Franchising

Former Wendys franchisee claims she was refused maternity leave

Andrew Sadauskas /

Another former Wendys franchisee has come forward with a horror story from her time with the hot dog and ice cream chain, which she says refused to allow her to take maternity leave after giving birth to her second child.

As SmartCompany previously 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.

Former Wendys franchisees have told SmartCompany they have had store locks changed during a dispute with the company and received letters stating their contracts with the company would not be renewed after speaking out. Another franchisee claimed Wendys repossessed all his stock, fittings and equipment without paying him any compensation after failing to renegotiate a lease.

The incidents appear to have taken place between 2006 and 2014, when Wendys was owned by Malaysian private equity firm Navis Capital. In September 2014, the company was purchased by current owners Global Food Retail Group.

Tragically, in at least two cases, the failure of a Wendys franchise eventually led to a suicide.

Early problems

Former franchisee Talia Robertson told SmartCompany she negotiated a price of $85,000 for the Wendys store in Emu Plains, NSW, after answering an ad in the local paper that offered the chance to “be your own boss”.

“I was a single mum and working as a youth worker earning $55,000 a year. I was looking to purchase a small takeaway shop that I could manage for my mum and sister to work in,” Robertson says.

Robertson says she negotiated a price of $85,000 with Wendys then-general manager Russell Stone and was asked to spend $10,000 to attend the company’s training course in Adelaide. Her problems with the chain began soon after.

“Near the end of the week at Adelaide, I got a phone call from [an employee at] Wendy’s head office telling me that I had to come up with almost another $9000. This was for the bond for the rent; while looking into buying the store I had received a letter from Wendy’s stating that my lease did not require the bond. This was a mistake and in fact was needed, meaning I had to find another $9000,” she says.

Maternity leave

When Robertson gave birth to her second child in September 2007, she claims Wendys refused to allow her time off from her store – despite her being the owner.

“I was no longer working in my store as I was home looking after my daughter during the day and I had to find other work for the afternoons as again we could not afford to pay the bills,” she says.

“In February 2008, I received a letter from Wendys telling me that I had to work in my store for 30 hours or more a week unless I became ‘deceased or disabled’, and if I did become deceased or disabled I had three months to replace myself. Their letter also stated that I was not allowed to work anywhere else while I was the nominated operator of my store.”

The demand was allegedly made even though Robertson says she lived across the road from the store at the time and had an employee she trusted to manage the store in her absence.

Employee problems

Robertson claims she encountered further problems when she had trouble with an employee.

“After two written warnings which [the employee] had not even received yet, the young girl resigned with her parents making demands,” she says.

“I spoke to the appropriate person from Wendys head office about the demands I was receiving such as a reference and I was told that I did not have to provide references; it was up to my discretion.”

“Instead I wrote this employee a certificate of employment, which her parents were not happy with. I then received a phone call from Russell Stone telling me that a complaint had been made and I needed to go into head office the next morning.”

Robertson claims she was eventually bullied into providing a reference for the former employee.

“They did not ask me what had happened, nor did they care, basically their reaction was, ‘what can we do to fix this?’ as the parents were threatening to go to the media. Wendys then told me that I had to write the girl a reference which I refused, however I was then bullied daily by [a Wendys employee] about providing a reference. In the end Wendy’s wrote a reference for her and then told me I had to sign it. I would receive daily phone calls until I gave in and signed the reference.”

Swept under the rug

Robertson confirms she encountered several of the issues previously raised by numerous other franchisees, including forced refurbishments at the end of franchise terms and being banned from purchasing products from sources other than Wendys.

“Any time I or any other franchisee try and raise a concern with Wendys, we were told ‘no other franchisee has that problem or concern’. You are made to feel like you are the only one who has a problem so it must be something you are doing,” she says.

Sold at a loss

After keeping her store afloat for just two years, Robertson says she eventually sold her store to a couple in April 2008 for just $30,000, minus a $7000 fee to Wendys. During the process, she says Stone encouraged her to drop her price below the $85,000 she paid for the store.

“I had a meeting with Russell Stone about my store, and he told me I wasn’t asking for a reasonable price, although they let me buy it for $85,000. At this meeting I asked Russell what a store needs to turn over in order to make a profit, he replied $300,000 to $350,000. I told him that I bought the store doing $205,000, I had increased it but in this centre I would never get the sales up to $300,000. Russell replied ‘no you won’t in this centre’.”

Robertson is now studying to be a nurse, having accumulated a significant debt of around $100,000 as a franchisee.

SmartCompany contacted Wendys but did not receive a response prior to publication.

Emu Plains store expenses on $205,000 turnover

Rent 15%
Wages 15%
Stock 28%
GST 10%
Wendys 11%
Total costs 79% ($161,950)
Remaining 21% ($43,050)

Extra expenses

Refurbishment $20,000 per year. X 5 = $100,000 (although I was quoted at $164,000).
Insurance $2040 per year
Loan $ 10,800 per year
Workers’ Compensation $2000 per year
Phone $ 2400 per year
Power $6000 per year
Total $43,240
Balance, minus extra expenses $43,050 – $43,240 =  -$190

Know more? Email [email protected].

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Andrew Sadauskas

Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.

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