Cash flow

Working seven days a week for no wage: Franchisee claims Wendy’s breached duty of care as landlord locks him out of his store

Eloise Keating /

A Wendy’s franchisee, who was locked out of the store he owned and operated for more than two years, claims the ice cream and hot dog chain breached its duty of care.

Read more: A Wendy’s franchisee’s nightmare: From fast food state representative to resignation, divorce and death

The franchisee, who spoke to SmartCompany anonymously, says the landlord of the shopping centre where his Wendy’s kiosk is located disassembled the store early on Monday morning.

“It’s now just a polished floor,” says the franchisee, adding the landlord now has possession of all of the store’s equipment.

The franchise stopped trading at the end of May and until this week, the store had been siting idle. The franchisee says he has not heard from Wendy’s since that time.

The closure of the franchisee’s store was caused by a rental dispute, with the franchisee falling $40,000 behind in rent.

But with the closure, which the franchisee blames on Wendy’s and not necessarily the landlord, the franchisee has now been left with a bank debt of $200,000 and no means of paying it. On top of that, there is a $22,500 guarantee he was required to provide to the landlord, which he also now has to pay.

“I have spent all of my savings over the two year period ($130,000) keeping the store running and now have to sell my house to cover the bank debt,” the franchisee says.

Like other Wendy’s franchisees and former franchisees that have shared their stories with SmartCompany, the franchisee says the problems with his store started early on.

“This has been building up to disaster since I first opened the store in May 2013, providing Wendy’s with monthly profit and loss statements showing a loss of at least $4000,” the franchisee says.

The franchisee says the shopping centre landlord had offered rent reductions over a 14-month period, during which time the shopping centre was undergoing a refurbishment.

But the franchisee says he approached Wendy’s head office on a number of occasions starting in July 2013 to request his store be relocated to a spot in the centre that was closer to the food court, and therefore with the potential for more foot traffic.

He claims Wendy’s refused this offer – even when the franchisee indicated he was willing to pay the $30,000 the move would cost – even though the landlord had offered Wendy’s a number of different location sites. The franchisee was not told of these offers until after the fact

Emails seen by SmartCompany from 2014 show the franchisee pleaded with Wendy’s for help with his store and explained the “great strain” the financial pressures were putting on his family.

“I cannot see a light at the end of this,” the franchisee wrote in early 2014.

In multiple emails, the franchisee made the case to both Wendy’s management and the shopping centre landlord that his store was situated in the wrong part of the shopping centre.

The franchisee says at no time has he “made anything” from his store and for more than two years, he has not personally drawn a wage, despite working seven days a week.

“From day one we lost every month, we never made a cent,” the franchisee says.

“And they never told us the franchise that was there before us went broke.”

The franchisee says he has sought legal advice, and has been told he may have a case against Wendy’s. However, the estimated cost of taking legal action is in the tens of thousands of dollars, money which they don’t have.

SmartCompany contacted Wendy’s but the company was unable to provide a response prior to publication.

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Eloise Keating

Eloise Keating is the editor of SmartCompany. Previously, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry.

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