Wendy's

The technical assistance fee (franchise fee equivalent) is $50,000 for a standard traditional restaurant. Non-traditional locations (limited seating, military bases) pay $25,000; the Franchise Flip program for acquiring company-operated restaurants is $25,000.

Total investment for a traditional new-build (cash purchase) ranges $1,523,957–$2,992,000. The dominant cost is building construction: $1,033,292–$2,200,000 depending on market, land costs, and design specifications. California locations can reach $3,092,000 total. Equipment (furniture, fixtures, technology, signage, security) adds $380,165–$550,000. Pre-opening expenses including training ($5,000), grand opening advertising ($7,500–$10,000), inventory and supplies ($14,000–$25,000), and roughly 3 months' working capital ($84,000–$152,000 average) bring the total to the stated range. Land/real estate is excluded from these figures and adds $500,000–$1,500,000+ if purchasing.

For financed scenarios (80% LTV on building and equipment), the upfront cash requirement drops to $393,191–$752,000 — a meaningful difference that makes Wendy's more accessible than the headline number suggests. The Build-to-Suit (BTS) program, where Wendy's or a developer builds the restaurant and you lease it, reduces upfront capital to approximately $232,000–$251,000 average cash-out while still giving you a fully operational restaurant.

Ongoing royalties: 4% of gross sales for standard traditional locations — one of the lowest royalty rates in the burger QSR category. Advertising: 3.5% national (WNAP) plus 0.5% local co-op = 4.0% total. New post-August 2025 restaurants must pay an additional $20,004/year FreshAi fee for the AI ordering system. Technology fees range $7,620–$14,200/year depending on prior year sales volume.

Wendy's provides one of the more detailed Item 19 disclosures in the burger QSR category, including company P&L data that is directly relevant to franchisee economics.

FY2024 all franchise restaurants (5,325 reporting): - Average gross sales: $2,108,454 - Median gross sales: $1,984,382 - Range: $345,222 to $8,344,302 - 42.4% of franchise locations exceeded the average

FY2024 company restaurant P&L (362 traditional company locations, average $2.34M sales): - Cost of sales (food/paper): 32.5% of revenue - Other operating expenses (labor, advertising, utilities, insurance, etc.): 49.3% of revenue - Restaurant EBITDA before rent: 18.2% average, 16.3% median - Range: -4.1% to 32.9%

Important caveat: this is company restaurant data, and company locations benefit from economies of scale. Franchisee costs — particularly labor (likely higher as an independent operator) and royalties (4% that company locations don't pay) — will differ. Adding the 4% royalty to the company expense base reduces the effective EBITDA for a franchisee to roughly 14% at average revenue. On $2.1M average franchise revenue, that's approximately $294,000 in pre-rent EBITDA — before lease costs that could run $80,000–$200,000+ annually depending on market.

New-build weekly average for FY2023-24 openings (122 restaurants): $39,853/week ($2.07M annualized), consistent with the system average.

Wendy's is a massive system at nearly 6,000 global locations, but the domestic franchise count has been essentially flat to modestly declining. Franchised U.S. locations went from 5,535 (start of 2022) to 5,591 (end 2022) to 5,627 (end 2023) to 5,552 (end 2024 — note this figure reflects a restructuring of the count methodology in the FDD). Closure rates are a concern: in 2022, 273 franchised restaurants were terminated or ceased operations; in 2023, 56 ceased operations.

The high closure numbers in 2022 reflect a known system-wide event (Wendy's repurchased and refranchised units from certain large operators), but the ongoing attrition reflects genuine unit economics pressure at some locations. New openings of 94–132 per year demonstrate that the system remains attractive to new investors, but the gross-to-net spread indicates a meaningful percentage of locations don't reach long-term viability.

Wendy's brand remains one of the top-3 burger QSR brands in the U.S. with strong consumer loyalty. The breakfast daypart expansion, digital ordering investment (including the FreshAi AI ordering system), and ongoing menu innovation are positive long-term signals. International expansion continues with meaningful presence in Canada, the Middle East, and Asia-Pacific.

The Build-to-Suit program reduces upfront capital significantly but introduces a different risk: you're leasing the real estate from Wendy's/an affiliate rather than owning or controlling your own lease. Build-to-Suit rent equals the prime lease amount plus a monthly percentage rent set by CAPCOM (the corporate capital committee) plus a lease administration fee of at least $6,000/year with potential 5% annual increases. You have limited control over your occupancy cost in a BTS structure.

The Development Obligations Fee is a serious contractual risk: if you commit to opening a restaurant under a Groundbreaker or Pacesetter development agreement and miss the required open date, you owe $6,000–$7,500/month continuing until you actually open or for up to 10 years. This is not a penalty you can easily dismiss in a construction delay scenario.

New restaurants opening after August 1, 2025 must pay the FreshAi service fee of $20,004/year ($1,667/month) for the AI ordering system. This is a new mandatory cost not reflected in older franchisee P&L data and adds approximately 1% to revenue burden on a $2M restaurant.

The 4% royalty, while low for QSR, is supplemented by a 4% total advertising contribution and the FreshAi fee — making the true recurring obligation closer to 8–9% of gross sales plus a technology fee that scales with your revenue tier.

The reimage/remodel obligation is significant: restaurants must be remodeled on Wendy's schedule, with costs ranging $150,000–$2,515,000 depending on design type. This is not discretionary — failing to comply with image standards is grounds for termination.