Finance, Legal, Management

Wendy’s franchisees hit out at disgruntled store owner

Oliver Milman /

A group of Wendy’s franchisees has lashed out at dissident franchisee Trevor Banks over his criticism of the ice cream retailer, claiming that his attacks “damage our brand image, devalue our stores and cause genuine discomfort for prospective franchisees.”

 

Wendy’s Franchise Advisory Council, an elected body of 10 franchisees across the 200-strong national chain, says that Banks has hindered their businesses due to the negative media coverage generated by his remarks.

 

Last June, Banks, who runs a Wendy’s store in Mount Druitt, NSW, appeared on ABC show Lateline to complain about his franchisor, claiming that he was forced to pay high prices for equipment, damaging his margins.

 

Banks then underwent unsuccessful mediation with Wendy’s, which lasted either three days or “several months,” depending on the account of each party.

 

In a statement sent to StartupSmart, Wendy’s FAC, which previously expelled Banks as a representative, says that his actions have caused “significant stress” for other franchisees, as well as unnecessary legal fees for the franchisor.

 

“In short, the argument for ‘good faith’ should also apply to franchisees,” says the statement.

 

“There are many contented franchisees in the Wendy’s family – all who have families to support, bank loans and mortgages to meet. These people should not be held hostage by a disgruntled franchisee driven by a questionable agenda.”

 

Dale Eichner, a FAC representative who runs a Wendy’s in Mount Barker, SA, says that negative coverage surrounding the brand had prevented several franchisees from selling their businesses.

 

“The negative press has been continuous for the past 18 months and we’re sick of it,” he says. “Retail conditions are very hard anyway and it doesn’t help when you get people in the store saying ‘did you see Lateline?’”

 

“Two or three years ago, we had a big push because there were some issues that needed sorted out, which as the cost of machinery and goods. But there’s been a big turnaround and we are quite happy with our lot.”

 

“He’s affecting Joe Bloggs in NSW and Joe Bloggs in Queensland. We’d be happy for him to be quiet and concentrate on his store.”

 

Eichner says that he wouldn’t want to force Banks out of his business and denies that Wendy’s management is behind the group’s protest. He says that “about 80%” of franchisees agreed with his stance.

 

However, Banks claims that buyers are put off buying Wendy’s franchisees because of the poor state of the business, rather than any concern over his dispute with the company.

 

“99% of people don’t remember Lateline – one disgruntled franchisee shouldn’t stop you buying a viable business,” Banks tells StartupSmart.

 

“Over 30 stores have closed over the last two years. They push the point that there are economies of scale in getting a franchise, but it’s not the case. They’ve kept profit at the franchisees’ expense.”

 

Banks claims that Wendy’s forces its franchisees to buy from a single supplier at an uncompetitive rate, with franchisees missing out on the rebate. He says that a plan put to Wendy’s to use another supplier that offered substantial savings was turned down.

 

Banks plans to exit his Wendy’s agreement when his lease expires in March. He will then attempt to de-brand his store and operate independently, despite the recent legal action taken against Cold Rock franchisees who tried to do the same thing.

 

Wendy’s hadn’t returned calls from StartupSmart at the time of publication.

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