Short history how it started
Wendy’s is the third largest food chain in the world that specializes in fast-service hamburger service. The first Wendy’s restaurant was opened by Dave Thomas in Ohio in 1969. The food quality has always been one of the core values for Wendy’s, that is why the slogan “Quality is our recipe” has been put on the restaurant logo. Apart from the traditional hamburgers presented on the menu, Wendy’s was the first restaurant to offer a salad bar. The company has demonstrated commitment to quality food by actively reducing the amount of trans fatty acids in their dishes, enhancing quality controls and raising standards for animal welfare. The first Wendy’s franchise was sold in 1972 and in 1976 the restaurant chain went public. The period between 1988-1990 was considered the time when the chain went global by opening their restaurants in Mexico, New Zealand, Italy, Turkey, Greece, Indonesia and Guatemala. In 1995 the company entered into an alliance with Tim Horton, a fast food retailer in Canada, which helped Wendy’s to gain access to 1323 restaurant in North America. However, Tim Horton was spun off in October 2006. In 2002 the chain acquires Baja Fresh Mexican Grill, which was sold in 2006. Today, Wendy’s operates 6,500 restaurants both in the U.S. and in 27 countries all over the world ("Wendy’s Company").
United state market for the franchise
According to the predictions of Standard and Poor’s agency, U.S. fast food market has entered its maturity phase, therefore the growth rate in the industry is expected to be rather low with a few major restaurant chains competing for the market share (Royle and Towers 12). However, the U.S. and North American markets have traditionally been the main targets for Wendy’s franchises. Thus, while the company is barely known internationally, it is the second most recognized restaurant in the U.S (Carrada-Bravo 131).
International market
Since 2009 Wendy’s had pursued an aggressive growth in the international market. It currently operates in 27 countries outside of the U.S. and their geography continuously expands in response to the limited growth in the mature U.S. market. The company believes that they have the opportunity to open more than 8000 restaurant outside the U.S. Its international strategy relies on the expansion in blocs rather than on the “one store at a time” approach. Most foreign franchisees own both the land and buildings, however Wendy’s offers continuous training and support in operations, marketing, engineering and site development, supply chain, quality assurance, and technology development ("Wendy’s Company").
Cost of opening a franchise in the U.S.
In order to qualify for opening a Wendy’s franchise in the U.S., applicants need to have a minimum net worth of $1000000 with a minimum value of the liquid assets of $500000. Applicants need to pay a non-refundable Application Fee of $5,000 before their training and the $25,000 Technical Assistance Fee in case their application is accepted ("Wendy’s Company"). The franchisees can purchase franchises for $350,000 and then they have to pay royalties and rent equal to 4% and 12.5% of gross sales respectively (Carrada-Bravo 134).
Conclusion
Wendy’s franchise development has been very successful and made the company the third largest fast-food chain in the world. However, the limited growth in the U.S. fast-food market, where Wendy’s has most recognition and expertise, forces the company to focus on international expansion. Although high fees and low brand awareness worldwide makes Wendy’s less attractive than its more successful competitors, McDonald’s and Burger King, the chain has the potential to gain market share internationally through the commitment of the company to constant support of their international franchisees and the long tradition of the high quality products.
References
"Company Profile." The Wend'ys Company . The Wendy’s Company , 2012. Web. 1 Apr
2012. <http://www.aboutwendys.com/Our-Company/>.
Carrada-Bravo, Francisco. Managing global finance in the digital economy. Westport, CT:
Greenwood Publishing Group, 2003. 131-134. eBook.
Royle, Tony, and Brian Towers. Labour relations in the global fast-food industry. London,
the United Kingdom: Routledge, 2002. 12. eBook.
