Franchise Deep Dive: Wendy’s Franchise Costs, Fees, Profit and Data

This burger franchise is the real deal, which is why it doesn’t award franchise agreements to just anyone.

By Luca Piacentini1851 Franchise Managing Editor

8:08AM • 06/21/23

LAST UPDATED: May 22, 2023

FRANCHISE WEBSITE: https://www.wendys.com/franchising

NUMBER OF LOCATIONS: 7,049

REPORTED COST TO GET IN: $329,500 - $3,693,000

REPORTED ROI (Item 19): $1,892,827 (Average Annual Gross Sales)

Wendy’s is one of the most recognizable quick service restaurant (QSR) franchise brands in the world, famous amongst consumers for its hamburgers, sandwiches, fries, tenders and milkshakes. It is a rival of other legacy fast food franchises, including McDonald’s, Burger King and Arby’s.

How Many Wendy's Locations Are There?

The original Wendy's restaurant was opened in 1969 by Dave Thomas, who founded the company in Columbus, Ohio. The company got its name from his daughter’s nickname and quickly gained recognition for its quality food and fast prep times. In 1970, Wendy’s introduced the first modern drive-thru to the world; what Thomas coined the “pick-up window.” In August, the first Wendy's franchisee signed an agreement for Indianapolis, Indiana. By the end of the ‘70s, Wendy’s had opened 1,000 locations in just 100 months, including its first international location in Canada.

Over the next few decades, Wendy’s expanded exponentially, particularly in international markets. Today, Wendy’s has a footprint of over 7,000 locations, making it one of the top 10 biggest franchises in the world. The franchise opened a net of 146 restaurants in 2022, up from 121 in 2021. In response to ongoing demand for off-premise options, Wendy’s has prioritized its digital platform. The brand’s loyalty program reached 29 million members at the end of 2022, an almost 40% increase year-over-year.

Approximately 77% of Wendy’s locations are franchised, but the brand has very specific criteria it looks for when granting licensing agreements, most notably significant experience operating fast-food chains in the food and service industry. It is extremely competitive and difficult to be approved for a franchise, even if you meet the capital requirements.

Wendy’s was ranked No. 15 on Entrepreneur’s 2023 Franchise 500 List.

What Is the Wendy's Business Model?

As a Wendy’s owner, franchisees get to decide on prices, restaurant hours, staff wages, uniforms and more (including interior decoration for their real estate), as stated in the franchise agreement. While Wendy's usually recommends against absentee ownership for new franchised locations, it doesn't forbid it outright. Therefore, you don't have to be a Wendy's restaurant manager if you don't want to, provided you can find someone capable of taking the job.

Wendy's recently rolled out a new global design standard that should build higher average unit volume (AUV) and reduce construction costs. The prototype features a delivery pickup window, dedicated mobile order pickup, a reimagined galley-style kitchen, modernized technology and efficient building elements, like HVAC and lighting.

How Much Can Wendy's Franchise Owners Make?

These financial performance representations, taken from Wendy’s 2022 Franchise Disclosure Document (FDD), outline the average gross sales of the 403 domestic Wendy’s company restaurants and 5,535 domestic Wendy’s franchise restaurants open during the fiscal year of 2021:

All Company Restaurants

Number of Restaurants: 393
Average Annual Gross Sales: $2,105,786
Median Annual Gross Sales: $2,072,255
Range of Annual Gross Sales: $893,377 to $4,183,704
Number and Percent of Restaurants at or Above Average: 186 (47.3%)

All Franchise Restaurants

Number of Restaurants: 5,190
Average Annual Gross Sales: $1,892,827
Median Annual Gross Sales: $1,791,231
Range of Annual Gross Sales: $285,004 to $5,636,894
Number and Percent of Restaurants at or Above Average: 2,247 (43.3%)

Non-Traditional Company Sites:

Transportation

Number of Restaurants: 16
Average Annual Gross Sales: $2,575,356
Median Annual Gross Sales: $2,366,779
Range of Annual Gross Sales: $1,032,170 to $5,636,894
Number and Percent of Restaurants at or Above Average: 7 (43.8%)

Fuel

Number of Restaurants: 227
Average Annual Gross Sales: $1,923,528
Median Annual Gross Sales: $1,797,238
Range of Annual Gross Sales: $582,664 to $4,099,044
Number and Percent of Restaurants at or Above Average: 96 (42.3%)

Food Court

Number of Restaurants: 17
Average Annual Gross Sales: $1,013,183
Median Annual Gross Sales: $1,062,150
Range of Annual Gross Sales: $513,003 to $1,669,152
Number and Percent of Restaurants at or Above Average: 9 (52.9%)

Military

Number of Restaurants: 10
Average Annual Gross Sales: $1,634,248
Median Annual Gross Sales: $1,695,925
Range of Annual Gross Sales: $285,004 to $3,619,554
Number and Percent of Restaurants at or Above Average: 5 (50.0%)

New Builds:

Company Restaurants

Number of Restaurants: 9
Number of Markets That Opened New Restaurants: 5
Average Weekly Gross Sales: $40,400
Average Weeks Open: 52
Number and Percent of Restaurants at or Above Average: 7 (77.8%)

Franchise Restaurants

Number of Restaurants: 174
Number of Markets That Opened New Restaurants: 80
Average Weekly Gross Sales: $38,100
Average Weeks Open: 48
Number and Percent of Restaurants at or Above Average: 75 (43.1%)

Traditional Company Restaurants:

Gross Sales

Average: $2,203,267 (100.0%)
Median: $2,147,824
Range: $1,158,899 to $4,192,494
Number and Percent of Restaurants at or Above Average: 132 (44.9%)

Cost of Sales

Average: $705,542 (32.0%)
Median: $691,594
Range: $401,850 to $1,276,370
Number and Percent of Restaurants at or Above Average: 137 (46.6%)

Gross Profit

Average: $1,497,725 (68.0%)
Median: $1,452,308
Range: $737,712 to $2,916,124
Number and Percent of Restaurants at or Above Average: 132 (44.9%)

Other Operating Expenses

Average: $1,054,828 (47.9%)
Median: $1,025,930
Range: $752,876 to $1,821,281
Number and Percent of Restaurants at or Above Average: 121 (41.2%)

Restaurant EBITDA Before Rent

Average: $442,898 (20.1%)
Median: $430,295
Range: -$72,157 to $1,458,069
Number and Percent of Restaurants at or Above Average: 140 (47.6%)

Rent

Average: $48,041 (2.2%)
Median: $7,179
Range: -$73,045 to $234,503
Number and Percent of Restaurants at or Above Average: 129 (43.9%)

Restaurant EBITDA After Rent

Average: $394,856 (17.9%)
Median: $379,285
Range: -$200,188 to $1,458,069
Number and Percent of Restaurants at or Above Average: 143 (48.6%)

How Much Does It Cost to Open a Wendy's?

The estimated total investment necessary to begin the operation of a Wendy’s franchise costs, based on Item 7 of the company’s 2022 FDD, includes:

Application Fee: $5,000

Training Expenses: $26,000 to $100,000

Initial Technical Assistance Fee: $50,000

Real Estate, Permits, Construction of Standard Prototype Restaurant, and Site Improvements:

Cash Purchase: $1,147,000 to $2,515,000
Financing (3 months): $271,000 to $551,000
Leasing (3 months): $24,000 to $63,500

Equipment:

Cash Purchase: $331,000 to $420,000
Financing (3 months): $11,000 to $18,000

Signage:

Cash Purchase: $58,000 to $100,000
Financing (3 months): $2,000 to $4,000

Technology:

Cash Purchase: $65,000 to $100,000
Financing (3 months): $3,000 to $4,000

Opening Inventory and Supplies: $13,000 to $18,000

Additional Funds — Three Months: $150,000 to $192,000

Grand Opening Advertising: $7,500 to $10,000

Security Deposit, Utilities, Licenses and Other Prepaid Expenses: $20,000 to $165,000

Insurance Cost: $15,000 to $35,000

Total Estimated Initial Investment:

If you pay cash for land, building, site improvements, equipment, signage and technology: $1,887,500 to $3,693,000
If you finance the land, building, site improvements, equipment, signage and technology: $556,500 to $1,135,000
If you lease the land, building and site improvements, and finance the equipment, signage and technology: $329,500 to $647,500

What Is the Franchise Fee for Wendy's?

The initial franchise fee is $5,000.

Royalty: 4% of Gross Sales
National Advertising: 3.50% of Gross Sales
Local and Regional Advertising: 0.50% of Gross Sales
Net Worth Requirement: $1,000,000
Cash Requirement: $500,000

The fast-food chain recently announced a new "Pacesetter" development program in the U.S. and Canada, which will cut payback for a new build to just over two years, while increasing the royalty rate to 5%.

Who’s On Wendy's Leadership Team?

What Helpful Articles Can I Read to Learn More About Wendy's?

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