any compensation.

Singh told SmartCompany the experience left a bad taste in his mouth.

“I wouldn’t recommend anyone get involved in the business,” Singh says.

Wendys is currently advertising the 25 square metre Armadale store as being up for sale on its website, with an official asking price of $120,000. It was one of 116 appearing on a list of stores that either failed or were repossessed by the company.

A spokesperson for Wendys told SmartCompany the accusations predate the company’s sale to Global Food Retail Group in September 2014.

“The matters raised are historical allegations which pre-date the current owners of the business. Wendys does not comment on the conduct of former board members or employees of the company,” the spokesperson says.

“Should there be any allegation or implication that the current Wendys management has acted in an improper manner towards Wendys franchisees, by reference to allegations levelled at the previous management of the company or at all, such allegations or implications would be untrue and would cause financial loss to Wendys and the franchisees.

“For legal reasons, Wendys is unable to make further comment on these matters.”

Comments

1. Peter Coventry
In response to the above statements by the Wendy's 'spokesperson':

This is a typical cover up attempt by this heartless Franchisor. The smoke screen of trying to lay blame on 'previous management' is not going to fool anyone who takes more than a cursory look at the facts and record of this organization. Just scratch the surface and you'll find the same methods and business practices that have lined the pockets of this Franchisor for years are still in place today. This of course comes at the expense of the Franchisees, their families and their homes.

The most profitable income stream for Wendy's is their Ice-cream Factory, NOT the revenue that they generate from royalties on sales by their Franchisees. The Wendy's Franchise Agreement locks Franchisees into buying products from their factory regardless of the wholesale price or quality. Known as Innovation Ice-cream (IIC Pty Ltd), it has been the Cash Cow of this Franchisor for years. It matters very little to them that Franchisees have become uncompetitive in the marketplace because once they have you locked into their Franchisee Agreement they simply use stores as a vehicle through which to move their products.

The guy who has been running the factory for years was not only retained by the new owners - but promoted. They have also retained one of their internal legal team and she is very adept at sending out threatening Breach Notices to any Franchisee that doesn't comply with the Wendy's mandate.

Don't be fooled anyone -

The Business Model remains unchanged.
Stores continue to close.
The Franchisor continues to overcharge for the products that they FORCE their Franchisees to buy.

2.a. Amanda G
Oh Smart Company, do you have NOTHING better to do with yourselves? there is obviously two sides to every story and your stories are nothing but bias rubbish. Can you please contact some HAPPY franchisee's because there's plenty of them.

2.b. Peter Coventry
Hi Amanda……everything in the above article is the TRUTH. Does that scare you? I believe you are simply 'shooting the messenger' here because you don't like hearing what is actually taking place.
What EVIDENCE do you have to back up your 'bias rubbish' claim?
Why don't you and I open a dialogue and have a mature and serious discussion about Wendy's?
Myself and Rupinder would be more than happy to talk to you.
My email address is moc.dnopgib|yrtnevoc-retep#moc.dnopgib|yrtnevoc-retep
Look forward to hearing from you and anyone else who wants to share their views. By the way - what store do you own Amanda?

2.c. hudson
I disagree with Amanda G. What is amazing to me, is how long it has taken for a handful,of brave franchisees ro speak out at the shabby treatment they received from the old Wendy's hierarchy.

2.d. Peter Coventry
Watch this space Hudson as there's a lot more coming!
I had hoped that the new Wendy's Management would be a change for the better. Alas, they continue to stay with the same system that has seen so many peoples hopes and dreams destroyed. The trail of destruction continues unabated I'm afraid.

2.e. hudson
Peter Coventry, Are the old management definately gone for good do you know? I really hope the lifeline the new management espoused to be offering is for real. If not I imagine all but a handful of stores will survive.
Has there been a changing of the guards announcement, outlining who is in charge of what now?

2.f. Peter Coventry
I estimate that there's roughly a 100 stores under extreme financial duress that will struggle to survive. These poor Franchisees running at huge losses will of course pour good money after bad to try and avoid breaching their Franchise Agreements and subsequently losing their homes. They will either be working in their stores for zero return or working other jobs to earn money to keep their stores afloat. Most of the old management have been 'let go' but the compliance police (the state BC's) are still putting out the rhetoric and positive spin. They've retained one of their internal legal eagles as she is very adept at sending breach notices to Franchisees and charging Franchisees $660.00 on every occasion…..a great revenue stream for the Franchisor!

http://www.smartcompany.com.au/growth/franchising/45268-cold-burns-another-franchisee-comes-forward-claiming-mistreatment-by-wendys.html


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Risks: 1st generation of investors knowingly sacrificed, 30 different programs of kickbacks, shelf allowances and inside money, Belief in a Just World (BJW): people deserve their fate, Blame the victim (Just-world effect), Business model had never created adequate investor returns, Call for franchise law, Can't afford to sue, Cannon fodder, Churning (serial reselling), Comments on article are interesting, Death, Dispute resolution, Encroachment (too many outlets put in territory), Franchise Council of Australia, FCA, Franchisee abandons their investment, Franchisor takes back high-volume store, Fraud victims changed deeply and often not for the better, Gag order (confidentiality agreement), Gag order used to conceal criminal wrongdoing, Good faith, fair dealing, Gouging on supplies, Health consequences, Indentured servants, Lost homes, Must buy only through franchisor (tied buying), Only 3 ways out: resell to next loser, independence & be sued or abandon and go bankrupt, Opportunism: contract creates powers which are used to strip investor value during relationship, Opportunism: self-interest with deceit, Renewal of contract denied, Stores shuttered, Strong back and weak mind, Successful for the middleman, System designed to fail for franchisees, Unilateral changes in business model drive franchisees' profits down, Unproven business model, War of attrition, Resales (after termination) seen as a profit center, Suicide, Divorce, Stores shuttered, Mediation: information gathering that aids the destruction of valid legal claims, Mediation, Termination of franchisee, mass, No franchisor support, Forced to sell, Discount programs destroy retail margins but boost wholesale profits, Clinical depression, Bullying, Unilateral fines, Australia, 20150114 Cold burns

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