Wendy's Co 10-Q for FY2026 Q3
Wendy's Co (WEN)
10-Q
2026-11-05
For: 2026-09-27
View Original
Added on
November 06, 2026
About this 10-Q
Wendy's Co filed this 10-Q on November 5, 2026, covering the quarter ended September 27, 2026 (FY2026 Q3).
The Wendy’s Company reported third-quarter 2026 global systemwide sales of $3.33 billion, down 5.9% on a constant currency basis, and income before income taxes of $25.4 million, down 59.8% from $63.2 million. AI summary
Headline figures
Quarter ended September 27, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $546.99M
- down 0.5% from $549.52M a year earlier
- Net income
- $15.09M
- down 65.9% from net income of $44.25M a year earlier
- Diluted EPS
- $0.08
- down 65.2% from $0.23 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended September 27, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ______________ to _______________
Commission file number: 1-2207
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(614 ) 764-3100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
There were 191,242,899 shares of The Wendy’s Company common stock outstanding as of October 29, 2026.
THE WENDY’S COMPANY AND SUBSIDIARIES
INDEX TO FORM 10-Q
| Page | |||||
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Par Value)
| September 27, 2026 | December 28, 2025 | ||||||||||
| ASSETS | (Unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts and notes receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Advertising funds restricted assets | |||||||||||
| Total current assets | |||||||||||
| Properties | |||||||||||
| Finance lease assets | |||||||||||
| Operating lease assets | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Investments | |||||||||||
| Net investment in sales-type and direct financing leases | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Current portion of finance lease liabilities | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Advertising funds restricted liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term finance lease liabilities | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Deferred franchise fees | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Common stock held in treasury, at cost; | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
4
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Sales | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue and fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Franchise support and other costs | |||||||||||||||||||||||
| Franchise rental expense | |||||||||||||||||||||||
| Advertising funds expense | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | |||||||||||||||||||||||
| Amortization of cloud computing arrangements | |||||||||||||||||||||||
| Portfolio and system optimization gains, net | ( | ( | ( | ( | |||||||||||||||||||
| Reorganization and realignment costs | ( | ||||||||||||||||||||||
| Impairment of long-lived assets | |||||||||||||||||||||||
| Other operating income, net | ( | ( | ( | ( | |||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Investment loss, net | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Basic and diluted net income per share | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
5
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
6
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Thousands)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Balance at December 28, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
| Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at March 29, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
| Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at June 28, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
| Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at September 27, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
7
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED
(In Thousands)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Balance at December 29, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ||||||||||||||||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ||||||||||||||||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||
| Balance at June 29, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||
| Cash dividends | ( | ( | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||||||||||||||||||||
| Share-based compensation | ( | ( | |||||||||||||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ||||||||||||||||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at September 28, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
8
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | |||||||||||
| Amortization of cloud computing arrangements | |||||||||||
| Share-based compensation | |||||||||||
| Impairment of long-lived assets | |||||||||||
| Deferred income tax | ( | ||||||||||
| Non-cash rental expense, net | |||||||||||
| Change in operating lease liabilities | ( | ( | |||||||||
| Net receipt of deferred vendor incentives | |||||||||||
| Portfolio and system optimization gains, net | ( | ( | |||||||||
| Distributions received from joint ventures, net of equity in earnings | |||||||||||
| Long-term debt-related activities, net | |||||||||||
| Cloud computing arrangements expenditures | ( | ( | |||||||||
| Changes in operating assets and liabilities and other, net | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Franchise development fund | ( | ( | |||||||||
| Acquisitions | ( | ||||||||||
| Dispositions | |||||||||||
| Notes receivable, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from long-term debt | |||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Repayments of finance lease liabilities | ( | ( | |||||||||
| Deferred financing costs | ( | ||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Dividends | ( | ( | |||||||||
| Proceeds from stock option exercises | |||||||||||
| Payments related to tax withholding for share-based compensation | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net cash provided by (used in) operations before effect of exchange rate changes on cash | ( | ||||||||||
| Effect of exchange rate changes on cash | ( | ||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
9
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of September 27, 2026, the results of our operations for the three and nine months ended September 27, 2026 and September 28, 2025 and cash flows for the nine months ended September 27, 2026 and September 28, 2025. The results of operations for the nine months ended September 27, 2026 are not necessarily indicative of the results to be expected for the full 2026 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025 (the “Form 10-K”).
The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 19 for further information.
We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.
Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.
(2) Accounts and Notes Receivable, Net
| September 27, 2026 | December 28, 2025 | ||||||||||||||||||||||||||||||||||
| Gross | Allowance for Doubtful Accounts | Net | Gross | Allowance for Doubtful Accounts | Net | ||||||||||||||||||||||||||||||
| Accounts receivable (a) (b) | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Notes receivable from franchisees (c) (d) | ( | ( | |||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
(a)Consist primarily of royalties, rents, property taxes and franchise fees due from franchisees, refundable income taxes, credit card receivables and insurance receivables.
(b)Includes income tax refund receivables of $611 and $17,055 as of September 27, 2026 and December 28, 2025, respectively.
(c)Includes the current portion of sales-type and direct financing lease receivables of $11,379 and $10,932 , respectively.
10
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(d)Includes notes receivable related to a joint venture in Brazil (the “Brazil JV”) of $3,888 3,888 and $2,444 , respectively, on the loans outstanding related to the Brazil JV.
The following is a rollforward of the allowance for doubtful accounts:
| Accounts Receivable | Notes Receivable | Total | |||||||||||||||
Nine Months Ended September 27, 2026 | |||||||||||||||||
Balance at December 28, 2025 | $ | $ | $ | ||||||||||||||
| Provision for doubtful accounts | |||||||||||||||||
| Uncollectible accounts written off, net of recoveries | ( | ( | |||||||||||||||
Balance at September 27, 2026 | $ | $ | $ | ||||||||||||||
Nine Months Ended September 28, 2025 | |||||||||||||||||
Balance at December 29, 2024 | $ | $ | $ | ||||||||||||||
| Provision for doubtful accounts | ( | ||||||||||||||||
| Uncollectible accounts written off, net of recoveries | ( | ( | ( | ||||||||||||||
Balance at September 28, 2025 | $ | $ | $ | ||||||||||||||
(3) Advertising Funds
Restricted assets and liabilities of the Company’s national advertising funds for the U.S. and Canada (the “Advertising Funds”) at September 27, 2026 and December 28, 2025 are as follows:
| September 27, 2026 | December 28, 2025 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Other assets | |||||||||||
| Advertising funds restricted assets | $ | $ | |||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Advertising funds restricted liabilities | $ | $ | |||||||||
| Supplemental balance sheet information: | |||||||||||
| Accounts receivable, gross | $ | $ | |||||||||
| Allowance for doubtful accounts | ( | ( | |||||||||
| Accounts receivable, net | $ | $ | |||||||||
The following is a rollforward of the allowance for doubtful accounts of the Advertising Funds:
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| Allowance for doubtful accounts at beginning of period | $ | $ | |||||||||
| Provision for doubtful accounts | |||||||||||
| Uncollectible accounts written off, net of recoveries | ( | ( | |||||||||
| Allowance for doubtful accounts at end of period | $ | $ | |||||||||
11
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(4) Revenue
Disaggregation of Revenue
The following tables disaggregate revenue by segment and source:
| Wendy’s U.S. | Wendy’s International | Global Real Estate & Development | Total | ||||||||||||||||||||
Three Months Ended September 27, 2026 | |||||||||||||||||||||||
| Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended September 28, 2025 | |||||||||||||||||||||||
| Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Nine Months Ended September 27, 2026 | |||||||||||||||||||||||
| Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Nine Months Ended September 28, 2025 | |||||||||||||||||||||||
| Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Franchise royalty revenue | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Franchise rental income | |||||||||||||||||||||||
| Advertising funds revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
12
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Contract Balances
The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:
| September 27, 2026 (a) | December 28, 2025 (a) | ||||||||||
Receivables, which are included in “Accounts and notes receivable, net” (b) | $ | $ | |||||||||
Receivables, which are included in “Advertising funds restricted assets” | |||||||||||
| Deferred franchise fees (c) | |||||||||||
_______________
(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.
(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”
(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,073 and $80,078 , respectively, as of September 27, 2026, and $10,540 and $87,956 , respectively, as of December 28, 2025.
Significant changes in deferred franchise fees are as follows:
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| Deferred franchise fees at beginning of period | $ | $ | |||||||||
Revenue recognized during the period | ( | ( | |||||||||
| New deferrals due to cash received and other | |||||||||||
| Deferred franchise fees at end of period | $ | $ | |||||||||
Anticipated Future Recognition of Deferred Franchise Fees
The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
| Estimate for fiscal year: | |||||
| 2026 (a) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| $ | |||||
_______________
(a)Represents franchise fees expected to be recognized for the remainder of 2026, which includes development-related franchise fees expected to be recognized over a duration of one year or less.
13
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(5) Leases
Nature of Leases
The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. The Company also leases restaurant, office and transportation equipment. As of September 27, 2026, the nature of restaurants operated by the Company and its franchisees was as follows:
| September 27, 2026 | |||||
| Company-operated restaurants: | |||||
| Owned land and building | |||||
| Owned building and held long-term land leases | |||||
| Leased land and building | |||||
| Total Company-operated restaurants | |||||
| Franchisee-operated restaurants: | |||||
| Company-owned properties leased to franchisees | |||||
| Company-leased properties subleased to franchisees | |||||
| Other franchisee-operated restaurants | |||||
| Total franchisee-operated restaurants | |||||
| Total Company-operated and franchisee-operated restaurants | |||||
Company as Lessee
The components of lease cost are as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||
| Amortization of finance lease assets | $ | $ | $ | $ | |||||||||||||||||||
| Interest on finance lease liabilities | |||||||||||||||||||||||
| Operating lease cost | |||||||||||||||||||||||
| Variable lease cost (a) | |||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Total operating lease cost (b) | |||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)Includes expenses for executory costs of $10,436 and $10,367 for the three months ended September 27, 2026 and September 28, 2025, respectively, and $31,272 and $31,339 for the nine months ended September 27, 2026 and September 28, 2025, respectively, for which the Company is reimbursed by sublessees.
(b)Includes $30,361 and $30,899 for the three months ended September 27, 2026 and September 28, 2025, respectively, and $88,354 and $94,120 for the nine months ended September 27, 2026 and September 28, 2025, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,922 and $6,886 for the three months ended September 27, 2026 and September 28, 2025, respectively, and $20,726 and $20,773 for the nine months ended September 27, 2026 and September 28, 2025, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.
14
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Company as Lessor
The components of lease income are as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Sales-type and direct-financing leases: | |||||||||||||||||||||||
| Selling profit | $ | $ | $ | $ | |||||||||||||||||||
| Interest income (a) | |||||||||||||||||||||||
| Operating lease income | |||||||||||||||||||||||
| Variable lease income | |||||||||||||||||||||||
| Franchise rental income (b) | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)Included in “Interest expense, net.”
(b)Includes sublease income of $43,439 and $41,548 recognized during the three months ended September 27, 2026 and September 28, 2025, respectively, and $123,580 and $128,999 for the nine months ended September 27, 2026 and September 28, 2025, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,384 and $10,439 for the three months ended September 27, 2026 and September 28, 2025, respectively, and $31,151 and $31,148 for the nine months ended September 27, 2026 and September 28, 2025, respectively.
(6) Investments
Equity Method Investment
Wendy’s has a 50 % share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). The Company has significant influence over this investee. Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”
Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements:
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Equity in earnings for the period | |||||||||||
| Amortization of purchase price adjustments (a) | ( | ( | |||||||||
| Distributions received | ( | ( | |||||||||
Foreign currency translation adjustment included in “Other comprehensive income (loss)” | ( | ||||||||||
| Balance at end of period | $ | $ | |||||||||
_______________
15
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21
Other Investments in Equity Securities
(7) Long-Term Debt
Long-term debt consisted of the following:
| September 27, 2026 | December 28, 2025 | ||||||||||
| Class A-2 Notes: | |||||||||||
| $ | $ | ||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||
| Less amounts payable within one year | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Other Long-Term Debt
Wendy’s U.S. advertising fund has a revolving line of credit, which was established to support the Company’s advertising fund operations and bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.25 %. Borrowings under the line of credit are guaranteed by Wendy’s. During the three months ended March 29, 2026, the Company borrowed and repaid $11,500 3,600 2,700 15,000 to $25,000 and borrowed and repaid $15,950 21,100 no outstanding borrowings under the revolving line of credit.
(8) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:
16
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.
•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.
Financial Instruments
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
| September 27, 2026 | December 28, 2025 | ||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | Fair Value Measurements | |||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | Level 1 | ||||||||||||||||||||||||
| Financial liabilities (a) | |||||||||||||||||||||||||||||
| Series 2025-1 Class A-2-I Notes | Level 2 | ||||||||||||||||||||||||||||
| Series 2022-1 Class A-2-I Notes | Level 2 | ||||||||||||||||||||||||||||
| Series 2022-1 Class A-2-II Notes | Level 2 | ||||||||||||||||||||||||||||
| Series 2021-1 Class A-2-I Notes | Level 2 | ||||||||||||||||||||||||||||
| Series 2021-1 Class A-2-II Notes | Level 2 | ||||||||||||||||||||||||||||
| Series 2019-1 Class A-2-II Notes | Level 2 | ||||||||||||||||||||||||||||
| Series 2018-1 Class A-2-II Notes | Level 2 | ||||||||||||||||||||||||||||
_______________
(a)The fair values were based on quoted market prices in markets that are not considered active markets.
The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.
Non-Recurring Fair Value Measurements
Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.
17
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) the deterioration in operating performance of certain Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 14 for further information regarding impairment of our long-lived assets.
| Fair Value Measurements | |||||||||||||||||||||||
| September 27, 2026 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Held and used | $ | $ | $ | $ | |||||||||||||||||||
| Held for sale | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurements | |||||||||||||||||||||||
| December 28, 2025 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Held and used | $ | $ | $ | $ | |||||||||||||||||||
| Held for sale | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(9) Income Taxes
The Company’s effective tax rate for the three months ended September 27, 2026 and September 28, 2025 was 40.7 % and 30.0 %, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21
The Company’s effective tax rate for the nine months ended September 27, 2026 and September 28, 2025 was 34.9 % and 28.6 %, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21
18
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(10) Net Income Per Share
The calculation of basic and diluted net income per share was as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Weighted average basic shares outstanding | |||||||||||||||||||||||
Dilutive effect of stock options and restricted shares | |||||||||||||||||||||||
| Weighted average diluted shares outstanding | |||||||||||||||||||||||
| Basic and diluted net income per share | $ | $ | $ | $ | |||||||||||||||||||
Basic net income per share for the three and nine months ended September 27, 2026 and September 28, 2025 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 13,477 and 12,640 for the three and nine months ended September 27, 2026, respectively, and 10,193 and 8,823 for the three and nine months ended September 28, 2025, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.
(11) Stockholders’ Equity
Dividends
During the first, second, and third quarters of 2026, the Company paid dividends per share of $.14 , $.14 and $.07 , respectively. During the first, second, and third quarters of 2025, the Company paid dividends per share of $.25 , $.14 and $.14 , respectively.
Repurchases of Common Stock
In January 2023, our Board of Directors authorized a repurchase program for up to $500,000 of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”). During the nine months ended September 27, 2026, no shares were repurchased under the January 2023 Authorization. During the nine months ended September 27, 2026, the Company paid $1,922 in excise tax on shares repurchased during 2025. As of September 27, 2026, the Company had $35,000 of availability remaining under the January 2023 Authorization.
During the nine months ended September 28, 2025, the Company repurchased 14,361 shares under the January 2023 Authorization with an aggregate purchase price of $200,000 , excluding excise tax of $1,930 and commissions of $201 . During the nine months ended September 28, 2025, the Company paid $565 in excise tax on shares repurchased during 2024.
19
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Accumulated Other Comprehensive Loss
The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| Balance at beginning of period | $ | ( | $ | ( | |||||||
Foreign currency translation | ( | ||||||||||
| Balance at end of period | $ | ( | $ | ( | |||||||
Stockholder Rights Plan
On November 4, 2026, the Board of Directors (excluding the directors affiliated with Trian Fund Management, L.P.) adopted a stockholder rights plan and authorized and declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to stockholders of record at the close of business on November 16, 2026. The Rights will generally become exercisable if a person or group acquires beneficial ownership of 15 % or more of the outstanding shares of the Company’s common stock or if a person or group that currently beneficially owns 15 % or more of the outstanding shares of the Company’s common stock acquires additional shares (in each case, including in economic exposure through certain derivatives contracts as described in the Rights Agreement), in each case, without the approval of the Board of Directors or the committee of independent, disinterested directors of the Company, subject to certain exceptions. If the Rights become exercisable, all holders of Rights (other than the triggering person or group) will be entitled to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, $0.10 par value per share, of the Company (the “Preferred Shares”) at a purchase price of $37.00 per one one-thousandth of a Preferred Share, subject to adjustment as provided in the Rights Agreement (as defined below). The terms of the Rights are set forth in the Rights Agreement, dated as of November 4, 2026, by and between the Company and Equiniti Trust Company, LLC, as rights agent (the “Rights Agreement”). The Rights will expire on November 3, 2027, unless the Rights are earlier redeemed or exchanged by the Company.
(12) Portfolio and System Optimization Gains, Net
During the third quarter of 2026, the Company established Dave’s Way, a multi-year strategy focused on growing customer traffic and market share while strengthening restaurant profitability. In support of this strategy, the Company launched a new portfolio optimization initiative focused on strengthening franchisee economics, aligning restaurants with high-performing operators and creating greater long-term value across the system. The new portfolio optimization initiative has replaced the Company’s prior system optimization initiative. While the Company’s prior system optimization initiative was established to focus on opportunities to transition certain Company-operated restaurants to franchise operators, the portfolio optimization initiative takes a broader, more strategic approach to optimizing the Wendy’s restaurant portfolio in the United States, with an increased focus on restaurant and franchisee performance and long-term value creation. Although the strategic focus of the portfolio optimization initiative differs from that of the prior system optimization initiative, the nature of the activities and associated costs are consistent as both initiatives involve transactions such as evaluating strategic acquisitions of franchised restaurants, pursuing strategic dispositions of Company-operated restaurants to existing and new franchisees, facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”), working with franchisees and lenders to optimize their restaurant portfolios and, at times, closing certain underperforming restaurants. Through these activities, the Company seeks to optimize restaurant ownership structures, strengthen the franchisee base, support franchisee economics and drive sustainable system growth.
During the nine months ended September 27, 2026 and September 28, 2025, the Company facilitated 69 and one Franchise Flips, respectively. Additionally, during the nine months ended September 27, 2026 and September 28, 2025, the Company completed the sale of four and five Company-operated restaurants to franchisees, respectively.
Gains and losses recognized on dispositions for both our prior system optimization initiative and the current portfolio optimization initiative are recorded to “Portfolio and system optimization gains, net” in our condensed consolidated statements
20
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
of operations. Costs related to acquisitions and dispositions under our portfolio optimization initiative are recorded to “Reorganization and realignment costs.” All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”
The following is a summary of the disposition activity recorded as a result of our portfolio and system optimization initiatives:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Number of restaurants sold to franchisees | |||||||||||||||||||||||
| Proceeds from sales of restaurants (a) | $ | $ | $ | $ | |||||||||||||||||||
| Net assets sold (b) | ( | ( | |||||||||||||||||||||
| Other | ( | ( | ( | ||||||||||||||||||||
| Loss on sales of restaurants, net | ( | ||||||||||||||||||||||
| Post-closing adjustments on sales of restaurants | ( | ( | ( | ( | |||||||||||||||||||
| Loss on sales of restaurants, net | ( | ( | ( | ( | |||||||||||||||||||
| Gain on sales of other assets, net (c) | |||||||||||||||||||||||
| Portfolio and system optimization gains, net | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)During the nine months ended September 27, 2026, the Company received net cash proceeds of $2,392 related to the sale of Company-operated restaurants as part of the Company’s strategic build to suit development fund. These proceeds are included within operating activities in the Company’s condensed consolidated statements of cash flows.
(b)Net assets sold consisted primarily of equipment.
(c)During the three and nine months ended September 27, 2026, the Company received net cash proceeds of $8,700 and $13,364 , respectively, primarily from the sale of surplus and other properties. During the three and nine months ended September 28, 2025, the Company received net cash proceeds of $5 and $1,305 , respectively, primarily from the sale of surplus and other properties.
Assets Held for Sale
As of September 27, 2026 and December 28, 2025, the Company had assets held for sale of $25,773 and $3,696 , respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”
(13) Reorganization and Realignment Costs
The following is a summary of the initiatives included in “Reorganization and realignment costs:”
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Portfolio optimization initiative | $ | $ | $ | $ | |||||||||||||||||||
| Organizational Redesign Plan | ( | ( | ( | ||||||||||||||||||||
| Other reorganization and realignment plans | |||||||||||||||||||||||
| Reorganization and realignment costs | $ | $ | $ | $ | ( | ||||||||||||||||||
21
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Portfolio Optimization Initiative
The Company recognizes costs related to acquisitions and dispositions under its portfolio optimization initiative. During the three months ended September 27, 2026, the Company recognized costs totaling $2,841 comprised of third-party and other costs. During the remainder of 2026, the Company expects to incur approximately $2,000 of additional costs in connection with our portfolio optimization initiative, comprised of third-party and other costs.
As of September 27, 2026, the accruals for our portfolio optimization initiative are included in “Accrued expenses and other current liabilities.” The table below presents a rollforward of accruals for the portfolio optimization initiative.
Balance December 28, 2025 | Charges | Payments | Balance September 27, 2026 | ||||||||||||||||||||
| Third-party and other costs | $ | $ | $ | ( | $ | ||||||||||||||||||
Organizational Redesign
In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”). Additionally, in January 2024, the Board of Directors announced the appointment of a new President and Chief Executive Officer and the departure of the Company’s previous President and Chief Executive Officer. During the nine months ended September 27, 2026 and September 28, 2025, the Company recognized costs totaling $(245 ) and $(820 ), respectively, which primarily included reversals of severance accruals. The Company does not expect to incur any material additional costs under the Organizational Redesign Plan.
The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:
| Three Months Ended | Nine Months Ended | Total Incurred Since Inception | |||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||
| Severance and related employee costs (a) | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||
| Recruitment and relocation costs | |||||||||||||||||||||||||||||
| Third-party and other costs | |||||||||||||||||||||||||||||
| ( | ( | ( | ( | ||||||||||||||||||||||||||
| Share-based compensation (b) | |||||||||||||||||||||||||||||
| Total organizational redesign | $ | ( | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||
_______________
(a)The three and nine months ended September 27, 2026 and September 28, 2025 include reversals of severance accruals as a result of changes in estimates.
(b)Total incurred since inception primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.
As of September 27, 2026, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities.” The tables below present a rollforward of accruals for the Organizational Redesign Plan.
Balance December 28, 2025 | Charges | Payments | Balance September 27, 2026 | ||||||||||||||||||||
| Severance and related employee costs | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Recruitment and relocation costs | |||||||||||||||||||||||
| Third-party and other costs | |||||||||||||||||||||||
| $ | $ | ( | $ | ( | $ | ||||||||||||||||||
22
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Balance December 29, 2024 | Charges | Payments | Balance September 28, 2025 | ||||||||||||||||||||
| Severance and related employee costs | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Recruitment and relocation costs | ( | ||||||||||||||||||||||
| Third-party and other costs | |||||||||||||||||||||||
| $ | $ | ( | $ | ( | $ | ||||||||||||||||||
Other Reorganization and Realignment Plans
Costs incurred under the Company’s other reorganization and realignment plans were not material during the nine months ended September 27, 2026 and September 28, 2025. The Company does not expect to incur any material additional costs under these plans.
(14) Impairment of Long-Lived Assets
The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications and (3) classifying surplus properties as held for sale.
The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||||||
| Restaurants leased or subleased to franchisees | |||||||||||||||||||||||
| Surplus properties | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
(15) Supplemental Cash Flow Information
The following table includes supplemental non-cash investing and financing activities:
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| Supplemental non-cash investing and financing activities: | |||||||||||
| Capital expenditures included in accounts payable | $ | $ | |||||||||
| Finance leases | |||||||||||
23
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
The following table includes a reconciliation of cash, cash equivalents and restricted cash:
| September 27, 2026 | December 28, 2025 | ||||||||||
| Reconciliation of cash, cash equivalents and restricted cash at end of period: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Restricted cash, included in Advertising funds restricted assets | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
(16) Guarantees and Other Commitments and Contingencies
Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.
Lease Guarantees
Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $95,838 as of September 27, 2026. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of September 27, 2026. In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner. The liability recorded for our probable exposure associated with these lease guarantees was not material as of September 27, 2026.
Letters of Credit
As of September 27, 2026, the Company had outstanding letters of credit with various parties totaling $29,186 . Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Variable Funding Senior Secured Notes, Class A-1. We do not expect any material loss to result from these letters of credit.
(17) Transactions with Related Parties
Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.
TimWen Lease and Management Fee Payments
A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $15,619 and $15,960 under these lease agreements during the nine months ended September 27, 2026 and September 28, 2025, respectively, which has been recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $176 and $174 during the nine months ended September 27, 2026 and September 28, 2025, respectively, which is included as a reduction to “General and administrative.”
Transactions with Yellow Cab
Certain family members and/or affiliates of Mr. Nelson Peltz, our former Chairman and Chairman Emeritus, Mr. Peter May, our Senior Vice Chairman, and Mr. Matthew Peltz, our former Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee that, as of September 27, 2026 owned and operated 87 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab. In addition, Mr. Bradley Peltz, a director of the Company, is a Managing Director of, and holds a minority ownership interest in, Yellow Cab. During the nine months ended September 27, 2026 and September 28, 2025, the Company recognized $11,737 and $11,491 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities. In all transactions involving Yellow Cab, the Company’s standard franchisee recruiting and approval processes were followed, no modifications were made to the
24
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Company’s standard franchise agreements or related documents, and all deal terms and transaction documents were negotiated and executed on an arm’s-length basis, consistent with the Company’s comparable franchise transactions and relationships. As of September 27, 2026 and December 28, 2025, $1,160 and $1,045 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”
Transactions with AMC
Ms. Kristin Dolan, a director of the Company until May 2026, serves as the Chief Executive Officer of AMC Networks Inc. (“AMC”). During the nine months ended September 28, 2025, the Company purchased approximately $800 of advertising time from a subsidiary of AMC. During the nine months ended September 27, 2026, no advertising time was purchased from a subsidiary of AMC. The Company’s advertising spend with AMC was made in the ordinary course of business and approved on an arm’s-length basis, consistent with the Company’s comparable advertising decisions. There were no
(18) Legal and Environmental Matters
The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.
(19) Segment Information
Wendy’s U.S. revenue, significant segment expenses and segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) are as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Wendy’s U.S. revenue | $ | $ | $ | $ | |||||||||||||||||||
| Wendy’s U.S. expense | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Franchise support and other costs | |||||||||||||||||||||||
| Advertising fund expense | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Other segment items (a) | |||||||||||||||||||||||
| Wendy’s U.S. adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)Other segment items for the three and nine months ended September 27, 2026 and September 28, 2025 primarily include professional fees.
25
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
Wendy’s International revenue, significant segment expenses and segment adjusted EBITDA are as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Wendy’s International revenue | $ | $ | $ | $ | |||||||||||||||||||
| Wendy’s International expense | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Advertising fund expense (a) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Other segment items (b) | |||||||||||||||||||||||
| Wendy’s International adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)Includes advertising fund expense of $191 and $533 for the three and nine months ended September 28, 2025, respectively, related to the Company’s funding of incremental advertising. There was no 1,320 and $564 for the three and nine months ended September 27, 2026, respectively, and $(650 ) and $(1,769 ) for the three and nine months ended September 28, 2025, respectively.
(b)Other segment items primarily include franchise support and other costs.
Global Real Estate & Development revenue, significant segment expenses and segment adjusted EBITDA are as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Global Real Estate & Development revenue | $ | $ | $ | $ | |||||||||||||||||||
| Global Real Estate & Development expense | |||||||||||||||||||||||
| Franchise rental expense | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Other segment items (a) | ( | ( | ( | ( | |||||||||||||||||||
| Global Real Estate & Development adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)Other segment items for the three and nine months ended September 27, 2026 and September 28, 2025 primarily include equity in earnings from our TimWen joint venture, lease buyout activity and franchise support and other costs. Equity in earnings from our TimWen joint venture was $3,053 and $8,589 for the three and nine months ended September 27, 2026, respectively, and $3,081 and $8,393 for the three and nine months ended September 28, 2025, respectively.
26
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
The following table reconciles profit by segment to the Company’s consolidated income before income taxes:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| Wendy’s U.S. | $ | $ | $ | $ | |||||||||||||||||||
| Wendy’s International | |||||||||||||||||||||||
| Global Real Estate & Development | |||||||||||||||||||||||
| Total segment adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
| Unallocated franchise support and other costs | ( | ( | ( | ( | |||||||||||||||||||
| Advertising funds surplus | |||||||||||||||||||||||
| Unallocated general and administrative (a) | ( | ( | ( | ( | |||||||||||||||||||
| Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of cloud computing arrangements | ( | ( | ( | ( | |||||||||||||||||||
| Portfolio and system optimization gains, net | |||||||||||||||||||||||
| Reorganization and realignment costs | ( | ( | ( | ||||||||||||||||||||
| Impairment of long-lived assets | ( | ( | ( | ( | |||||||||||||||||||
| Unallocated other operating income, net | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Investment loss, net | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
_______________
(a)Includes corporate overhead costs, such as employee compensation and related benefits, as well as non-recurring third-party consulting and professional fees.
(20) New Accounting Standards
Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the Financial Accounting Standards Board (“FASB”) issued an amendment to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets for revenue arising from contracts with customers. The Company adopted this amendment during the first quarter of 2026 and has elected the practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the receivables when estimating expected credit losses. The adoption of this amendment did not have a material impact on our condensed consolidated financial statements.
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us,” or “our”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes included elsewhere within this report and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025 (the “Form 10-K”). There have been no material changes as of September 27, 2026 to the application of our critical accounting policies as described in Item 7 of the Form 10-K. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II. Other Information” of this report. You should consider our forward-looking statements in light of the risks discussed in “Item 1A. Risk Factors” in “Part II. Other Information” of this report and our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this report, the Form 10-K and our other filings with the Securities and Exchange Commission (the “SEC”).
The Wendy’s Company is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (formerly known as Wendy’s International, Inc). Wendy’s International, LLC is the indirect parent company of (1) Quality Is Our Recipe, LLC (“Quality”), which is the owner and franchisor of the Wendy’s restaurant system in the United States (the “U.S.”) and all international jurisdictions except for Canada, and (2) Wendy’s Restaurants of Canada Inc., which is the owner and franchisor of the Wendy’s restaurant system in Canada. As used herein, unless the context requires otherwise, the term “Company” refers to The Wendy’s Company and its direct and indirect subsidiaries, and “Wendy’s” refers to Quality when the context relates to the ownership or franchising of the Wendy’s restaurant system and to Wendy’s International, LLC when the context refers to the Wendy’s brand.
Wendy’s is primarily engaged in the business of operating, developing and franchising a system of distinctive quick-service restaurants serving high quality food. Wendy’s opened its first restaurant in Columbus, Ohio in 1969. Today, Wendy’s is one of the largest quick-service restaurant companies in the hamburger sandwich segment in the U.S. based on traffic and dollar share, and the third largest globally with 7,194 restaurants in the U.S. and 38 foreign countries and U.S. territories as of September 27, 2026.
Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring chicken sandwiches, which are prepared to order with the customer’s choice of toppings and condiments. Wendy’s menu also includes chicken tenders and nuggets, chili, french fries, baked potatoes, salads, soft drinks, Frosty® desserts and kids’ meals. In addition, Wendy’s restaurants sell a variety of promotional products on a limited time basis. Wendy’s also offers breakfast in some restaurants in the U.S. and Canada.
The Company is comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture. In addition, Global Real Estate & Development earns fees from facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”) and providing other development-related services to franchisees. In this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company reports on the segment profit for each of the three segments described above. The Company measures segment profit using segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). Segment adjusted EBITDA excludes certain unallocated general and administrative expenses and other items that vary from period to period without correlation to the Company’s core operating performance. See “Results of Operations” below and Note 19 to the Condensed Consolidated Financial Statements contained in Item 1 herein for segment financial information.
The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31. All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.
28
Executive Overview
Our Business
As of September 27, 2026, the Wendy’s restaurant system was comprised of 7,194 restaurants, with 5,711 Wendy’s restaurants in operation in the U.S. Of the U.S. restaurants, 422 were operated by the Company and 5,289 were operated by a total of 204 franchisees. In addition, at September 27, 2026, there were 1,483 Wendy’s restaurants in operation in 38 foreign countries and U.S. territories. Of the international restaurants, 1,473 were operated by a total of 116 franchisees and 10 were operated by the Company in the United Kingdom (the “U.K.”).
The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants.
Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather. Further, recent operating results have contributed to financial pressure for certain of our franchisees, which has affected, and may continue to affect, the timing of franchisee payments, and have resulted and may continue to result in payment delays and deferrals. See Note 2 to the Condensed Consolidated Financial Statements contained in Item 1 herein and “Item 1A. Risk Factors” in “Part II. Other Information” for further information.
As we continue to evolve our strategic priorities, certain actions previously undertaken as part of the Company’s former initiative, Project Fresh, have been incorporated into the broader strategy built on the Company’s foundation of delivering high-quality food, compelling value and a differentiated customer experience. The Company recently announced Dave’s Way, its multi-year strategy focused on growing customer traffic and market share while strengthening restaurant profitability. The five strategic pillars of Dave’s Way include: (1) Our Menu with Quality Food at Real Value; (2) Distinct Branding and Marketing to Drive Demand; (3) Operational Excellence that Delights Customers; (4) A Winning Digital Experience to Build Frequency and (5) Restaurants as an Engine for Growth.
On November 5, 2026, the Company announced a revision to the breakfast strategy to be location specific, which makes breakfast optional for all U.S. restaurants, allowing franchisees to focus on the dayparts with the greatest opportunity for profitable growth in their business.
During the second quarter of 2026, the Company learned that its franchise partner in China had experienced leadership changes and the parties amended the previously disclosed franchise agreement to provide for a termination right for either party without liability prior to December 12, 2026.
Key Business Measures
We track our results of operations and manage our business using the following key business measures:
•Same-Restaurant Sales – We report same-restaurant sales commencing after new restaurants have been open for 15 continuous months and as soon as reimaged restaurants reopen. Restaurants temporarily closed for more than one week are excluded from same-restaurant sales. This methodology is consistent with the metric used by our management for internal reporting and analysis. The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes.
•Company-Operated Restaurant Margin – We define Company-operated restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs. Cost of sales excludes certain costs that support restaurant operations that are not allocated to individual restaurants, which are included in “General and administrative.” Cost of sales also excludes depreciation and amortization expense and impairment of long-lived assets. Therefore, as Company-operated restaurant margin as presented excludes certain costs as described above, its usefulness may be limited and may not be comparable to other similarly titled measures of other companies in our industry.
29
Company-operated restaurant margin is influenced by factors such as menu prices, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs.
•Systemwide Sales – Systemwide sales includes sales by both Company-operated restaurants and franchised restaurants. Franchised restaurants’ sales are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. The Company’s condensed consolidated financial statements do not include sales by franchised restaurants to their customers. The Company’s royalty and advertising funds revenues are computed as percentages of sales made by Wendy’s franchisees. As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability.
The Company calculates same-restaurant sales and systemwide sales growth on a constant currency basis. Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability.
Same-restaurant sales and systemwide sales exclude sales from Argentina due to that country’s highly inflationary economy. The Company considers economies that have had cumulative inflation in excess of 100% over a three-year period as highly inflationary.
The Company believes its presentation of same-restaurant sales, Company-operated restaurant margin and systemwide sales provide a meaningful perspective of the underlying operating performance of the Company’s current business and enables investors to better understand and evaluate the Company’s historical and prospective operating performance. The Company believes that these metrics are important supplemental measures of operating performance because they highlight trends in the Company’s business that may not otherwise be apparent when relying solely on our condensed consolidated financial statements. The Company believes investors, analysts and other interested parties use these metrics in evaluating issuers and that the presentation of these measures facilitates a comparative assessment of the Company’s operating performance. With respect to same-restaurant sales and systemwide sales, the Company also believes that the data is useful in assessing consumer demand for the Company’s products and the overall success of the Wendy’s brand.
Third Quarter Highlights
•Global systemwide sales were $3.33 billion in the third quarter of 2026 compared with $3.54 billion in the third quarter of 2025, a decrease of 5.9% on a constant currency basis;
•International systemwide sales were $549.4 million in the third quarter of 2026 compared with $534.0 million in the third quarter of 2025, an increase of 3.5% on a constant currency basis;
•Revenues were relatively flat at $547.0 million in the third quarter of 2026 compared with $549.5 million in the third quarter of 2025;
•Global same-restaurant sales decreased 5.2%, U.S. same-restaurant sales decreased 5.7% and international same-restaurant sales decreased 2.2% compared with the third quarter of 2025;
•Global Company-operated restaurant margin was 11.3% in the third quarter of 2026, a decrease of 110 basis points compared with the third quarter of 2025;
•Income before income taxes decreased 59.8% to $25.4 million in the third quarter of 2026 compared with $63.2 million in the third quarter of 2025;
•Digital sales increased to approximately 24.9% of global systemwide sales in the third quarter of 2026 compared with approximately 21.0% in the third quarter of 2025; and
•Systemwide restaurant count increased by 14 net restaurants in the third quarter of 2026.
Year-to-Date Highlights
•Global systemwide sales were $9.97 billion in the first nine months of 2026 compared with $10.59 billion in the first
30
nine months of 2025, a decrease of 6.0% on a constant currency basis;
•International systemwide sales were $1.61 billion in the first nine months of 2026 compared with $1.54 billion in the first nine months of 2025, an increase of 4.3% on a constant currency basis;
•Revenues increased 1.5% to $1.66 billion in the first nine months of 2026 compared with $1.63 billion in the first nine months of 2025;
•Global same-restaurant sales decreased 6.1%, U.S. same-restaurant sales decreased 6.8% and international same-restaurant sales decreased 1.6% compared with the first nine months of 2025;
•Global Company-operated restaurant margin was 12.0% in the first nine months of 2026, a decrease of 210 basis points compared with the first nine months of 2025;
•Income before income taxes decreased 44.3% to $108.2 million in the first nine months of 2026 compared with $194.1 million in the first nine months of 2025;
•Digital sales increased to approximately 23.9% of global systemwide sales in the first nine months of 2026 compared with approximately 20.6% in the first nine months of 2025; and
•Systemwide restaurant count decreased by 203 net restaurants in the first nine months of 2026.
31
Results of Operations
The tables included throughout this Results of Operations section set forth in millions the Company’s condensed consolidated results of operations for the third quarter and the first nine months of 2026 and 2025.
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Sales | $ | 234.9 | $ | 233.2 | $ | 1.7 | $ | 700.4 | $ | 685.5 | $ | 14.9 | |||||||||||||||||||||||
| Franchise royalty revenue and fees | 142.2 | 152.0 | (9.8) | 440.0 | 453.5 | (13.5) | |||||||||||||||||||||||||||||
| Franchise rental income | 58.5 | 57.3 | 1.2 | 170.7 | 176.2 | (5.5) | |||||||||||||||||||||||||||||
| Advertising funds revenue | 111.4 | 107.0 | 4.4 | 347.1 | 318.7 | 28.4 | |||||||||||||||||||||||||||||
| 547.0 | 549.5 | (2.5) | 1,658.2 | 1,633.9 | 24.3 | ||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of sales | 208.3 | 204.3 | 4.0 | 616.6 | 588.9 | 27.7 | |||||||||||||||||||||||||||||
| Franchise support and other costs | 26.9 | 17.5 | 9.4 | 71.4 | 51.2 | 20.2 | |||||||||||||||||||||||||||||
| Franchise rental expense | 30.4 | 30.9 | (0.5) | 88.6 | 94.3 | (5.7) | |||||||||||||||||||||||||||||
| Advertising funds expense | 110.0 | 107.7 | 2.3 | 346.5 | 320.6 | 25.9 | |||||||||||||||||||||||||||||
| General and administrative | 73.1 | 57.9 | 15.2 | 212.1 | 185.6 | 26.5 | |||||||||||||||||||||||||||||
| Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) | 39.9 | 38.4 | 1.5 | 118.5 | 111.9 | 6.6 | |||||||||||||||||||||||||||||
| Amortization of cloud computing arrangements | 5.0 | 5.2 | (0.2) | 14.4 | 13.4 | 1.0 | |||||||||||||||||||||||||||||
| Portfolio and system optimization gains, net | (3.7) | — | (3.7) | (6.0) | (0.3) | (5.7) | |||||||||||||||||||||||||||||
| Reorganization and realignment costs | 2.8 | 0.3 | 2.5 | 2.6 | (0.2) | 2.8 | |||||||||||||||||||||||||||||
| Impairment of long-lived assets | 1.7 | 2.3 | (0.6) | 7.4 | 5.4 | 2.0 | |||||||||||||||||||||||||||||
| Other operating income, net | (3.2) | (7.0) | 3.8 | (13.9) | (16.3) | 2.4 | |||||||||||||||||||||||||||||
| 491.2 | 457.5 | 33.7 | 1,458.2 | 1,354.5 | 103.7 | ||||||||||||||||||||||||||||||
| Operating profit | 55.8 | 92.0 | (36.2) | 200.0 | 279.4 | (79.4) | |||||||||||||||||||||||||||||
| Interest expense, net | (33.6) | (31.5) | (2.1) | (101.5) | (94.0) | (7.5) | |||||||||||||||||||||||||||||
| Investment loss, net | — | — | — | — | (1.7) | 1.7 | |||||||||||||||||||||||||||||
| Other income, net | 3.2 | 2.8 | 0.4 | 9.6 | 10.4 | (0.8) | |||||||||||||||||||||||||||||
| Income before income taxes | 25.4 | 63.3 | (37.9) | 108.1 | 194.1 | (86.0) | |||||||||||||||||||||||||||||
| Provision for income taxes | (10.3) | (19.0) | 8.7 | (37.7) | (55.5) | 17.8 | |||||||||||||||||||||||||||||
| Net income | $ | 15.1 | $ | 44.3 | $ | (29.2) | $ | 70.4 | $ | 138.6 | $ | (68.2) | |||||||||||||||||||||||
32
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Total Revenues | 2025 | % of Total Revenues | 2026 | % of Total Revenues | 2025 | % of Total Revenues | ||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales | $ | 234.9 | 42.9 | % | $ | 233.2 | 42.4 | % | $ | 700.4 | 42.2 | % | $ | 685.5 | 42.0 | % | |||||||||||||||||||||||||||||||
Franchise royalty revenue and fees: | |||||||||||||||||||||||||||||||||||||||||||||||
| Franchise royalty revenue | 119.4 | 21.8 | % | 127.8 | 23.3 | % | 359.2 | 21.7 | % | 381.8 | 23.3 | % | |||||||||||||||||||||||||||||||||||
| Franchise fees | 22.8 | 4.1 | % | 24.2 | 4.4 | % | 80.8 | 4.8 | % | 71.7 | 4.4 | % | |||||||||||||||||||||||||||||||||||
| Total franchise royalty revenue and fees | 142.2 | 25.9 | % | 152.0 | 27.7 | % | 440.0 | 26.5 | % | 453.5 | 27.7 | % | |||||||||||||||||||||||||||||||||||
Franchise rental income | 58.5 | 10.7 | % | 57.3 | 10.4 | % | 170.7 | 10.3 | % | 176.2 | 10.8 | % | |||||||||||||||||||||||||||||||||||
Advertising funds revenue | 111.4 | 20.5 | % | 107.0 | 19.5 | % | 347.1 | 21.0 | % | 318.7 | 19.5 | % | |||||||||||||||||||||||||||||||||||
Total revenues | $ | 547.0 | 100.0 | % | $ | 549.5 | 100.0 | % | $ | 1,658.2 | 100.0 | % | $ | 1,633.9 | 100.0 | % | |||||||||||||||||||||||||||||||
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Sales | 2025 | % of Sales | 2026 | % of Sales | 2025 | % of Sales | ||||||||||||||||||||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||||||||||||||||||||||||||
| Food and paper | $ | 74.6 | 31.8 | % | $ | 75.5 | 32.4 | % | $ | 220.5 | 31.5 | % | $ | 215.8 | 31.5 | % | |||||||||||||||||||||||||||||||
| Restaurant labor | 76.5 | 32.6 | % | 75.1 | 32.2 | % | 229.0 | 32.7 | % | 219.3 | 32.0 | % | |||||||||||||||||||||||||||||||||||
Occupancy, advertising and other operating costs | 57.2 | 24.3 | % | 53.7 | 23.0 | % | 167.1 | 23.8 | % | 153.8 | 22.4 | % | |||||||||||||||||||||||||||||||||||
| Total cost of sales | $ | 208.3 | 88.7 | % | $ | 204.3 | 87.6 | % | $ | 616.6 | 88.0 | % | $ | 588.9 | 85.9 | % | |||||||||||||||||||||||||||||||
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Sales | 2025 | % of Sales | 2026 | % of Sales | 2025 | % of Sales | ||||||||||||||||||||||||||||||||||||||||
| Company-operated restaurant margin: | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 26.7 | 11.7 | % | $ | 29.4 | 13.1 | % | $ | 84.1 | 12.3 | % | $ | 97.6 | 14.7 | % | |||||||||||||||||||||||||||||||
| Global | 26.6 | 11.3 | % | 28.9 | 12.4 | % | 83.8 | 12.0 | % | 96.6 | 14.1 | % | |||||||||||||||||||||||||||||||||||
33
The table below presents certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein.
| Third Quarter | Nine Months | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Key business measures: | |||||||||||||||||||||||
U.S. same-restaurant sales: | |||||||||||||||||||||||
| Company-operated | (3.0) | % | (0.7) | % | (4.0) | % | (0.8) | % | |||||||||||||||
| Franchised | (6.0) | % | (5.0) | % | (7.1) | % | (3.9) | % | |||||||||||||||
Systemwide | (5.7) | % | (4.7) | % | (6.8) | % | (3.7) | % | |||||||||||||||
| International same-restaurant sales (a) | (2.2) | % | 3.0 | % | (1.6) | % | 2.4 | % | |||||||||||||||
Global same-restaurant sales: | |||||||||||||||||||||||
| Company-operated | (3.1) | % | (0.7) | % | (4.1) | % | (0.9) | % | |||||||||||||||
| Franchised (a) | (5.4) | % | (3.9) | % | (6.2) | % | (3.0) | % | |||||||||||||||
| Systemwide (a) | (5.2) | % | (3.7) | % | (6.1) | % | (2.9) | % | |||||||||||||||
| Systemwide sales (b): | |||||||||||||||||||||||
| U.S. Company-operated | $ | 228.9 | $ | 225.3 | $ | 682.2 | $ | 664.0 | |||||||||||||||
| U.S. franchised | 2,548.1 | 2,778.8 | 7,673.6 | 8,387.5 | |||||||||||||||||||
U.S. systemwide | 2,777.0 | 3,004.1 | 8,355.8 | 9,051.5 | |||||||||||||||||||
| International Company-operated | 5.9 | 7.9 | 18.2 | 21.5 | |||||||||||||||||||
| International franchised (a) | 543.5 | 526.1 | 1,596.0 | 1,514.5 | |||||||||||||||||||
| International systemwide (a) | 549.4 | 534.0 | 1,614.2 | 1,536.0 | |||||||||||||||||||
| Global systemwide (a) | $ | 3,326.4 | $ | 3,538.1 | $ | 9,970.0 | $ | 10,587.5 | |||||||||||||||
_______________
(a)Excludes Argentina due to the impact of that country’s highly inflationary economy.
(b)During the third quarter of 2026 and 2025, global systemwide sales decreased 5.9% and 2.6%, respectively, U.S. systemwide sales decreased 7.6% and 4.4%, respectively, and international systemwide sales increased 3.5% and 8.6%, respectively, on a constant currency basis. During the first nine months of 2026 and 2025, global systemwide sales decreased 6.0% and 1.8%, respectively, U.S. systemwide sales decreased 7.7% and 3.4%, respectively, and international systemwide sales increased 4.3% and 8.7%, respectively, on a constant currency basis.
34
| Third Quarter | |||||||||||||||||||||||||||||
| U.S. Company-operated | U.S. Franchised | International Company-operated | International Franchised | Systemwide | |||||||||||||||||||||||||
| Restaurant count: | |||||||||||||||||||||||||||||
Restaurant count at June 28, 2026 | 420 | 5,304 | 10 | 1,446 | 7,180 | ||||||||||||||||||||||||
| Opened | 3 | 10 | — | 30 | 43 | ||||||||||||||||||||||||
| Closed | (1) | (25) | — | (3) | (29) | ||||||||||||||||||||||||
Restaurant count at September 27, 2026 | 422 | 5,289 | 10 | 1,473 | 7,194 | ||||||||||||||||||||||||
| Nine Months | |||||||||||||||||||||||||||||
| U.S. Company-operated | U.S. Franchised | International Company-operated | International Franchised | Systemwide | |||||||||||||||||||||||||
Restaurant count at December 28, 2025 | 423 | 5,546 | 11 | 1,417 | 7,397 | ||||||||||||||||||||||||
| Opened | 7 | 50 | — | 84 | 141 | ||||||||||||||||||||||||
| Closed | (4) | (311) | (1) | (28) | (344) | ||||||||||||||||||||||||
| Net (sold to) purchased by franchisees | (4) | 4 | — | — | — | ||||||||||||||||||||||||
Restaurant count at September 27, 2026 | 422 | 5,289 | 10 | 1,473 | 7,194 | ||||||||||||||||||||||||
| Sales | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Sales | $ | 234.9 | $ | 233.2 | $ | 1.7 | $ | 700.4 | $ | 685.5 | $ | 14.9 | |||||||||||||||||||||||
The increase in sales during the third quarter and the first nine months of 2026 was primarily due to (1) the impact of the Company’s acquisition of franchise-operated restaurants during the third quarter of 2025 of $9.5 million and $38.9 million, respectively, and (2) net new restaurant development of $1.4 million and $7.4 million, respectively. During the third quarter and the first nine months of 2026, these impacts were partially offset by (1) a 3.1% and 4.1% decrease in global Company-operated same-restaurant sales of $6.2 million and $24.8 million, respectively, and (2) the impact of the sale of Company-operated restaurants to franchisees of $2.6 million and $7.8 million, respectively. Company-operated same-restaurant sales during the third quarter and the first nine months of 2026 decreased due to a decrease in traffic, partially offset by higher average check.
| Franchise Royalty Revenue and Fees | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Franchise royalty revenue | $ | 119.4 | $ | 127.8 | $ | (8.4) | $ | 359.2 | $ | 381.8 | $ | (22.6) | |||||||||||||||||||||||
| Franchise fees | 22.8 | 24.2 | (1.4) | 80.8 | 71.7 | 9.1 | |||||||||||||||||||||||||||||
| $ | 142.2 | $ | 152.0 | $ | (9.8) | $ | 440.0 | $ | 453.5 | $ | (13.5) | ||||||||||||||||||||||||
Franchise royalty revenue during the third quarter and the first nine months of 2026 decreased primarily due to a 5.4% and 6.2% decrease in global franchise same-restaurant sales, respectively. Franchise same-restaurant sales during the third quarter and the first nine months of 2026 decreased due to a decrease in traffic, partially offset by higher average check.
The decrease in franchise fees during the third quarter of 2026 was primarily due to a decrease in other miscellaneous fees. The increase in franchise fees during the first nine months of 2026 was primarily due to the impact of portfolio optimization related to restaurant closures and hours of operation flexibility of $11.2 million, partially offset by a decrease in other miscellaneous fees of $2.1 million.
35
| Franchise Rental Income | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Franchise rental income | $ | 58.5 | $ | 57.3 | $ | 1.2 | $ | 170.7 | $ | 176.2 | $ | (5.5) | |||||||||||||||||||||||
The increase in franchise rental income during the third quarter of 2026 was primarily due to (1) the impact of assigning certain existing leases to franchisees in 2025 of $1.8 million and (2) entering into new leases of $1.2 million. These changes were partially offset by lease terminations of $1.2 million. The decrease in franchise rental income during the first nine months of 2026 was primarily due to (1) the impact of assigning certain existing leases to franchisees of $4.3 million, (2) terminating certain existing leases of $1.5 million and (3) amending certain existing leases of $1.4 million. During the first nine months of 2026, these changes were partially offset by entering into new leases of $2.4 million.
| Advertising Funds Revenue | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Advertising funds revenue | $ | 111.4 | $ | 107.0 | $ | 4.4 | $ | 347.1 | $ | 318.7 | $ | 28.4 | |||||||||||||||||||||||
The increase in advertising funds revenue during the third quarter and the first nine months of 2026 was primarily due to local and regional advertising funds being reallocated to U.S. national advertising of approximately $15.0 million and $45.0 million, respectively, partially offset by a decrease in franchise same-restaurant sales of approximately $8.0 million and $24.0 million, respectively. During the first nine months of 2026, advertising funds revenue also increased due to non-recurring incentives earned from a vendor during the second quarter of 2026 of $11.5 million.
| Cost of Sales, as a Percent of Sales | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Food and paper | 31.8 | % | 32.4 | % | (0.6) | % | 31.5 | % | 31.5 | % | — | % | |||||||||||||||||||||||
| Restaurant labor | 32.6 | % | 32.2 | % | 0.4 | % | 32.7 | % | 32.0 | % | 0.7 | % | |||||||||||||||||||||||
| Occupancy, advertising and other operating costs | 24.3 | % | 23.0 | % | 1.3 | % | 23.8 | % | 22.4 | % | 1.4 | % | |||||||||||||||||||||||
| 88.7 | % | 87.6 | % | 1.1 | % | 88.0 | % | 85.9 | % | 2.1 | % | ||||||||||||||||||||||||
The increase in cost of sales, as a percent of sales, during the third quarter and the first nine months of 2026 was primarily due to (1) a decrease in traffic, (2) higher commodity costs and (3) an increase in restaurant labor rates. These changes were partially offset by (1) higher average check and (2) labor efficiencies.
| Franchise Support and Other Costs | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Franchise support and other costs | $ | 26.9 | $ | 17.5 | $ | 9.4 | $ | 71.4 | $ | 51.2 | $ | 20.2 | |||||||||||||||||||||||
The increase in franchise support and other costs during the third quarter and the first nine months of 2026 was primarily due to an increase in the provision for doubtful accounts.
| Franchise Rental Expense | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Franchise rental expense | $ | 30.4 | $ | 30.9 | $ | (0.5) | $ | 88.6 | $ | 94.3 | $ | (5.7) | |||||||||||||||||||||||
The decrease in franchise rental expense during the third quarter of 2026 was primarily due to (1) the impact of amending certain existing leases and (2) lease terminations. These changes were partially offset by the impact of assigning certain leases to franchisees in 2025. The decrease in franchise rental expense during the first nine months of 2026 was primarily due to (1) the impact of assigning certain leases to franchisees, (2) amending certain existing leases and (3) lease terminations.
36
| Advertising Funds Expense | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Advertising funds expense | $ | 110.0 | $ | 107.7 | $ | 2.3 | $ | 346.5 | $ | 320.6 | $ | 25.9 | |||||||||||||||||||||||
On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue. The increase in advertising funds expense during the third quarter and the first nine months of 2026 was primarily due to the same factors as described above for “Advertising Funds Revenue.”
| General and Administrative | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Strategic initiative expenses | $ | 11.9 | $ | — | $ | 11.9 | $ | 11.9 | $ | — | $ | 11.9 | |||||||||||||||||||||||
| Professional fees | 10.5 | 12.5 | (2.0) | 45.4 | 40.5 | 4.9 | |||||||||||||||||||||||||||||
| Employee compensation and benefits | 36.2 | 38.0 | (1.8) | 115.6 | 113.0 | 2.6 | |||||||||||||||||||||||||||||
| Share-based compensation | 3.6 | (1.0) | 4.6 | 11.7 | 9.5 | 2.2 | |||||||||||||||||||||||||||||
| Incentive compensation | 7.0 | 5.0 | 2.0 | 15.1 | 13.1 | 2.0 | |||||||||||||||||||||||||||||
| Other, net | 3.9 | 3.4 | 0.5 | 12.4 | 9.5 | 2.9 | |||||||||||||||||||||||||||||
| $ | 73.1 | $ | 57.9 | $ | 15.2 | $ | 212.1 | $ | 185.6 | $ | 26.5 | ||||||||||||||||||||||||
In connection with Dave’s Way and the Company’s broader business transformation, the Company has incurred elevated costs associated with certain strategic initiatives during the third quarter of 2026. These transformational costs, which are infrequent or unusual in nature and outside of the Company’s normal ongoing operations, primarily include third-party consulting and professional fees related to Dave’s Way, as well as costs associated with discrete senior management and organizational actions.
The increase in general and administrative expenses during the third quarter of 2026 was primarily due to (1) strategic initiative expenses associated with Dave’s Way and other strategic and organizational activities and (2) lower share-based compensation in the prior year as a result of the departure of the Company’s previous President and Chief Executive Officer.
The increase in general and administrative expenses during the first nine months of 2026 was primarily due to (1) strategic initiative expenses associated with Dave’s Way and other strategic and organizational activities, (2) professional services and (3) employee compensation and benefits. General and administrative expenses also increased due to (1) lower share-based compensation in the prior year as a result of the departure of the Company’s previous President and Chief Executive Officer and (2) an increase in incentive compensation accruals, reflecting higher operating performance as compared to plan in 2026 versus 2025.
| Depreciation and Amortization (exclusive of amortization of cloud computing arrangements shown separately below) | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Restaurants | $ | 20.8 | $ | 19.7 | $ | 1.1 | $ | 60.9 | $ | 55.5 | $ | 5.4 | |||||||||||||||||||||||
| Finance lease assets | 5.8 | 5.1 | 0.7 | 17.0 | 15.1 | 1.9 | |||||||||||||||||||||||||||||
| Technology support, corporate and other | 13.3 | 13.6 | (0.3) | 40.6 | 41.3 | (0.7) | |||||||||||||||||||||||||||||
| $ | 39.9 | $ | 38.4 | $ | 1.5 | $ | 118.5 | $ | 111.9 | $ | 6.6 | ||||||||||||||||||||||||
The increase in depreciation and amortization during the third quarter and the first nine months of 2026 was primarily due to (1) asset additions for new and remodeled restaurants and (2) depreciation and amortization on restaurant assets acquired from a franchisee during the third quarter of 2025.
37
| Amortization of Cloud Computing Arrangements | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Amortization of cloud computing arrangements | $ | 5.0 | $ | 5.2 | $ | (0.2) | $ | 14.4 | $ | 13.4 | $ | 1.0 | |||||||||||||||||||||||
The increase in amortization of cloud computing arrangements during the first nine months of 2026 was primarily due to amortization of assets associated with the Company’s digital investments.
| Portfolio and System Optimization Gains, Net | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Portfolio and system optimization gains, net | $ | 3.7 | $ | — | $ | 3.7 | $ | 6.0 | $ | 0.3 | $ | 5.7 | |||||||||||||||||||||||
Portfolio and system optimization gains, net during the third quarter and the first nine months of 2026 were primarily comprised of gains on the sale of surplus and other properties. See Note 12 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.
| Reorganization and Realignment Costs | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Portfolio optimization initiative | $ | 2.8 | $ | — | $ | 2.8 | $ | 2.8 | $ | — | $ | 2.8 | |||||||||||||||||||||||
| Organizational Redesign Plan | — | — | — | (0.2) | (0.8) | 0.6 | |||||||||||||||||||||||||||||
| Other reorganization and realignment plans | — | 0.3 | (0.3) | — | 0.6 | (0.6) | |||||||||||||||||||||||||||||
| $ | 2.8 | $ | 0.3 | $ | 2.5 | $ | 2.6 | $ | (0.2) | $ | 2.8 | ||||||||||||||||||||||||
During the three months ended September 27, 2026, the Company recognized costs associated with its new portfolio optimization initiative of $2.8 million, which were primarily comprised of third-party and other costs. The Company’s new portfolio optimization initiative is focused on strengthening restaurant profitability, aligning restaurants with high-performing operators and creating greater long-term value across the system.
During the first nine months of 2026 and 2025, the Company recognized costs under the Organizational Redesign Plan of $(0.2) million and $(0.8) million, respectively, which primarily included reversals of severance accruals resulting from changes in estimates. See Note 13 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding “Reorganization and Realignment Costs.”
| Impairment of Long-Lived Assets | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Impairment of long-lived assets | $ | 1.7 | $ | 2.3 | $ | (0.6) | $ | 7.4 | $ | 5.4 | $ | 2.0 | |||||||||||||||||||||||
The decrease in impairment of long-lived assets during the third quarter of 2026 was primarily due to lower impairment charges resulting from the deterioration in operating performance of certain Company-operated restaurants. The increase in impairment of long-lived assets during the first nine months of 2026 was primarily due to losses from the remeasurement to fair value of assets leased and/or subleased to franchisees in connection with the closure of franchise-operated restaurants.
38
| Other Operating Income, Net | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Claim settlement | $ | — | $ | — | $ | — | $ | — | $ | 4.0 | $ | (4.0) | |||||||||||||||||||||||
| Gains on sales-type leases | 0.3 | 0.1 | 0.2 | 2.5 | 0.1 | 2.4 | |||||||||||||||||||||||||||||
| Lease buyout | 0.1 | 3.9 | (3.8) | 3.5 | 4.0 | (0.5) | |||||||||||||||||||||||||||||
| Other, net | 2.8 | 3.0 | (0.2) | 7.9 | 8.2 | (0.3) | |||||||||||||||||||||||||||||
| $ | 3.2 | $ | 7.0 | $ | (3.8) | $ | 13.9 | $ | 16.3 | $ | (2.4) | ||||||||||||||||||||||||
The decrease in other operating income, net during the third quarter of 2026 was primarily due to a decrease in lease buyout activity. The decrease in other operating income, net during the first nine months of 2026 was primarily due to the settlement of a claim during the prior year, partially offset by gains on new and modified sales-type leases.
| Interest Expense, Net | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Interest expense, net | $ | 33.6 | $ | 31.5 | $ | 2.1 | $ | 101.5 | $ | 94.0 | $ | 7.5 | |||||||||||||||||||||||
The increase in interest expense, net during the third quarter and the first nine months of 2026 was primarily due to the impact of completing the refinancing of a portion of the Company’s securitized financing facility in the fourth quarter of 2025.
| Investment Loss, Net | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Investment loss, net | $ | — | $ | — | $ | — | $ | — | $ | 1.7 | $ | (1.7) | |||||||||||||||||||||||
During the first nine months of 2025, the Company recorded a loss of $1.7 million due to impairment charges for the difference between the estimated fair value and the carrying value of an investment in equity securities.
| Other Income, Net | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Other income, net | $ | 3.2 | $ | 2.8 | $ | 0.4 | $ | 9.6 | $ | 10.4 | $ | (0.8) | |||||||||||||||||||||||
The increase in other income, net during the third quarter of 2026 was primarily due to an increase in interest income, reflecting higher balances of cash equivalents. The decrease in other income, net during the first nine months of 2026 was primarily due to a decrease in interest income, reflecting lower interest rates.
| Provision for Income Taxes | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Income before income taxes | $ | 25.4 | $ | 63.3 | $ | (37.9) | $ | 108.1 | $ | 194.1 | $ | (86.0) | |||||||||||||||||||||||
Provision for income taxes | (10.3) | (19.0) | 8.7 | (37.7) | (55.5) | 17.8 | |||||||||||||||||||||||||||||
Effective tax rate on income | 40.7 | % | 30.0 | % | 10.7 | % | 34.9 | % | 28.6 | % | 6.3 | % | |||||||||||||||||||||||
The increase in the effective tax rate for the third quarter of 2026 was primarily due to lower income before income taxes and the tax effects of share-based compensation. These impacts were partially offset by a decrease in state income taxes. The increase in the effective tax rate for the first nine months of 2026 was primarily due to lower income before income taxes, the tax effects of share-based compensation and the tax effects of our foreign operations.
39
Segment Information
See Note 19 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.
Wendy’s U.S.
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Sales | $ | 228.9 | $ | 225.3 | $ | 3.6 | $ | 682.2 | $ | 664.0 | $ | 18.2 | |||||||||||||||||||||||
| Franchise royalty revenue | 99.4 | 108.2 | (8.8) | 300.5 | 325.4 | (24.9) | |||||||||||||||||||||||||||||
| Franchise fees | 20.7 | 20.8 | (0.1) | 71.0 | 62.6 | 8.4 | |||||||||||||||||||||||||||||
| Advertising fund revenue | 101.2 | 97.1 | 4.1 | 318.2 | 290.2 | 28.0 | |||||||||||||||||||||||||||||
| Total revenues | $ | 450.2 | $ | 451.4 | $ | (1.2) | $ | 1,371.9 | $ | 1,342.2 | $ | 29.7 | |||||||||||||||||||||||
| Segment profit | $ | 100.2 | $ | 123.3 | $ | (23.1) | $ | 330.6 | $ | 381.4 | $ | (50.8) | |||||||||||||||||||||||
The decrease in Wendy’s U.S. revenues during the third quarter of 2026 was primarily due to a decrease in same-restaurant sales, partially offset by the impact of the Company’s acquisition of 35 franchise-operated restaurants in the third quarter of 2025. The increase in Wendy’s U.S. revenues during the first nine months of 2026 was primarily due to (1) the impact of the Company’s acquisition of 35 franchise-operated restaurants in the third quarter of 2025, (2) higher advertising fund revenue and (3) an increase in franchise fees. These impacts were partially offset by a decrease in same-restaurant sales. Same-restaurant sales decreased during the third quarter and the first nine months of 2026 primarily due to a decrease in traffic, partially offset by higher average check.
The decrease in Wendy’s U.S. segment profit during the third quarter of 2026 was primarily due to (1) higher franchise support and other costs, (2) lower revenues, (3) higher advertising fund expenses and (4) higher cost of sales, as a percent of sales, for Company-operated restaurants, driven by the same factors as described above for “Cost of Sales, as a Percent of Sales.” The decrease in Wendy’s U.S. segment profit during the first nine months of 2026 was primarily due to (1) higher advertising fund expenses, (2) higher franchise support costs and (3) higher cost of sales, as a percent of sales, for Company-operated restaurants, driven by the same factors as described above for “Cost of Sales, as a Percent of Sales.” These changes were partially offset by higher revenues.
Wendy’s International
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Sales | $ | 5.9 | $ | 7.9 | $ | (2.0) | $ | 18.2 | $ | 21.5 | $ | (3.3) | |||||||||||||||||||||||
| Franchise royalty revenue | 20.0 | 19.6 | 0.4 | 58.7 | 56.3 | 2.4 | |||||||||||||||||||||||||||||
| Franchise fees | 1.9 | 2.5 | (0.6) | 8.3 | 7.1 | 1.2 | |||||||||||||||||||||||||||||
| Advertising fund revenue | 10.2 | 9.9 | 0.3 | 29.0 | 28.6 | 0.4 | |||||||||||||||||||||||||||||
| Total revenues | $ | 38.0 | $ | 39.9 | $ | (1.9) | $ | 114.2 | $ | 113.5 | $ | 0.7 | |||||||||||||||||||||||
| Segment profit | $ | 12.9 | $ | 11.1 | $ | 1.8 | $ | 35.4 | $ | 33.7 | $ | 1.7 | |||||||||||||||||||||||
The decrease in Wendy’s International revenues during the third quarter of 2026 was primarily due to a decrease in same-restaurant sales. The increase in Wendy’s International revenues during the first nine months of 2026 was primarily due to (1) an increase in franchise fees and (2) net new restaurant development. These impacts were partially offset by a decrease in same-restaurant sales. Same-restaurant sales decreased during the third quarter and the first nine months of 2026 primarily due to a decrease in traffic, partially offset by higher average check.
The increase in Wendy’s International segment profit during the third quarter of 2026 was primarily due to lower advertising fund expenses. The increase in Wendy’s International segment profit during the first nine months of 2026 was primarily due to (1) higher revenues and (2) lower advertising fund expenses. These impacts were partially offset by (1) an increase in franchise support and other costs and (2) higher general and administrative expenses.
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Global Real Estate & Development
| Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Franchise fees | $ | 0.3 | $ | 0.9 | $ | (0.6) | $ | 1.3 | $ | 2.1 | $ | (0.8) | |||||||||||||||||||||||
| Franchise rental income | 58.5 | 57.3 | 1.2 | 170.7 | 176.2 | (5.5) | |||||||||||||||||||||||||||||
| Total revenues | $ | 58.8 | $ | 58.2 | $ | 0.6 | $ | 172.0 | $ | 178.3 | $ | (6.3) | |||||||||||||||||||||||
| Segment profit | $ | 25.9 | $ | 27.6 | $ | (1.7) | $ | 81.4 | $ | 79.5 | $ | 1.9 | |||||||||||||||||||||||
The change in Global Real Estate & Development revenues during the third quarter and the first nine months of 2026 was primarily due to the change in franchise rental income, driven by the same factors as described above for “Franchise Rental Income.”
The decrease in Global Real Estate & Development segment profit during the third quarter of 2026 was primarily due to a decrease in lease buyout activity, partially offset by an increase in franchise rental income, driven by the same factors as described above for “Franchise Rental Income.” The increase in Global Real Estate & Development segment profit during the first nine months of 2026 was primarily due to (1) a decrease in franchise rental expense, driven by the same factors as described above for “Franchise Rental Expense,” and (2) gains on new and modified sales-type leases.
Liquidity and Capital Resources
As of September 27, 2026, cash, cash equivalents and restricted cash totaled $432.0 million. In addition, the Company maintains a revolving financing facility, which allows for the drawing of up to $300.0 million. Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under our securitized financing facility. In light of recent operating results and their contribution to financial pressure for certain of our franchisees, cash flows from operations have been negatively impacted and may continue to be negatively impacted by franchisee payment delays and deferrals. Based on current levels of operations, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.
We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes. However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.
Stock Repurchases
In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”). During the nine months ended September 27, 2026, no shares were repurchased under the January 2023 Authorization. As of September 27, 2026, the Company had $35.0 million of availability remaining under the January 2023 Authorization.
Dividends
On March 16, 2026, June 15, 2026, and September 15, 2026, the Company paid quarterly cash dividends per share of $.14, $.14 and $.07, respectively, aggregating $66.7 million. On November 5, 2026, the Company announced a dividend of $.07 per share to be paid on December 15, 2026 to stockholders of record as of December 1, 2026. As a result, the Company expects that its total cash requirement for the fourth quarter of 2026 will be approximately $13.4 million based on the number of shares of its common stock outstanding at October 29, 2026. The Company currently intends to continue to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.
Long-Term Debt, Including Current Portion
Wendy’s U.S. advertising fund has a revolving line of credit, which was established to support the Company’s advertising fund operations. During the three months ended March 29, 2026, the Company borrowed and repaid $11.5 million under the revolving line of credit, then subsequently borrowed and repaid $3.6 million under the revolving line of credit. During the three months ended June 28, 2026, the Company borrowed and repaid $2.7 million under the revolving line of credit. During the
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three months ended September 27, 2026, the Company increased the Wendy’s U.S. advertising fund revolving line of credit from $15.0 million to $25.0 million and borrowed and repaid $16.0 million under the revolving line of credit, then subsequently borrowed and repaid $21.1 million under the revolving line of credit. As a result, as of September 27, 2026, the Company had no outstanding borrowings under the revolving line of credit.
Except as described above, there were no material changes to the Company’s debt obligations since December 28, 2025. The Company was in compliance with its debt covenants as of September 27, 2026. See Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein and “Item 1A. Risk Factors” in “Part II. Other Information” for further information related to our long-term debt obligations.
Cash Flows from Operating, Investing and Financing Activities
The table below summarizes our cash flows from operating, investing and financing activities for the first nine months of 2026 and 2025:
| Nine Months | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 239.0 | $ | 275.3 | $ | (36.3) | |||||||||||
| Investing activities | (49.9) | (100.6) | 50.7 | ||||||||||||||
| Financing activities | (112.3) | (329.6) | 217.3 | ||||||||||||||
| Effect of exchange rate changes on cash | (2.5) | 3.3 | (5.8) | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 74.3 | $ | (151.6) | $ | 225.9 | |||||||||||
Operating Activities
Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities. Cash provided by operating activities was $239.0 million and $275.3 million in the first nine months of 2026 and 2025, respectively. The change was primarily due to (1) lower net income, adjusted for non-cash expenses and (2) a decrease in cash flows resulting from payment delays and deferrals for certain of our franchisees, including amounts subject to payment deferral arrangements, a portion of which we have reserved against. These changes were partially offset by (1) a decrease in cash paid for income taxes and (2) the timing of payments for marketing expenses of the national advertising funds.
Investing Activities
Cash used in investing activities was $49.9 million and $100.6 million in the first nine months of 2026 and 2025, respectively. The change was primarily due to (1) a decrease in payments for acquisitions of $16.9 million compared to the prior year, reflecting the impact of the Company’s acquisition of 35 franchise-operated restaurants during the third quarter of 2025, (2) a decrease in capital expenditures of $15.3 million, (3) an increase in proceeds from dispositions of $11.9 million and (4) a decrease in expenditures associated with the Company’s franchise development fund of $8.5 million.
Financing Activities
Cash used in financing activities was $112.3 million and $329.6 million in the first nine months of 2026 and 2025, respectively. The change was primarily due to (1) a decrease in repurchases of the Company’s common stock of $198.8 million and (2) a decrease in dividends of $36.3 million. These changes were partially offset by a net increase in cash used in long-term debt activities of $15.4 million, reflecting the impact of proceeds and repayments under the Company’s U.S. advertising fund revolving line of credit.
General Inflation, Commodities and Changing Prices
Inflationary pressures on labor and commodity price increases directly impacted our consolidated results of operations during the nine months ended September 27, 2026, and we anticipate continued labor and commodity inflation throughout the remainder of 2026. We attempt to manage any inflationary costs and commodity price increases through selective menu price increases, product mix and focused execution of operational excellence. Delays in implementing such menu price increases and competitive pressures may limit our ability to recover such cost increases in the future. Inherent volatility experienced in
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certain commodity markets, such as those for beef, chicken, eggs, pork, dairy and grains, could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through selective menu price increases, product mix and focused execution of operational excellence.
Seasonality
Wendy’s restaurant operations are moderately seasonal. Wendy’s average restaurant sales are normally higher during the summer months than during the winter months. Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As of September 27, 2026 there were no material changes from the information contained in the Company’s Form 10-K for the fiscal year ended December 28, 2025.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The management of the Company, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 27, 2026. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that as of September 27, 2026, the disclosure controls and procedures of the Company were effective at a reasonable assurance level in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and (2) ensuring that information required to be disclosed by the Company in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the internal control over financial reporting of the Company during the third quarter of 2026 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, the management of the Company, including its Chief Executive Officer and Chief Financial Officer, does not expect that the control system can prevent or detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.
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PART II. OTHER INFORMATION
Special Note Regarding Forward-Looking Statements and Projections
This Quarterly Report on Form 10-Q and oral statements made from time to time by representatives of the Company may contain or incorporate by reference certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “estimate,” “goal,” “upcoming,” “annualized,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address future operating, financial or business performance, strategies or initiatives, future efficiencies or savings, anticipated costs or charges, future capitalization, anticipated impacts of recent or pending investments or transactions and statements expressing general views about future results or brand health are forward-looking statements within the meaning of the Reform Act. Forward-looking statements are based on our expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. Many important factors could affect our future results and cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors include, but are not limited to, the following:
•the impact of competition or poor customer experiences at Wendy’s restaurants;
•adverse economic conditions or volatility or disruptions, including in regions with a high concentration of Wendy’s restaurants;
•changes in discretionary consumer spending and consumer tastes and preferences;
•conditions beyond our control, such as adverse weather conditions, natural disasters, hostilities, social unrest, health epidemics or pandemics or other catastrophic events;
•impacts to our corporate reputation or the value and perception of our brand;
•the effectiveness of our marketing and advertising programs and new product development;
•our ability to manage the impact of social or digital media;
•our ability to protect our intellectual property;
•food safety events or health concerns involving our products;
•our ability to successfully implement important strategic initiatives, effectively managing or maintaining growth and market share across our dayparts or executing strategic transactions;
•our ability to grow our business through new restaurant development;
•our ability to effectively manage the acquisition and disposition of restaurants and other restaurant activity;
•risks associated with leasing and owning significant amounts of real estate, including environmental matters;
•risks associated with our international operations, including our ability to execute our international growth strategy;
•changes in commodity and other operating costs;
•shortages or interruptions in the supply or distribution of our products and other risks associated with our independent supply chain purchasing co-op;
•the impact of increased labor costs or labor shortages;
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•the continued succession and retention of key personnel and the effectiveness of our leadership and organizational structure;
•risks associated with our digital commerce strategy, platforms and technologies, including our ability to adapt to changes in industry trends and consumer preferences;
•our and our franchisees’ dependence on computer systems and information technology, including risks associated with the failure or interruption of our systems or technology or the occurrence of cybersecurity incidents or deficiencies;
•risks associated with our securitized financing facility and other debt agreements, including compliance with operational and financial covenants, restrictions on our ability to raise additional capital, the impact of our overall debt levels and our ability to generate sufficient cash flow to meet our debt service obligations and operate our business;
•risks associated with our capital allocation policy, including the amount and timing of equity and debt repurchases and dividend payments;
•risks associated with complaints and litigation, compliance with legal and regulatory requirements and a focus on corporate responsibility issues;
•risks associated with the availability and cost of insurance, the recognition of impairment or other charges, changes in tax rates or tax laws and fluctuations in foreign currency exchange rates;
•Trian Fund Management, L.P. and certain of its affiliates filed a Schedule 13D/A with the SEC on February 18, 2026 indicating, among other things, that they intend to explore and evaluate the possibility of participating, alone or with third parties, in certain potential transactions with respect to us to enhance stockholder value; there can be no assurance that (i) any such potential transactions will occur or result in additional value for our stockholders or (ii) that the exploration of potential transactions will not have an adverse impact on our business; and
•other risks and uncertainties affecting us and our subsidiaries referred to in our Annual Report on Form 10-K filed with the SEC on February 23, 2026 (see especially “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in our other current and periodic filings with the SEC.
In addition to the factors described above, there are risks associated with our predominantly franchised business model that could impact our results, performance and achievements. Such risks include our ability to identify, attract and retain experienced and qualified franchisees, our ability to effectively manage the transfer of restaurants between and among franchisees, the business and financial health of franchisees, the ability of franchisees to meet their royalty, advertising, development, reimaging and other commitments, participation by franchisees in brand strategies and the fact that franchisees are independent third parties that own, operate and are responsible for overseeing the operations of their restaurants. Our predominantly franchised business model may also impact the ability of the Wendy’s system to effectively respond and adapt to market changes.
All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that we currently deem immaterial may become material, and it is impossible for us to predict these events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q as a result of new information, future events or developments, except as required by federal securities laws, although we may do so from time to time. We do not endorse any projections regarding future performance that may be made by third parties.
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Item 1. Legal Proceedings.
The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.
Item 1A. Risk Factors.
In addition to the information contained in this report, you should carefully consider the risk factors disclosed in our Form 10-K, which could materially affect our business, financial condition or future results. Except as set forth below or as may be described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K.
We may not be successful in implementing important strategic initiatives, effectively managing or maintaining growth and market share across our dayparts or executing strategic transactions, any of which may have an adverse impact on our business, results of operations and financial condition.
We may not be able to implement important strategic initiatives in accordance with our expectations or that generate expected returns. For example, in the fourth quarter of 2026, we announced Dave’s Way, a multi-year strategy focused on growing customer traffic and market share while strengthening restaurant profitability. The five strategic pillars of Dave’s Way include: (1) Our Menu with Quality Food at Real Value; (2) Distinct Branding and Marketing to Drive Demand; (3) Operational Excellence that Delights Customers; (4) A Winning Digital Experience to Build Frequency and (5) Restaurants as an Engine for Growth. Our ability to successfully execute Dave’s Way and realize its expected benefits is subject to numerous estimates and assumptions, which are subject to uncertainties, and is dependent on a variety of factors.
We may be unable to achieve the goals of Dave’s Way due to competitive pressures and other factors, such as consumer tastes and preferences, the effectiveness of our marketing and advertising programs, the successful development and launch of new products, commodity and labor costs, providing fast and accurate customer experiences, further accelerating our digital business and technological enhancements, driving new restaurant development and ensuring the support, engagement and health of franchisees. Our inability to successfully execute our strategy could have a material adverse impact on our business, results of operations and financial condition. Furthermore, the Company has made the breakfast daypart optional for Wendy’s restaurants in the United States. While we believe that this option will allow our franchisees to focus on the dayparts with the greatest opportunity for profitable growth in their business, our sales results, results of operations and financial condition may be negatively impacted.
In addition, Wendy’s from time to time evaluates and may pursue other opportunities for growth, including through new and existing franchise partners, joint venture investments, the expansion of our brand through other opportunities and strategic mergers, acquisitions and divestitures. These strategic initiatives involve various risks, including general transaction and business risk, integration and synergy risk, market acceptance risk and risks associated with the potential diversion of management’s attention. Strategic transactions may not ultimately create value for us or our stockholders and may harm our reputation and materially adversely affect our business, results of operations and financial condition.
The execution of strategic initiatives, including Dave’s Way, may also be disruptive both internally and to our customers and may be viewed negatively by our shareholders. If we are delayed or unsuccessful in implementing any important strategic initiatives, if implementation proves to be more difficult, costly or time-consuming than expected, or if any important strategic initiatives fail to deliver their expected benefits or we do not fully realize such benefits or such benefits are offset by competitive actions or macroeconomic conditions, our business, results of operations and financial condition may suffer. Even if successful, benefits may take longer than expected to realize.
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Our predominantly franchised business model presents a number of risks.
As of December 28, 2025, approximately 95% of restaurants in the Wendy’s system were operated by franchisees. Wendy’s franchisees are contractually obligated to operate their restaurants in accordance with the standards set forth in our franchise and other agreements with them. Wendy’s also provides training and support to franchisees. However, franchisees are independent third parties that we do not control, and franchisees own, operate and oversee the daily operations of their restaurants. Specifically, franchisees are solely responsible for developing and utilizing their own policies and procedures, making their own hiring, firing and disciplinary decisions, scheduling hours and establishing wages and managing their day-to-day employment processes and procedures in accordance with applicable laws, rules and regulations, all of which is done independent of Wendy’s. Further, franchisees have discretion as to the prices charged to customers. As a result, the ultimate success and quality of any franchise restaurant rests with the franchisee. If franchisees do not successfully operate their restaurants in a manner consistent with required standards, the royalty and other payments they make to us could be adversely affected and our brand’s image and reputation could be harmed, which in turn, could hurt our business and results of operations.
In addition, the failure of franchisees to adequately engage in capital planning and/or succession planning may adversely affect their financial condition, restaurant operations and development of new Wendy’s restaurants, which in turn could hurt our business and results of operations.
Wendy’s franchisees are an integral part of our business, growth and brand strategies, and difficulties in identifying, attracting and retaining franchisees who meet our criteria could harm our business and brand. Our business and results of operations could be adversely affected if a significant number of franchisees do not participate in brand strategies, such as new restaurant development, restaurant remodeling initiatives, marketing and menu programs and digital commerce platforms and other restaurant technologies. In addition, Wendy’s current franchise model, and the way our brand strategies are executed across the system, may make it difficult for our brand to respond and adapt to the speed of changes in technology, consumer preferences or other factors as quickly as may be required to maintain and grow market share and remain competitive. Certain of our competitors that have a significantly higher percentage of company-operated restaurants than we do may have greater influence over their respective restaurant systems and greater ability to implement operational initiatives and business strategies.
In addition, certain franchisees operate a large number of Wendy’s restaurants. As of December 28, 2025, 203 franchisees operated approximately 5,546 franchise restaurants in the United States. The Company’s ten largest franchisees operated an average of 229 Wendy’s restaurants, representing approximately 41% of the total number of our franchised restaurants in the United States. The concentration of a significant number of franchised restaurants in a limited number of franchisees could subject the Company to an increased level of financial risk in respect of such franchisees, and the risk is particularly magnified among franchisees that are the sole or dominant franchisee for a particular region. If any of these franchisees experience financial or other difficulties, our business could be materially and adversely affected.
We receive revenues in the form of royalties and national advertising funds contributions (both of which are generally based on a percentage of sales at franchised restaurants), as well as rent and fees from franchisees. Accordingly, a substantial portion of our financial results depends upon the operational and financial success of our franchisees. If sales trends or economic conditions worsen for franchisees, or if the overall business or financial health of franchisees deteriorates, their results of operations or financial condition may worsen, which has in the past and could again in the future result in, among other things, increased restaurant closures, decreased restaurant openings or franchisee bankruptcies or insolvency leading to restructuring activities, all of which could reduce our royalty, national advertising funds, rent and other fee revenues. From time to time, we may work with our franchisees who are experiencing financial difficulties to assess and address their financial health and their ability to satisfy their financial obligations to us and any third parties. In certain of these situations, we have and may in the future provide cash flow or other financial and operational support to franchisees by providing royalty, advertising, rent or other relief, offering deferrals, waivers, setoffs or other modifications of certain franchisee obligations, extending loans or guarantees and/or advancing cash payments. These actions have and may in the future adversely affect our cash flow and financial results, which may be material, and there is no guarantee that any such support to franchisees will be successful in improving their results of operations or financial condition or preventing franchisee bankruptcies, insolvency or restructuring actions. For example, see Notes 2 and 3 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding our current accounts receivable and allowance for doubtful accounts, which reflects an increase in payment obligations from certain of our franchisees who are not current on their royalty, advertising and other fees under their respective franchise and other agreements. We have entered into deferral arrangements with certain of our franchisees, including certain of our largest franchisees, with respect to such amounts owed or anticipated to be owed to us. There is also no guarantee that we will receive all or any of the amounts due to us under our franchise agreements, notes receivable and other agreements. Prolonged periods of declining sales and profitability for franchisees can exacerbate these
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risks. If franchisees are unable to obtain financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in their existing restaurants or new restaurant development, and our future growth and results of operations could be adversely affected. Furthermore, an insolvency event or bankruptcy proceeding involving a franchisee could prevent or delay us from collecting payments or exercising any of our other rights under the franchise or other related agreement with such franchisee. For example, on September 16, 2026, we delivered a notice of termination of the franchise agreements of Meritage Hospitality Group, Inc. (“Meritage”), a franchisee which operated 314 Wendy’s restaurants as of that date, due to Meritage’s failure to make certain required payments to us, including $27.4 million in overdue royalties, advertising and other fees. On September 17, 2026, Meritage filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. As of the date of this report, Meritage continues to operate approximately 276 Wendy’s restaurants across nine markets within the Chapter 11 proceedings, following the closure of certain locations subsequent to the bankruptcy filing. On November 4, 2026, the Company, Meritage and certain of its lenders signed a letter of intent (the “LOI”) whereby the Company would acquire up to 163 of Meritage’s Wendy’s restaurants, subject to a definitive agreement, better and higher offers and court approval of the transaction. Meritage is also exploring the sale and recapitalization of its other markets not included in the LOI. However, there can be no assurances that any transaction with Meritage pursuant to the LOI or any other restaurant sales or transfers will be consummated or that Meritage’s bankruptcy will not have an adverse impact on our results of operations, cash flows or financial condition or on the performance of the Wendy’s system.
Additionally, when Company-operated restaurants with leased real estate are sold to franchisees, we are often required to remain responsible for lease payments for these restaurants in the event the purchasing franchisees default on their leases. Similarly, when we lease or sublease properties to franchisees, we remain responsible for certain expenses related to the properties, such as lease payments and maintenance charges. If franchisees fail to renew their franchise agreements or fail to perform under or extend their leases or subleases with us, or if we are unable to identify, attract and retain new franchisees who meet our criteria and can successfully implement development agreements and expansion plans, then our royalty and rental revenues may decrease and our future growth could be adversely affected.
We have a significant amount of debt outstanding, and such indebtedness could adversely affect our business, results of operations and financial condition.
As of September 27, 2026, the Company had approximately $2.7 billion of outstanding debt on its balance sheet. Additionally, a subsidiary of the Company has issued variable funding notes, which allow for the borrowing of up to $300.0 million from time to time on a revolving basis. This level of debt could have significant consequences on the Company’s future operations, including: (i) making it more difficult to meet payment and other obligations under outstanding debt; (ii) resulting in an event of default if the Company’s subsidiaries fail to comply with the financial and other restrictive covenants contained in debt agreements, which event of default could result in all of the Company’s subsidiaries’ debt becoming immediately due and payable; (iii) reducing the availability of the Company’s cash flow to fund working capital, capital expenditures, equity and debt repurchases, dividends, acquisitions and other general corporate purposes, and limiting the Company’s ability to obtain additional financing for these purposes; (iv) subjecting the Company to the risk of increased sensitivity to interest rate increases on indebtedness with variable interest rates; (v) limiting the Company’s flexibility in planning for or reacting to, and increasing its vulnerability to, changes in the Company’s business or industry or the general economy; and (vi) placing the Company at a competitive disadvantage compared to its competitors that are less leveraged.
The ability of the Company to make payments on, repay or refinance its debt, and to fund planned capital expenditures, dividends and other cash needs will depend largely upon its future operating performance and ability to generate significant cash flows. In addition, the ability of the Company to borrow funds in the future to make payments on its debt will depend on the satisfaction of the covenants in the securitized financing facility and other debt agreements, and other agreements it may enter into in the future. If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us under our variable funding notes in amounts sufficient to fund our other liquidity needs, our business, results of operations and financial condition may be adversely affected. If we cannot generate sufficient cash flow from operations to make scheduled principal amortization and interest payments on our debt obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures or seek additional equity. If we are unable to refinance any of our indebtedness on commercially reasonable terms or at all or to effect any other action relating to our indebtedness on satisfactory terms or at all, our business may be harmed. Further, our ability to incur additional indebtedness in order to refinance all or a portion of our existing indebtedness is subject to our satisfying certain incurrence covenants, including a senior ABS net leverage ratio. Recent performance trends have heightened, and may continue to heighten, certain of the risks described herein, including our ability to incur additional indebtedness in order to refinance our existing indebtedness. If current performance trends continue or worsen, our flexibility in refinancing our existing debt could be adversely impacted. Our debt is rated by credit ratings agencies and these agencies may downgrade their credit ratings for us based on the performance of our business, our capital strategies or their overall view of our industry. There can be no assurance
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that any rating assigned to our currently outstanding indebtedness will remain in effect for any given period of time or that any such ratings will not be lowered, suspended or withdrawn entirely by a rating agency if, in that agency’s judgment, circumstances so warrant. For example, on September 29, 2026, S&P placed its ratings of our Class A-2 notes on CreditWatch with negative implications, and there can be no assurance that such review will not result in a downgrade of our Class A-2 notes. A downgrade of our credit ratings could, among other things, increase our cost of borrowing, limit our ability to access capital, impact the timing of any refinancing transactions or result in more restrictive covenants in agreements governing the terms of any future indebtedness that we may incur, and thereby could adversely impact our business and results of operations.
In addition to the Company’s outstanding indebtedness, the Company is subject to risks related to certain commitments, guarantees and other liabilities. These commitments, guarantees and other liabilities could have an adverse effect on the Company’s liquidity and its ability to meet payment obligations. The Company may incur additional indebtedness, guarantees, commitments or other liabilities in the future that could amplify the risks that the Company currently faces.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the third quarter of 2026:
Issuer Repurchases of Equity Securities
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (2) | ||||||||||
| June 29, 2026 through August 2, 2026 | 3,005 | $6.79 | — | $35,000,024 | ||||||||||
| August 3, 2026 through August 30, 2026 | 204,554 | $8.23 | — | $35,000,024 | ||||||||||
| August 31, 2026 through September 27, 2026 | 24,978 | $8.30 | — | $35,000,024 | ||||||||||
| Total | 232,537 | $8.22 | — | $35,000,024 | ||||||||||
(1)Represents shares of common stock reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award. The shares were valued at the fair market value of the Company’s common stock on the vesting or exercise date of such awards, as set forth in the applicable plan document.
(2)In January 2023, our Board of Directors authorized a repurchase program for up to $500.0 million of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible.
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Item 6. Exhibits.
| EXHIBIT NO. | DESCRIPTION | ||||
| 10.1 | |||||
| 10.2 | |||||
| 10.3 | |||||
| 31.1 | |||||
| 31.2 | |||||
| 32.1 | |||||
| 101 | The following financial information from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2026 formatted in Inline eXtensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements. | ||||
| 104 | The cover page from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2026, formatted in Inline XBRL and contained in Exhibit 101. | ||||
_______________
| * | Filed herewith. | ||||
| ** | Identifies a management contract or compensatory plan or arrangement. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE WENDY’S COMPANY (Registrant) | |||||
| Date: November 5, 2026 | By: /s/ Steven W. Cirulis | ||||
| Steven W. Cirulis | |||||
| Chief Financial Officer and Chief Strategy Officer | |||||
| (On behalf of the registrant and as Principal Financial Officer) | |||||
| Date: November 5, 2026 | By: /s/ Aaron M. Kale | ||||
| Aaron M. Kale | |||||
| Chief Accounting Officer and Vice President – Tax | |||||
| (Principal Accounting Officer) | |||||
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EXHIBIT 10.1
August 21, 2026
Delivered Electronically:
Dear Tariq,
The Wendy’s Company (the “Company”) is delighted to confirm the offer of employment for the position of Chief Marketing and Customer Growth Officer reporting directly to the Chief Executive Officer. We believe you will contribute to the Company’s overall success and trust that Wendy’s will provide you with the career environment and opportunities you seek. We look forward to you joining the team - your start date is to be determined but projected to be August 24, 2026.
COMPENSATION AND BENEFITS. The following is a summary of your compensation and benefits, but it does not contain all the details. The complete understanding between the Company and you regarding your compensation and benefits is governed by legal plan documents and Company policies. If there is a discrepancy between the information in this letter and the legal plan documents/Company policies, the legal plan documents/Company policies will prevail. All forms of compensation referenced in this letter are subject to all applicable deductions and withholdings.
1.Base Salary. Your starting base annualized salary will be $675,000 paid on a bi-weekly basis.
2.Annual Incentive. You will be eligible to receive an incentive under the terms and conditions of the incentive plan provided to similarly situated officers of the Company, which currently provides for a target bonus of 90% of your annual base salary, provided performance measures set by the Company are achieved. Any bonus to which you are entitled in your initial year of employment will be prorated based on the number of full calendar months you are employed from your start date, and performance achievement will be based solely on the measures approved by the Compensation and Human Capital Committee for the 2nd half of the year.
3.Benefits. You shall be entitled to participate in any retirement, fringe benefit, or welfare benefit plan of the Company on the same terms as provided to similarly situated officers of the Company, including any plan providing medical, prescription, dental, vision, disability, life, accidental death, and travel accident insurance benefits that the Company may adopt for the benefit of similarly situated officers, in accordance with the terms of such plan. You will be eligible to participate in benefit programs after 30 days of service.
4.Executive Physical. Wendy’s wants to ensure that its leaders are provided with comprehensive health exams to help them maintain their health and peak performance. Wendy’s provides all officers of the Company with the opportunity to receive an Executive Physical and will cover the
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cost annually for an executive physical exam completed through the Company’s preferred partner. Additional details will be provided after hire.
5.Executive Financial Planning. Wendy’s provides all officers of the Company at the Senior Vice President level or above with the opportunity to enroll in personal Financial Planning Services through Ayco Goldman Sachs. Additional details will be provided after hire.
6.Vacation. You will be eligible to take up to five weeks of vacation per year.
7.One-Time Cash Sign-On Payment. You will be eligible to receive a one-time cash payment of $500,000 (less any and all applicable federal, state and local taxes) payable within the first 30 days of your employment. Should your employment with the Company be terminated voluntarily or for any reason not covered by the Company’s Executive Severance Pay Policy within one year of your hire date, you will be required to repay 100% of the after-tax portion of the cash award.
8.One-Time Equity Award. You will be eligible to receive a one-time award comprised of 50% restricted stock units and 50% stock options with a total value of $1,500,000 upon commencement of your active employment. These awards will vest ratably over three years.
9.2026 Annual Equity Award. For 2026, you will be eligible to receive an equity award comprised of 50% restricted stock units and 50% stock options with a total value of $1,500,000 upon commencement of your active employment. These awards will vest ratably over three years.
10.Subsequent Equity Awards. Commencing in 2027, you will be eligible to receive awards under the terms and conditions of the Company’s annual long-term incentive award program in effect for other similarly situated executives of the Company, subject to approval by the Performance Compensation Subcommittee (the “Subcommittee”). For 2027, the target value of your annual equity award will be $1,500,000.
11.Attorneys’ Fees. The company will reimburse or pay directly your reasonable attorneys’ fees incurred in the review and finalization of this letter, and related issues up to $10,000, subject to your presenting invoices (redacted as appropriate to preserve attorney-client privilege) and such other documentation as the Company reasonably requests within 30 days after you execute this letter.
12.Severance. The Company’s Executive Severance Pay Policy provides for certain pay and benefits in the event the Company terminates your employment without cause or within twelve (12) months following a change in control (the “Severance Payments”). Notwithstanding the language in the Company’s Executive Severance Pay Policy that permits payment to be made at the sole discretion of Wendy’s, the Severance Payments shall be no less than the pay and benefits provided under the Company’s Executive Severance Pay Policy in effect on the date of this offer letter, and shall only be provided in exchange for your execution of a Severance Agreement and Release in the form approved by the Company, including a general release of any and all claims concerning your employment and termination in favor of the Company. You will not be entitled to severance in the event the Company terminates you for cause or in the event you voluntarily resign or terminate your employment with the Company.
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In accepting this offer, you agree to the attached Non-Compete and Confidentiality Addendum. Please note that this offer is contingent upon its successful completion of a background check.
We look forward to you becoming a part of the Wendy’s team and are confident that you can have a long-term, positive impact on our business. Nonetheless, please understand that Wendy’s is an at-will employer. That means that either you or Wendy’s are free to end the employment relationship at any time, with or without notice or cause. This offer letter, including all attachments and addenda, is governed by Ohio law, without regard to conflict of law principles, and will be binding up and enforceable by the Company’s successors and assigns, if applicable.
Please review the information contained in this letter and the attachments, as it represents the complete understanding between you and the Company concerning the subject matter of this letter and supersedes any prior or contemporaneous offers, term sheets, agreements, understandings or communications between you and the Company (oral or written). You acknowledge that in accepting this offer you have not relied on any representation which is not set forth herein. Once you have had an opportunity to consider this letter, and provided you wish to accept the position on the terms outlined, please return an executed copy of this letter to me.
I’m excited about the prospect of working with you on the Wendy’s leadership team. Should you have any questions, please do not hesitate to contact me.
Yours truly,
/s/ Robert D. Wright
Robert D. Wright
President & Chief Executive Officer
The Wendy’s Company
Accepted and Agreed:
/s/ Tariq H. Hassan
Tariq H. Hassan
August 21, 2026
Date
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NON-COMPETE AND CONFIDENTIALITY ADDENDUM
TO OFFER LETTER OF AUGUST 21, 2026
CONFIDENTIAL INFORMATION. You agree that you will not at any time during your employment and anytime thereafter, divulge, furnish, or make known or accessible to, or use for the benefit of anyone other than Wendy’s, its subsidiaries, affiliates and their respective officers, directors and employee, any information of a confidential nature relating in any way to the business of Wendy’s or its subsidiaries or affiliates, or any of their respective franchisees, suppliers or distributors. You further agree that you are not subject to any agreement that would restrict you from performing services to Wendy’s and that you will not disclose to Wendy’s or use on its behalf, any confidential information or material that is the property of a former employer or third party.
Nothing in this Addendum prohibits or restricts you from reporting possible violations of law to, communicating with, cooperating with, or participating in any investigation or proceeding conducted by any federal, state, or local governmental agency or regulator, including the SEC. You are not required to obtain Wendy’s prior authorization or provide notice to Wendy’s to engage in such activities. Further, you will not be held criminally or civilly liable under any federal or state trade secret law for a disclosure of a trade secret that is made confidentially to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or that is made in a court filing under seal, in each case as permitted by 18 U.S.C. § 1833(b). Nothing in this Addendum limits any rights that cannot be waived under applicable law.
NONCOMPETE/NONSOLICITATION/EMPLOYEE NO-HIRE. You acknowledge that you will be involved, at the highest level, in the development, implementation, and management of Wendy’s business strategies and plans, including those which involve Wendy’s finances, marketing and other operations, and acquisitions and, as a result, you will have access to Wendy’s most valuable trade secrets and proprietary information. By virtue of your unique and sensitive position, your employment by a competitor of Wendy’s represents a material unfair competitive danger to Wendy’s and the use of your knowledge and information about Wendy’s business, strategies and plans can and would constitute a competitive advantage over Wendy’s. You further acknowledge that the provisions of this section are reasonable and necessary to protect Wendy’s legitimate business interests.
You agree that during your employment with Wendy’s and either (x) in the event your employment with Wendy’s is terminated “without cause”, for a period of eighteen (18) months following such termination, or (y) in the event your employment with Wendy’s is terminated for cause, for a period of twelve (12) months following such termination:
(i) in any state or territory of the United States (and the District of Columbia) or any country where Wendy’s maintains restaurants, you will not engage or be engaged in any capacity, “directly or indirectly” (as defined below), except as a passive investor owning less than a two percent (2%) interest in a publicly held company, in any business or entity that is competitive with the business of Wendy’s or its affiliates. This restriction includes any business engaged in drive through or food service restaurant business where hamburgers, chicken sandwiches or entree salads are predominant products (15% or more, individually or in the aggregate, of food products not including beverages). Notwithstanding anything to the contrary herein, this restriction shall not prohibit you from accepting employment, operating or otherwise becoming associated with a franchisee of Wendy’s, any of its affiliates or any subsidiary of the foregoing,
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but only in connection with activities associated with the operation of such a franchise or activities that otherwise are not encompassed by the restrictions of this paragraph, subject to any confidentiality obligations contained herein;
(ii) you will not, directly or indirectly, without Wendy’s prior written consent, hire or cause to be hired, solicit or encourage to cease to work with Wendy’s or any of its subsidiaries or affiliates, any person who is at the time of such activity, or who was within the six (6) month period preceding such activity, an employee of Wendy’s or any of its subsidiaries or affiliates at the level of director or any more senior level or a consultant under contract with Wendy’s or any of its subsidiaries or affiliates and whose primary client is such entity or entities; and
(iii) you will not, directly or indirectly, solicit, encourage or cause any franchisee or supplier of Wendy’s or any of its subsidiaries or affiliates to cease doing business with Wendy’s or any subsidiary or affiliate, or to reduce the amount of business such franchisee or supplier does with Wendy’s or such subsidiary or affiliate.
For purposes of this section, “directly or indirectly” means in your individual capacity for your own benefit or as a shareholder, lender, partner, member or other principal, officer, director, employee, agent or consultant of or to any individual, corporation, partnership, limited liability company, trust, association or any other entity whatsoever; provided, however, that you may own stock in Wendy’s and may operate, directly or indirectly, Wendy’s restaurants as a franchisee without violating sections (i) or (iii).
If any competent authority having proper jurisdiction over this section determines that any of the provisions is unenforceable because of the duration or geographical scope of such provision, such competent authority shall have the power to reduce the duration or scope, as the case may be, of such provision and, in its reduced form, such provision shall then be enforceable. In the event of your breach of your obligations under the post-employment restrictive covenants, then the post-employment restricted period shall be tolled and extended during the length of such breach, to the extent permitted by law.
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EXHIBIT 10.2
AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED BASE INDENTURE
THIS AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED BASE INDENTURE, dated as of October 7, 2026 (this “Amendment”), is entered into by and among (i) WENDY’S FUNDING, LLC, a Delaware limited liability company, as the master issuer (the “Master Issuer”), and (ii) CITIBANK, N.A., a national banking association, as the trustee (together with its successors and assigns in such capacity, the “Trustee”) and as the securities intermediary under the Indenture referred to below. Capitalized terms used and not defined herein shall have the meanings set forth or incorporated by reference in the Indenture.
RECITALS
WHEREAS, the Master Issuer and the Trustee have entered into the Second Amended and Restated Base Indenture, dated as of December 15, 2025 (as the same may be further amended, supplemented or otherwise modified from time to time prior to the date hereof and exclusive of the Series Supplements thereto, the “Existing Base Indenture”; and the Existing Base Indenture, as amended and supplemented by this Amendment, the “Base Indenture”, and the Base Indenture, together with each Series Supplement entered into on or prior to the date hereof and any additional Series Supplements thereto entered into from time to time, the “Indenture”).
WHEREAS, Section 13.1(a)(ii) of the Existing Base Indenture provides that the Master Issuer and the Trustee, without the consent of any Noteholder, the Control Party, the Controlling Class Representative or any other Secured Party, may at any time, and from time to time, amend the Base Indenture to add covenants of the Securitization Entities for the benefit of any Noteholders or any other Secured Parties.
WHEREAS, the Master Issuer desires to amend the Existing Base Indenture to add a covenant of the Master Issuer for the benefit of the Senior Noteholders, as set forth herein.
WHEREAS, the Master Issuer has duly authorized the execution and delivery of this Amendment.
WHEREAS, the Servicer (not in its capacity as Control Party) and the Back-Up Manager will consent to this Amendment, as set forth herein.
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NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:
1.Amendments to the Existing Base Indenture.
(a)Definition of Senior Notes Interest Reserve Amount. The definition of “Senior Notes Interest Reserve Amount” set forth in Annex A of the Existing Base Indenture is hereby amended by inserting the double-underlined text as follows:
“Senior Notes Interest Reserve Amount” means:
(a)Prior to the 2022 Springing Amendments Implementation Date, with respect to any Quarterly Payment Date (and any Weekly Allocation Date related thereto), an amount equal to the Senior Notes Quarterly Interest Amount due on the next Quarterly Payment Date (assuming that amounts available under each Variable Funding Note Purchase Agreement at such time (after giving effect to any commitment reductions on such date) are fully drawn)); and
(b)On and after the 2022 Springing Amendments Implementation Date, with respect to any Quarterly Payment Date (and any Weekly Allocation Date related thereto and any drawing date in respect of any Class A-1 Notes), the Senior Notes Quarterly Interest Amount and the Class A-1 Quarterly Commitment Fee Amount due on such Quarterly Payment Date with the interest and Class A-1 Quarterly Commitment Fee Amounts payable with respect to the Class A-1 Notes on such Quarterly Payment Date being based on the good faith utilization estimate of the Manager as set forth in the applicable Weekly Manager’s Certificate, which amount shall increase or decrease in accordance with any increase or reduction in the Outstanding Principal Amount of the Senior Notes or in accordance with the Manager’s good faith utilization estimate with respect to the Class A-1 Notes as set forth in the applicable Weekly Manager’s Certificate, it being understood that the Senior Notes Interest Reserve Amount may be funded in whole or in part with the proceeds of an advance under the Class A-1 Notes; provided, that, at all times, the Senior Notes Interest Reserve Amount shall not be lower than $30,568,414.56 (such amount, the “Minimum Senior Interest Reserve Amount”), except that the Master Issuer may reduce the Minimum Senior Interest Reserve Amount to an amount not lower than the amount calculated in accordance with clause (a) or (b) above, as applicable, without the consent of any Noteholder, the Control Party, the Controlling Class Representative or any other Secured Party if (i) S&P is no longer rating any Senior Notes or (ii) a Rating Agency Confirmation from S&P is obtained; provided further, in connection with any such reduction, the Master Issuer shall deliver to the Trustee (x) written notice of such reduction specifying the reduced Minimum Senior Interest Reserve Amount and the effective date of such reduction, together with (y) an Officer's Certificate certifying that the conditions set
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forth in clause (i) or (ii) above, as applicable, have been satisfied. Promptly following receipt of such notice, the Trustee shall post a copy of such notice on its website maintained for the benefit of the Noteholders in accordance with the Base Indenture.
(b)Definition of Minimum Senior Interest Reserve Amount. A new definition of “Minimum Senior Interest Reserve Amount” is hereby added to Annex A of the Existing Base Indenture, as follows:
“Minimum Senior Interest Reserve Amount” has the meaning set forth in the definition of “Senior Notes Interest Reserve Amount.”
(c)Section 5.17 of the Existing Base Indenture. The third paragraph of Section 5.17 of the Existing Base Indenture is hereby amended by inserting the double-underlined text as follows:
Upon the occurrence and continuance of an Interest Reserve Release Event, at the election of the Manager the resulting excess funds on deposit in the Senior Notes Interest Reserve Account or Senior Subordinated Interest Reserve Account, as applicable, shall be withdrawn and released to the Collection Account as Collections in accordance with Section 5.10(g)(v) and/or the excess amount of the related Interest Reserve Letter of Credit may be reduced by delivering a replacement or amended Interest Reserve Letter of Credit to the Control Party reflecting such reduced amount. If the existing Interest Reserve Letter of Credit is amended, the Trustee and the Control Party shall be entitled to execute or acknowledge such amendment based solely on the written confirmation from the Manager as to the amount reflected in such amendment being at least equal difference between the Senior Notes Interest Reserve Amount or Senior Subordinated Notes Interest Reserve Amount, as applicable, and the amount on deposit in the Senior Notes Interest Reserve Account or Senior Subordinated Notes Interest Reserve Account, as applicable, and without the consent of any Noteholder, the Trustee, the Controlling Class Representative or any other Secured Party. If a replacement Interest Reserve Letter of Credit is provided, the Control Party shall (without the consent of any Noteholder, the Trustee, the Controlling Class Representative or any other Secured Party) deliver to the L/C Provider the replaced Interest Reserve Letter of Credit for termination simultaneously with the receipt by the Control Party of such replacement Interest Reserve Letter of Credit, in each case to the extent that after the Control Party’s receipt thereof, no Senior Notes Interest Reserve Account Deficiency Amount or Senior Subordinated Notes Interest Reserve Account Deficiency Amount, as applicable, will exist for the immediately following Weekly Allocation Date. Notwithstanding the foregoing, the Manager shall not request, and the Master Issuer shall not permit, the release of any funds from the Senior Notes Interest Reserve Account or the reduction of any Interest Reserve Letter of Credit that has been issued for the benefit of the Trustee and the
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Control Party on behalf of the Senior Noteholders if such release or reduction, as applicable, would result in the sum of the balance of the funds on deposit in the Senior Notes Interest Reserve Account and the aggregate of the face amounts of any Interest Reserve Letters of Credit issued for the benefit of the Trustee and the Control Party on behalf of the Senior Noteholders being less than the Minimum Senior Interest Reserve Amount.
2.Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of the Existing Base Indenture shall remain in full force and effect and each reference to the “Base Indenture” and words of similar import in the Base Indenture, as amended hereby, shall be a reference to the Existing Base Indenture as amended hereby and as the same may be further amended, supplemented or otherwise modified and in effect from time to time. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Existing Base Indenture other than as set forth herein. This Amendment may not be amended, supplemented or otherwise modified except in accordance with the terms of the Base Indenture. This Amendment constitutes a Supplement pursuant to Section 13.3 of the Base Indenture. This Amendment shall inure to the benefit of and be binding on the respective successors and assigns of the parties hereto, each Noteholder and each other Secured Party.
3.Condition of Effectiveness. The amendments referenced in Section 1 of this Amendment shall be effective upon (i) the execution and delivery of this instrument by the parties hereto, (ii) the consent of the Trustee, the Back-Up Manager (provided that, such consent of the Back-Up Manager shall be subject to the language immediately preceding their signature attached hereto) and the Servicer (not in its capacity as Control Party) to this Amendment, (iii) the delivery of the Opinion of Counsel described in Section 13.3 and Section 14.3 of the Existing Base Indenture and (iv) the delivery of the Officer’s Certificate described in Section 14.3 of the Existing Base Indenture.
4.Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
5.Counterparts. The parties to this Amendment may sign any number of copies of this Amendment. Each signed copy shall be an original, but all of them together represent the same agreement. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, Title 15, United States Code, Sections 7001 et seq., the Uniform Electronic Transaction Act and any applicable state law.
6.Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Amendment shall not in any way be affected or impaired thereby.
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7.Matters relating to the Trustee. The Trustee makes no representations or warranties as to the correctness of the recitals contained herein, which shall be taken as statements of the Master Issuer, or the validity or sufficiency of this Amendment and the Trustee shall not be accountable or responsible for the adoption of the terms and provisions of the Amendment nor their conformance with the terms of the Related Documents. In entering into this Amendment, the Trustee shall have all of the rights, powers, duties and obligations of the Trustee under the Base Indenture and any other Related Document to which the Trustee is party and, for the avoidance of doubt, shall be entitled to the benefit of every provision thereunder relating to the conduct of or affecting the liability of or affording protection to the Trustee.
8.Representations and Warranties. Each party hereto represents and warrants to each other party hereto that this Amendment has been duly and validly executed and delivered by such party and constitutes its legal, valid and binding obligation, enforceable against such party in accordance with its terms.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be duly executed by its respective duly authorized officer as of the day and year first written above.
WENDY’S FUNDING, LLC,
as the Master Issuer
By: /s/ Steven W. Cirulis
Name: Steven W. Cirulis
Title: Chief Financial Officer and
Name: Steven W. Cirulis
Title: Chief Financial Officer and
Chief Strategy Officer, Treasurer
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CITIBANK, N.A., not in its individual capacity, but solely as Trustee
By: /s/ Anthony Bausa
Name: Anthony Bausa
Title: Senior Trust Officer
Name: Anthony Bausa
Title: Senior Trust Officer
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CONSENT OF THE SERVICER:
Midland Loan Services, a division of PNC Bank, National Association, in its capacity as Servicer (but not in its capacity as Control Party), hereby consents to the execution and delivery by the Master Issuer and the Trustee of this Amendment (but for the avoidance of doubt, will be deemed not to consent to any provisions of this Amendment (including any provisions in the Indenture) to which it is not required to consent under the Base Indenture or Indenture). The Servicer’s consent is granted solely to the extent that the amendment of the Indenture pursuant to this Amendment materially increases the Servicer’s obligations or liabilities, or materially decreases the Servicer’s rights or remedies under the Servicing Agreement, the Indenture or any other Related Document, and in each such case, only for such limited purpose.
The Servicer makes no representations or warranties as to the correctness of the recitals contained herein, which shall be taken as statements of the Master Issuer, or the validity or sufficiency of this Amendment and the Servicer shall not be accountable or responsible for the adoption of the terms and provisions of the Amendment nor their conformance with the terms of the Related Documents. In consenting to this Amendment, the Servicer shall have all of the rights, powers, duties and obligations of the Servicer under the Servicing Agreement and any other Related Document to which the Servicer is party and, for the avoidance of doubt, shall be entitled to the benefit of every provision thereunder relating to the conduct of or affecting the liability of or affording protection to the Servicer.
MIDLAND LOAN SERVICES,
a division of PNC Bank, National Association,
as Servicer
By: /s/ David Bornheimer
Name: David Bornheimer
Title:
Name: David Bornheimer
Title:
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CONSENT OF THE BACK-UP MANAGER:
FTI Consulting, Inc., a Maryland corporation, in its capacity as Back-Up Manager, hereby consents to the execution and delivery by the Master Issuer and the Trustee of this Amendment (but for the avoidance of doubt, will be deemed not to consent to any provisions of this Amendment (including any provisions in the Indenture) to which it is not required to consent under the Base Indenture or Indenture). The Back-Up Manager’s consent is granted solely to the extent that the amendment of the Indenture pursuant to this Amendment materially increases the Back-Up Manager’s obligations or liabilities, or materially decreases the Back-Up Manager’s rights or remedies under the Back-Up Management Agreement, the Indenture or any other Related Document, and in each such case, only for such limited purpose.
The Back-Up Manager makes no representations or warranties as to the correctness of the recitals contained herein, which shall be taken as statements of the Master Issuer, or the validity or sufficiency of this Amendment and the Back-Up Manager shall not be accountable or responsible for the adoption of the terms and provisions of the Amendment nor their conformance with the terms of the Related Documents. In consenting to this Amendment, the Back-Up Manager shall have all of the rights, powers, duties and obligations of the Back-Up Manager under the Back-Up Management Agreement and any other Related Document to which the Back-Up Manager is party and, for the avoidance of doubt, shall be entitled to the benefit of every provision thereunder relating to the conduct of or affecting the liability of or affording protection to the Back-Up Manager.
FTI CONSULTING, INC.,
as Back-Up Manager
By: /s/ Ed Tedeschi
Name: Ed Tedeschi
Title: Senior Managing Director
Name: Ed Tedeschi
Title: Senior Managing Director
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EXHIBIT 10.3
MANAGEMENT AGREEMENT
(CONFORMED THROUGH NOVEMBER 2, 2026)
Dated as of June 1, 2015
by and among
WENDY’S FUNDING, LLC, as Master Issuer,
THE OTHER SECURITIZATION ENTITIES PARTY
HERETO FROM TIME TO TIME,
HERETO FROM TIME TO TIME,
WENDY’S INTERNATIONAL, LLC, as the Manager,
and
CITIBANK, N.A., as the Trustee
TABLE OF CONTENTS
| Page | ||||||||||||||
| Article I Definitions | 2 | |||||||||||||
| Section 1.1 Certain Definitions | 2 | |||||||||||||
| Section 1.2 Other Defined Terms | 14 | |||||||||||||
| Section 1.3 Other Terms | 15 | |||||||||||||
| Section 1.4 Computation of Time Periods | 15 | |||||||||||||
| Article II Administration and Servicing of Managed Assets | 15 | |||||||||||||
| Section 2.1 Wendy’s to Act as Manager | 15 | |||||||||||||
| Section 2.2 Accounts | 17 | |||||||||||||
| Section 2.3 Records | 20 | |||||||||||||
| Section 2.4 Administrative Duties of Manager | 20 | |||||||||||||
| Section 2.5 No Offset | 21 | |||||||||||||
| Section 2.6 Compensation and Expenses | 21 | |||||||||||||
| Section 2.7 Indemnification | 21 | |||||||||||||
| Section 2.8 Nonpetition Covenant | 24 | |||||||||||||
| Section 2.9 Franchisor Consent | 24 | |||||||||||||
| Section 2.10 Appointment of Sub-managers | 24 | |||||||||||||
| Section 2.11 Insurance/Condemnation Proceeds | 25 | |||||||||||||
| Section 2.12 Permitted Asset Dispositions | 25 | |||||||||||||
| Section 2.13 Letter of Credit Reimbursement Agreement | 25 | |||||||||||||
| Section 2.14 Manager Advances | 26 | |||||||||||||
| Article III Statements and Reports | 26 | |||||||||||||
| Section 3.1 Reporting by the Manager | 26 | |||||||||||||
| Section 3.2 Appointment of Independent Auditor | 27 | |||||||||||||
| Section 3.3 Annual Accountants’ Reports | 28 | |||||||||||||
| Section 3.4 Available Information | 28 | |||||||||||||
| Article IV The Manager | 28 | |||||||||||||
| Section 4.1 Representations and Warranties Concerning the Manager | 28 | |||||||||||||
| Section 4.2 Existence; Status as Manager | 32 | |||||||||||||
| Section 4.3 Performance of Obligations | 32 | |||||||||||||
| Section 4.4 Merger and Resignation | 36 | |||||||||||||
| Section 4.5 Notice of Certain Events | 37 | |||||||||||||
| Section 4.6 Capitalization | 38 | |||||||||||||
| Section 4.7 Maintenance of Separateness | 38 | |||||||||||||
| Article V Representations, Warranties and Covenants | 39 | |||||||||||||
| Section 5.1 Representations and Warranties Made in Respect of New Assets | 39 | |||||||||||||
| Section 5.2 Assets Acquired After the Closing Date | 43 | |||||||||||||
| Section 5.3 Securitization IP | 44 | |||||||||||||
| Section 5.4 Allocated Note Amount | 44 | |||||||||||||
| Section 5.5 Specified Non-Securitization Debt Cap | 44 | |||||||||||||
| TABLE OF CONTENTS | ||||||||||||||
| (continued) | ||||||||||||||
| Page | ||||||||||||||
| Section 5.6 Competition | 45 | |||||||||||||
| Section 5.7 Restrictions on Liens | 45 | |||||||||||||
| Article VI Manager Termination Events | 46 | |||||||||||||
| Section 6.1 Manager Termination Events | 46 | |||||||||||||
| Section 6.2 Manager Termination Event Remedies | 49 | |||||||||||||
| Section 6.3 Manager’s Transitional Role | 49 | |||||||||||||
| Section 6.4 Intellectual Property | 51 | |||||||||||||
| Section 6.5 Third Party Intellectual Property | 51 | |||||||||||||
| Section 6.6 No Effect on Other Parties | 51 | |||||||||||||
| Section 6.7 Rights Cumulative | 51 | |||||||||||||
| Article VII Confidentiality | 52 | |||||||||||||
| Section 7.1 Confidentiality | 52 | |||||||||||||
| Article VIII Miscellaneous Provisions | 53 | |||||||||||||
| Section 8.1 Termination of Agreement | 53 | |||||||||||||
| Section 8.2 Survival | 53 | |||||||||||||
| Section 8.3 Amendment | 53 | |||||||||||||
| Section 8.4 Governing Law | 54 | |||||||||||||
| Section 8.5 Notices | 54 | |||||||||||||
| Section 8.6 Acknowledgement | 55 | |||||||||||||
| Section 8.7 Severability of Provisions | 55 | |||||||||||||
| Section 8.8 Delivery Dates | 55 | |||||||||||||
| Section 8.9 Limited Recourse | 55 | |||||||||||||
| Section 8.10 Binding Effect; Assignment; Third Party Beneficiaries | 56 | |||||||||||||
| Section 8.11 Article and Section Headings | 56 | |||||||||||||
| Section 8.12 Concerning the Trustee | 56 | |||||||||||||
| Section 8.13 Counterparts | 56 | |||||||||||||
| Section 8.14 Entire Agreement | 56 | |||||||||||||
| Section 8.15 Waiver of Jury Trial; Jurisdiction; Consent to Service of Process | 56 | |||||||||||||
| Section 8.16 Joinder of Additional Securitization Entities | 57 | |||||||||||||
LIST OF EXHIBITS
Exhibit A-l - Power of Attorney For Franchise Holder
Exhibit A-2 - Power of Attorney For Securitization Entities
Exhibit B - Form of Additional Securitization Entity Joinder
Schedule 2.1(f) - Manager Insurance
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT, dated as of June 1, 2015 (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), is entered into by and among WENDY’S FUNDING, LLC, a Delaware limited liability company (the “Master Issuer”), WENDY’S SPV GUARANTOR, LLC, a Delaware limited liability company (together with its successors and assigns, the “Holding Company Guarantor”), QUALITY IS OUR RECIPE, LLC, a Delaware limited liability company (the “Franchise Holder”), WENDY’S PROPERTIES, LLC, a Delaware limited liability company (“Wendy’s Properties”), and each Additional Securitization Entity that shall join this Agreement pursuant to Section 8.16 hereof (each, a “Securitization Entity” and, together with the Holding Company Guarantor, the Franchise Holder and Wendy’s Properties, the “Guarantors” and, together with the Master Issuer, the “Securitization Entities”), WENDY’S INTERNATIONAL, LLC, an Ohio limited liability company, as Manager (in its individual capacity and as Manager, together with its successors and assigns, “Wendy’s”) and CITIBANK, NA., a national banking association, not in its individual capacity but solely as the trustee (together with its successor and assigns, the “Trustee”). Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms or incorporated by reference in Annex A to the Base Indenture (as defined below).
RECITALS
WHEREAS, the Master Issuer has entered into the Base Indenture, dated as of the date hereof, with the Trustee (as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, exclusive of any Series Supplements, the “Base Indenture” and, together with all Series Supplements, the “Indenture”), pursuant to which the Master Issuer issued the Series 2015-1 Class A-l Notes and the Series 2015-1 Class A-2 Notes and may issue additional series of notes from time to time (collectively, the “Notes”) on the terms described therein;
WHEREAS, the Master Issuer has granted to the Trustee on behalf of the Secured Parties a Lien in the Collateral owned by it pursuant to the terms of Indenture;
WHEREAS, the Guarantors have guaranteed the obligations of the Master Issuer under the Indenture, the Notes and the other Related Documents and have granted to the Trustee on behalf of the Secured Parties a Lien in the Collateral owned by each of them pursuant to the terms of the Guarantee and Collateral Agreement dated as of the date hereof (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “Guarantee and Collateral Agreement”);
WHEREAS, from and after the date hereof, all New Assets shall be originated or acquired by the Securitization Entities following the Closing Date;
WHEREAS, each of the Securitization Entities desires to engage the Manager, and each of the Securitization Entities desires to have the Manager enforce such Securitization Entity’s rights
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and powers and perform such Securitization Entity’s duties and obligations under the Managed Documents (as defined below) and the Related Documents to which it is party in accordance with the Managing Standard (as defined below);
WHEREAS, each of the Securitization Entities desires to have the Manager enter into certain agreements and acquire certain assets from time to time on such Securitization Entity’s behalf, in each case in accordance with the Managing Standard;
WHEREAS, each of the Securitization Entities desires to appoint the Manager as its agent for providing comprehensive Intellectual Property services, including developing, filing for registration, clearance, maintenance, protection, enforcement, licensing, and recording transfers of the Securitization IP in accordance with the Managing Standard and as provided in Section 2.1(c) and Section 4.3(b);
WHEREAS, each of the Securitization Entities desires to enter into this Agreement to provide for, among other things, the managing of the respective rights, powers, duties and obligations of the Securitization Entities under or in connection with the Contribution Agreements, the Franchise Assets, the Securitization IP, the Real Estate Assets, the Franchisee Notes, the Contributed Restaurants, the New Contributed Restaurants, the Contributed Restaurant Assets, all other Securitized Assets and each Securitization Entity’s equity interests in each other Securitization Entity owned by it and in connection with any other assets acquired by or transferred to the Securitization Entities (collectively, the “Managed Assets”), all in accordance with the Managing Standard; and
WHEREAS, the Manager desires to enforce such rights and powers and perform such obligations and duties, all in accordance with the Managing Standard.
NOW THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. For all purposes of this Agreement, capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in Annex A to the Base Indenture. In addition, the following terms shall have the following meanings:
“Advertising Fees”: has the meaning set forth in Section 2.2(d).
“Advertising Fund Account”: has the meaning set forth in Section 2.2(d).
“Agreement”: has the meaning set forth in the preamble.
“Base Indenture”: has the meaning set forth in the recitals.
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“Cash Collateralized Letters of Credit” means any letter of credit that is 100% cash collateralized.
“Change in Management”: shall occur if more than 50% of the Leadership Team is terminated and/or resigns within 12 months after the date of the occurrence of a Change of Control; provided, in each case, that termination and/or resignation of such officer will not include (i) a change in such officer’s status in the ordinary course of succession so long as such officer remains affiliated with TWC or its Subsidiaries as an officer or director, or in a similar capacity, (ii) retirement of any officer, (iii) death or incapacitation of any officer or (iv) the replacement of any such officer with the prior written consent of the Control Party.
“Change of Control”: means an event or series of events by which:
(a)individuals who on the date hereof constituted the Board of Directors of TWC, together with any new directors whose election by the Board of Directors or whose nomination for election by the equity holders of TWC was approved by a majority of the directors then still in office who were either directors or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors of TWC then in office; or
(b)any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of TWC.
For purposes of this definition, a Person shall not be deemed to have beneficial ownership of voting power of Voting Stock subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.
“Confidential Information”: means trade secrets and other information (including, without limitation, know how, ideas, techniques, recipes, formulas, customer lists, customer information, financial information, business methods and processes, marketing plans, specifications, and other similar information as well as internal materials prepared by the owner of such information containing or based, in whole or in part, on any such information) that is confidential and proprietary to its owner and that is disclosed by one party to an agreement to another party thereto whether in writing or disclosed orally, and whether or not designated as confidential.
“Continuity of Services”: has the meaning set forth in Section 6.3(a).
“Contributed Restaurant Services”: means the services required to perform all of the duties and obligations of Wendy’s Properties in connection with the operations and
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ownership of the Contributed Restaurants and New Contributed Restaurants, including, without limitation, (a) collecting revenues generated by the Contributed Restaurants and New Contributed Restaurants; (b) maintaining appropriate levels of property and casualty insurance and performing any other activities necessary or desirable for the operation of the Contributed Restaurants and New Contributed Restaurants and the development, acquisition and disposition of New Contributed Restaurants and Contributed Restaurants, in each case as permitted or required under the Related Documents; (c) causing all revenue generated from the operation of the Contributed Restaurants and New Contributed Restaurants to be deposited into the applicable Contributed Restaurant Account in accordance with the terms of the Indenture; (d) on and after the Closing Date, withdrawing available amounts on deposit in the applicable Contributed Restaurant Account to pay the Restaurant Operating Expenses that are incurred or committed to be paid by Wendy’s Properties relating to the operation of the Contributed Restaurants and New Contributed Restaurants, such as the cost of goods sold, labor, repair and maintenance expenses to the extent not capitalized, insurance (including self-insurance), local advertising expenses, Advertising Fees allocable to the Contributed Restaurants and New Contributed Restaurants, litigation and settlement costs relating to the Managed Assets, applicable Company Restaurant License Fees and lease payments to third-party landlords; (e) hiring, training and managing employees (or supervising the hiring, training and management of the same) and negotiating with vendors, suppliers, distributors and other third parties on behalf of Wendy’s Properties in connection with the operation of Contributed Restaurants and New Contributed Restaurants; (f) selecting and acquiring Contributed Restaurant Assets, such as furnishings, cooking equipment, cooking supplies and computer equipment, on behalf of Wendy’s Properties and disposing of such Contributed Restaurant Assets in accordance with the terms of this Agreement and the other Related Documents; (g) implementing renovation projects at Contributed Restaurants and New Contributed Restaurants on behalf of Wendy’s Properties; (h) developing and implementing new menu items to be served at Contributed Restaurants and New Contributed Restaurants, (i) operating non-Branded Restaurants in limited circumstances where necessary to obtain a concession for a Contributed Restaurant or New Contributed Restaurant in the same location (for example, in a toll road food court area) so long as the revenues therefrom are treated as revenues of the related Contributed Restaurant or New Contributed Restaurant, and where the related franchise agreement is not a Contributed Restaurant Asset, acting as franchisee with respect to such restaurants; (j) performing the duties and obligations and enforcing the rights of Wendy’s Properties pursuant to the terms of the Managed Documents to which it is a party.
“Current Practice”: means, in respect of any action or inaction, the practices, standards and procedures of the Non-Securitization Entities as performed on or that would have been performed immediately prior to the Closing Date.
“Defective New Asset”: means any New Asset that does not satisfy the applicable representations and warranties of ARTICLE V hereof on the New Asset Addition Date for such New Asset.
“Discloser”: has the meaning set forth in Section 7.1.
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“Disentanglement”: has the meaning set forth in Section 6.3(a).
“Disentanglement Period”: has the meaning set forth in Section 6.3(b).
“Disentanglement Services”: has the meaning set forth in Section 6.3(a).
“Employee Benefit Plan”: means any “employee benefit plan,” as such term is defined in Section 3(3) of ERISA, established, maintained or contributed to by the Manager, or with respect to which the Manager has any liability.
“Foreign Country”: means any country (other than the United States) in which the Wendy’s System operates on the Closing Date.
“Guarantors”: has the meaning set forth in the preamble.
“Holding Company Guarantor”: has the meaning set forth in the preamble.
“Hot Back-Up Management Duties” has the meaning set forth in the Back-Up Management Agreement.
“Hot Back-Up Management Trigger Event” has the meaning set forth in the Back-Up Management Agreement.
“Indemnitee”: has the meaning set forth in Section 2.7(a).
“Indenture”: has the meaning set forth in the recitals.
“Independent Auditors”: has the meaning set forth in Section 3.2.
“Interim Successor Manager”: means, upon the resignation or termination of the Manager pursuant to the terms hereof and prior to the appointment of any successor to the Manager by the Control Party (acting at the direction of the Controlling Class Representative) subject to the terms of the Back-Up Management Agreement, the Back-Up Manager.”
“IP Services”: means the services provided on behalf of the Franchise Holder with respect to the Securitization IP, including performing the Franchise Holder’s obligations as licensor under the IP License Agreements; exercising the Franchise Holder’s rights under the IP License Agreements (and under any other agreements pursuant to which the Franchise Holder licenses the use of any Securitization IP); and acquiring, developing, managing, maintaining, protecting, enforcing, defending, licensing, sublicensing and undertaking such other duties and services as may be necessary in connection with the Securitization IP, on behalf of the Franchise Holder, in each case in accordance with and subject to the terms of this Agreement (including the Managing Standard, unless the Franchise Holder determines, in its sole discretion, that additional action is necessary or desirable in furtherance of the
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protection of the Securitization IP, in which case the Manager shall perform such IP Services and additional related services as are reasonably requested by the Franchise Holder), the Indenture, the other Related Documents and the Managed Documents, as agent for the Franchise Holder, including the following activities: (a) searching, screening and clearing After-Acquired Securitization IP to assess patentability, registrability and the risk of potential infringement; (b) filing, prosecuting and maintaining applications and registrations for the Securitization IP in the Franchise Holder’s name in the United States and in such international markets (including Canada) as the Franchise Holder or Wendy’s Canada operates or franchises (or plans to operate or franchise), including timely filing of evidence of use, applications for renewal and affidavits of use and/or incontestability, timely paying of all registration and maintenance fees, responding to third-party oppositions of applications or challenges to registrations, and responding to any office actions, reexaminations, interferences, inter partes reviews, post grant reviews, or other office or examiner requests, reviews, or requirements; (c) monitoring third-party use and registration of Securitization IP, as applicable, and taking actions the Manager deems appropriate to oppose or contest the use and any application or registration for Securitization IP, as applicable, that could reasonably be expected to infringe, dilute or otherwise violate the Securitization IP or the Franchise Holder’s rights therein; (d) confirming the Franchise Holder’s legal title in and to any or all of the Securitization IP, including obtaining written assignments of Securitization IP to the Franchise Holder and recording transfers of title in the appropriate intellectual property registry in the United States, Canada and any Additional Perfection Country, following such time that it becomes an Additional Perfection Country, and, in the Manager’s discretion, elsewhere; (e) with respect to the Franchise Holder’s rights and obligations under the IP License Agreements and any Related Documents, monitoring the licensee’s use of each licensed Trademark and the quality of its goods and services offered in connection with such Trademarks, rendering any approvals (or disapprovals) that are required under the applicable license agreement(s), and employing reasonable means to ensure that any use of any such Trademarks by any such licensee satisfies the quality control standards and usage provisions of the applicable license agreement; (f) protecting, policing, and, in the event that the Manager becomes aware of any unlicensed copying, imitation, infringement, dilution, misappropriation, unauthorized use or other violation of the Securitization IP, or any portion thereof, enforcing such Securitization IP, including (i) preparing and responding to cease-and-desist, demand and notice letters, and requests for a license; and (ii) commencing, prosecuting and/or resolving claims or suits involving imitation, infringement, dilution, misappropriation, the unauthorized use or other violation of the Securitization IP, and seeking monetary and equitable remedies as the Manager deems appropriate in connection therewith; provided that the Franchise Holder shall, and agrees to, join as a party to any such suits to the extent necessary to maintain standing; (g) performing such functions and duties, and preparing and filing such documents, as are required under the Indenture or any other Related Document to be performed, prepared and/or filed by the Franchise Holder, including (i) executing and recording such financing statements (including continuation statements) or amendments thereof or supplements thereto or such other instruments as the Franchise Holder or the Control Party may, from time to time, reasonably request (consistent with the obligations of the Franchise Holder to perfect the Trustee’s Lien only in the United States, Canada and any Additional Perfection Country, following such time that it becomes an
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Additional Perfection Country) in connection with the security interests in the Securitization IP granted by the Franchise Holder to the Trustee under the Related Documents and (ii) preparing, executing and delivering grants of security interests or any similar instruments as the Securitization Entities or the Control Party may, from time to time, reasonably request (consistent with the obligations of the Franchise Holder to perfect the Trustee’s Lien only in the United States, Canada and any Additional Perfection Country, following such time that it becomes an Additional Perfection Country) that are intended to evidence such security interests in the Securitization IP and recording such grants or other instruments with the relevant Governmental Authority including the PTO and the United States Copyright Office; (h) taking such actions as any licensee under an IP License Agreement may request that are required by the terms, provisions and purposes of such IP License Agreement (or by any other agreements pursuant to which the Franchise Holder licenses the use of any Securitization IP) to be taken by the Franchise Holder, and preparing (or causing to be prepared) for execution by the Franchise Holder all documents, certificates and other filings as the Franchise Holder shall be required to prepare and/or file under the terms of such IP License Agreements (or such other agreements); (i) paying or causing to be paid or discharged, from funds of the Securitization Entities, any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the Securitization IP or contesting the same in good faith; (j) obtaining licenses of third-party Intellectual Property for use and sublicense in connection with the Contributed Franchised Restaurant Business, the Contributed Restaurant Business and the other assets of the Securitization Entities; (k) sublicensing the Securitization IP to suppliers, manufacturers, advertisers and other service providers in connection with the provision of products and services for use in the Contributed Franchised Restaurant Business and the Contributed Restaurant Business; and (1) with respect to Trade Secrets and other confidential information of the Franchise Holder, taking reasonable measures to maintain confidentiality and to prevent non- confidential disclosures.
“Leadership Team”: means the persons holding the following offices immediately prior to the date of the occurrence of a Change of Control: any Senior Vice President, any person that reports directly to the Chief Executive Officer or Chief Financial Officer, the Treasurer or any other position that contains substantially the same responsibilities as of any of the positions listed above or reports to the Chief Executive Officer; provided that from time to time an Authorized Officer of Wendy’s may, upon written notice to the Control Party and the Trustee, change the list of offices comprising the Leadership Team so long as such list (x) at all times includes, at a minimum, the Chief Executive Officer and Chief Financial Officer (or differently-titled successor offices performing substantially the same functions as the Chief Executive Officer and/or Chief Financial Officer, as the case may be) and (y) at no time exceeds twenty-five (25) officers; provided, further, that any changes to such list notified to the Control Party and the Trustee during the period beginning on the date that is ninety (90) days preceding the announcement of a Change of Control and ending on the date that is twelve (12) months following the occurrence of a Change of Control shall be disregarded for purposes of this definition.
“Managed Assets”: has the meaning set forth in the recitals.
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“Managed Document”: means any contract, agreement, arrangement or undertaking relating to any of the Managed Assets, including the Contribution Agreements, the Franchise Documents, the Franchisee Notes, the Contributed Restaurant Leases, the New Contributed Restaurant Leases, the Franchised Restaurant Leases, the New Franchised Restaurant Leases, the Retained Restaurant Leases, the New Retained Restaurant Leases, the Contributed Restaurant Third-Party Leases, the New Contributed Restaurant Third-Party Leases and the IP License Agreements.
“Manager”: means Wendy’s, in its capacity as manager hereunder, unless a successor Person shall have become the Manager pursuant to the applicable provisions of the Indenture and this Agreement, and thereafter “Manager” shall mean such successor Person.
“Manager Advance”: means any advance of funds made by the Manager to, or on behalf of, a Securitization Entity in connection with the operation of the Contributed Franchised Restaurant Business, the Contributed Restaurant Business and other Managed Assets.
“Manager Termination Event”: has the meaning set forth in Section 6.1(a).
“Managing Standard”: means standards that (a) are consistent with Current Practice or, to the extent of changed circumstances, practices, technologies, strategies or implementation methods, consistent with the standards as the Manager would implement or observe if the Managed Assets were owned by the Manager at such time; (b) are consistent with Ongoing Practice; (c) will enable the Manager to comply in all material respects with all of the duties and obligations of the Securitization Entities under the Related Documents and the Managed Documents; (d) are in material compliance with all applicable Requirements of Law; and (e) with respect to the use and maintenance of the Securitization Entities’ rights in and to the Securitization IP, are consistent with the standards imposed by the IP License Agreements.
“Master Issuer”: has the meaning set forth in the preamble.
“New Assets”: means a New Franchise Agreement, a New Development Agreement, a New Real Estate Asset or a New Franchisee Note or any other Managed Asset contributed to, or otherwise entered into or acquired by, the Securitization Entities after the Closing Date.
“New Asset Addition Date”: means, with respect to any New Asset, the earliest of (i) the date on which such New Asset is acquired by the applicable Securitization Entity, (ii) the later of (a) the date upon which the closing occurs under the applicable contract giving rise to such New Asset and (b) the date upon which all of the diligence contingencies, if any, in the contract for purchase of the applicable New Asset expire and the Securitization Entity acquiring such New Asset no longer has the right to cancel such contract and (iii) if such New Asset is a New Franchise Agreement, New Development Agreement or New Franchisee Note, the date on which the related Securitization Entity begins receiving payments from the applicable Franchisee in respect of such New Asset.
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“New Foreign Country”: means any country that is not a Foreign Country.
“New Leased Real Property”: has the meaning set forth in Section 5.1(f).
“Notes”: has the meaning set forth in the recitals.
“Ongoing Practice”: means, in respect of any action or inaction, practices, standards and procedures that are at least as favorable or beneficial as the practices, standards and procedures of any Non-Securitization Entities as performed with respect to any additional restaurant brand, restaurant concept or any other asset similar to those owned by a Securitization Entity that is owned or operated by such Non-Securitization Entity.
“Parent Entities”: has the meaning set forth in Section 2.13.
“Pension Plan”: means any “employee pension benefit plan,” as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA and to which any company in the same Controlled Group as the Manager has liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA for any time within the preceding five years or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
“Post-Opening Services”: means the services required to be performed under the applicable Franchise Documents by the applicable Securitization Entities after the opening of a Franchised Restaurant, in each case in accordance with and subject to the terms of this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture, the other Related Documents and the Managed Documents, including, as may be required under the applicable Franchise Document, (a) providing such Franchisee with the standards established or approved by the Franchise Holder for use by Franchisees; (b) maintaining a system-wide advertising program and administering the development of all national advertising and promotional programs for the Wendy’s Brand and the Branded Restaurants; (c) inspecting such Franchised Restaurant; (d) providing such Franchisee with the Manager’s ongoing operating standards and materials designed for use in the Franchised Restaurants; and (e) such other Post- Opening Services as are required to be performed under applicable Franchise Documents; provided that such Post-Opening Services provided by the Manager under this Agreement will not include any “add-on” type corporate services provided by a Non-Securitization Entity to a Franchisee, whether pursuant to the related Franchise Agreement or otherwise, the cost of which is not included in the royalties payable to the Franchise Holder under the related Franchise Agreement, including, without limitation, repairs and maintenance, gift card administration, employee training, point-of-sale system maintenance and support and maintenance of other information technology systems.
“Power of Attorney”: means the authority granted by a Securitization Entity to the Manager pursuant to a Power of Attorney in substantially the form set forth as Exhibit A-l or Exhibit A-2 hereto.
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“Pre-Opening Services”: means the services required to be performed under the applicable Franchise Documents by the applicable Securitization Entities prior to the opening of a Franchised Restaurant, in each case in accordance with and subject to the terms of this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture, the other Related Documents and the Managed Documents, including, as required under the applicable Franchise Document, (a) providing the applicable Franchisee with standards for the design, construction, equipping and operation of such Franchised Restaurant and the approval of locations meeting such standards; (b) providing such Franchisee with the Manager’s programs and materials designed for use in the Franchised Restaurants; (c) providing such Franchisee with a loaned copy of the Wendy’s Manual; and (d) providing such Franchisee with such other assistance in the pre-opening, opening and initial operation of such Franchised Restaurant, as is required to be provided under applicable Franchise Documents; provided that such Pre-Opening Services provided by the Manager under this Agreement will not include any “add-on” type corporate services provided by a Non-Securitization Entity to a Franchisee, whether pursuant to the related Franchise Agreement or otherwise, the cost of which is not included in the royalties payable to the Franchise Holder under the related Franchise Agreement, including, without limitation, repairs and maintenance, gift card administration, employee training, point-of-sale system maintenance and support and maintenance of other information technology systems.
“QSCC”: means Quality Supply Chain Co-op, Inc., a Delaware corporation.
“Real Estate Services”: means acquiring, developing, managing, maintaining, protecting, enforcing, defending, leasing and undertaking, or causing to be undertaken, such other duties and services as may be necessary in connection with the Real Estate Assets, on behalf of Wendy’s Properties, in each case in accordance with and subject to the terms of this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture, the other Related Documents and the Managed Documents, as agent for Wendy’s Properties, including, without limitation, the following activities: (a) the negotiation, execution and recording (as appropriate) of leases, subleases, deeds and other contracts and agreements relating to the Real Estate Assets; (b) the management of the Real Estate Assets on behalf of Wendy’s Properties, including (i) the management of the Contributed Owned Real Property and New Owned Real Property, (ii) the enforcement and exercise of Wendy’s Properties’ rights under each lease included in the Real Estate Assets, (iii)the payment, extension, renewal, modification, adjustment, prosecution, defense, compromise or submission to arbitration or mediation of any obligation, suit, liability, cause of action or claim, including taxes, relating to any Real Estate Assets and (iv) the collection of any amounts payable to Wendy’s Properties and the payment of amounts payable by Wendy’s Properties under the Real Estate Assets, including rent; (c) causing Wendy’s Properties to (i) acquire and enter into agreements to acquire Real Estate Assets and (ii) sell, assign, transfer, encumber or otherwise dispose of all or any portion of the Real Estate Assets in accordance with this Agreement and the Indenture; (d) environmental evaluation and remediation activities on any Real Estate Asset owned or leased by Wendy’s Properties as deemed appropriate by the Manager or as otherwise required under applicable Requirements of Law; (e) obtaining appropriate levels of title and property insurance with respect to each parcel of Contributed
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Owned Real Property and New Owned Real Property; provided that the level of title insurance, if any, maintained on the Closing Date for each parcel of Contributed Owned Real Property owned by Wendy’s Properties on the Closing Date will be deemed to be the appropriate level of title insurance for such Contributed Owned Real Property and the New Owned Real Property on and after the Closing Date for purposes of this clause (e); (f) making or causing to be made all repairs and replacements to the existing improvements and the construction of new improvements on the Real Estate Assets; (g) the employment of agents, managers, brokers or other Persons necessary or appropriate to acquire, dispose of, maintain, own, lease, manage and operate the Real Estate Assets; (h) paying or causing to be paid any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the Real Estate Assets or contesting the same in good faith; and (i) all other actions or decisions relating to the acquisition, disposition, amendment, termination, maintenance, ownership, leasing, subleasing, management and operation of the Real Estate Assets.
“Recipient”: has the meaning ascribed to such term in Section 7,1.
“Securitization Entities”: has the meaning set forth in the preamble.
“Securitization Transaction”: means the transactions contemplated by the Related Documents including, without limitation, the contribution to the applicable Securitization Entities of the Contributed Assets and the proceeds thereof in the manner provided in the applicable Related Documents.
“Services”: means the servicing and administration by the Manager of the Managed Assets, in each case in accordance with and subject to the terms of this Agreement (including the Managing Standard), the Indenture, the other Related Documents and the Managed Documents for the applicable Securitization Entity, including, without limitation: (a) calculating and compiling information required in connection with any report or certificate to be delivered pursuant to the Related Documents; (b) preparing and filing all tax returns and tax reports required to be prepared by any Securitization Entity; (c) paying or causing to be paid or discharged, in each case from funds of the Securitization Entities, any and all taxes, charges and assessments attributable to and required to be paid under applicable Requirements of Law by any Securitization Entity; (d) performing the duties and obligations of, and exercising and enforcing the rights of, the Securitization Entities under the Related Documents, including performing the duties and obligations of each applicable Securitization Entity under the IP License Agreements; (e) taking those actions that are required under the Related Documents and Requirements of Law to maintain continuous perfection (where applicable) and priority (subject to Permitted Liens and the exclusions from perfection requirements under the Indenture, the Guarantee and Collateral Agreement and the Related Documents) of any Securitization Entity’s and the Trustee’s respective interests in the Collateral; (f) making or causing the collection of amounts owing under the terms and provisions of each Managed Document and the Related Documents, including managing (i) the applicable Securitization Entities’ rights and obligations under the Franchise Agreements and the Development Agreements (including performing Pre-Opening Services and Post-Opening Services) and (ii) the right to approve amendments, waivers, modifications and
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terminations of (including extensions, modifications, write-downs and writeoffs of obligations owing under) Franchise Documents and other Managed Documents (which amendments to Franchise Agreements may be effected by replacing such Franchise Agreement with a New Franchise Agreement on the then-current form of the applicable Franchise Agreement (which New Franchise Agreement may be executed by a different Securitization Entity than is party to such existing Franchise Agreement)) and to exercise all rights of the applicable Securitization Entities under such Franchise Documents and other Managed Documents; (g) performing due diligence with respect to, selecting and approving new Franchisees, performing due diligence with respect to and approving extensions of credit to Franchisees pursuant to New Franchisee Notes and providing personnel to manage the due diligence, selection and approval process; (h) preparing New Franchise Agreements, New Development Agreements and New Franchisee Notes, including, among other things, adopting variations to the forms of agreements used in documenting such agreements and preparing and executing documentation of assignments, transfers, terminations, renewals, site relocations and ownership changes, in all cases, subject to and in accordance with the terms of the Related Documents; (i) evaluating and approving assignments of Franchise Agreements, Development Agreements and Franchisee Notes (and related documents) to third-party franchisee candidates or existing Franchisees and, in accordance with the Managing Standard, arranging for the assignment of Reacquired Restaurants to a Non-Securitization Entity until such time as the applicable restaurant is re-franchised to a third-party Franchisee; (j) preparing and filing franchise disclosure documents with respect to New Development Agreements and New Franchise Agreements to comply, in all material respects, with applicable Requirements of Law; (k) complying with franchise industry-specific government regulation and applicable Requirements of Law; (1) making Manager Advances in its sole discretion; (m) administering the Advertising Fund Account and the Management Accounts; (n) performing the duties and obligations and enforcing the rights of the Securitization Entities under the Managed Documents, including entering into new Managed Documents from time to time; (o) arranging for legal services with respect to the Managed Assets, including with respect to the enforcement of the Managed Documents; (p) arranging for or providing accounting and financial reporting services; (q) ensuring that suppliers to the Wendy’s System meet quality control standards and appointing two representatives to the QSCC board of directors; (r) establishing and/or providing quality control services and standards for food, equipment, suppliers and distributors in connection with the Contributed Restaurant Business and the Contributed Franchised Restaurant Business and monitoring compliance with such standards; (s) developing new products and services (or modifying any existing products and services) to be offered in connection with the Contributed Restaurant Business and the Contributed Franchised Restaurant Business and the other assets of the Securitization Entities; (t) in connection with the Contributed Restaurant Business and the Contributed Franchised Restaurant Business, developing, modifying, amending and disseminating (i) specifications for restaurant operations, (ii) the Wendy’s Manual and (iii) new menu items; (u) performing the Contributed Restaurant Services with respect to the operation of Contributed Restaurants and New Contributed Restaurants; (v) performing the Real Estate Services, as described above; (w) preparing and delivering the Mortgages; (x) performing the IP Services, as described above; (y) developing and administering advertising, marketing and promotional programs relating to the Wendy’s
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Brand and Branded Restaurants; and (z) performing such other services as may be necessary or appropriate from time to time and consistent with the Managing Standard and the Related Documents in connection with the Managed Assets.
“Specified Non-Securitization Debt”: has the meaning set forth in Section 5.5.
“Specified Non-Securitization Debt Cap”: has the meaning set forth in Section 5.5.
“Sub-manager”: has the meaning set forth in Section 2.10.
“Sub-managing Arrangement”: means an arrangement whereby the Manager engages any other Person (including any Affiliate) to perform certain of its duties under this Agreement excluding the fundamental corporate functions of the Manager; provided that (i) master franchise arrangements with Franchisees and temporary arrangements with Franchisees with respect to the management of one or more Branded Restaurants immediately following the termination of the former Franchisee thereof, and (ii) any agreement between the Manager and third-party vendors pursuant to which the Manager purchases a specific product or service shall not be considered to be a Sub-managing Arrangement.
“Successor Manager” means any successor to the Manager appointed by the Control Party (at the direction of the Controlling Class Representative) that has accepted such appointment, upon the termination, removal, resignation or replacement of the Manager pursuant to the terms of the Management Agreement.
“Term”: shall have the meaning set forth in Section 8.1.
“Termination Notice”: has the meaning set forth in Section 6.1(b).
“Transition Plan” has the meaning set forth in the Back-Up Management Agreement.
“Trustee”: has the meaning set forth in the preamble.
“Voting Stock”: means Equity Interests of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors, managers or trustees of a corporation (irrespective of whether or not at the time Equity Interests of any other class or classes will have or might have voting power by reason or the happening of any contingency).
“Weekly Management Fee”: means, (X) with respect to each Weekly Allocation Date, the amount determined by dividing:
(a) an amount equal to the sum of (A) a base fee of $34,600,00, plus (B) a fee of $15,860 for every integer multiple of $100,000 of aggregate Retained Collections over the preceding four (4) most recently ended Quarterly Collection Periods; by
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(ii) 52 or 53, as applicable (i.e., as determined based on the number of weeks included in the preceding four (4) most recently ended Quarterly Collection Periods);
provided that such fee will be payable only to the extent that the sum of the amounts set forth in clause (i)(A) and together with clause (i)(B) will not exceed 25% of the aggregate Retained Collections over the preceding four (4) Quarterly Collection Periods or (Y) the formula designated by the Master Issuer in writing to the Trustee, so long as (a) the Master Issuer certifies in writing to the Trustee that (i) the formula was determined in consultation with the Back-up Manager, and (ii) the Master Issuer will disclose the formula in each Quarterly Noteholders’ Report and (b) the Trustee has received written confirmation from the Master Issuer that the Rating Agency Condition with respect to each Series of Notes Outstanding has been satisfied with respect to such new formula.
“Wendy’s”: has the meaning set forth in the preamble.
“Wendy’s Manual”: means the Operations Standards Manual specifying Wendy’s operating standards and an initial set of reporting forms for use in the operation of a Franchised Restaurant.
Section 1.2 Other Defined Terms.
(a)Each term defined in the singular form in Section 1.1 or elsewhere in this Agreement shall mean the plural thereof when the plural form of such term is used in this Agreement and each term defined in the plural form in Section 1.1 or elsewhere in this Agreement shall mean the singular thereof when the singular form of such term is used herein.
(b)The words “hereof’, “herein”, “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references herein are references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified.
(c)Unless as otherwise provided herein, the word “including” as used herein shall mean “including without limitation”.
(d)All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with GAAP.
(e)Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this, such determination or calculation shall be made, to the extent applicable and except as otherwise specified in this, in accordance with GAAP. When used
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herein, the term “financial statement” shall include the notes and schedules thereto. All accounting determinations and computations hereunder shall be made without duplication.
Section 1.3 Other Terms. All terms used in Article 9 of the UCC as in effect from time to time in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
Section 1.4 Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”
ARTICLE II
ADMINISTRATION AND SERVICING OF MANAGED ASSETS
Section 2.1 Wendy’s to Act as Manager.
(a)Engagement of the Manager. The Manager is hereby authorized by each Securitization Entity, and hereby agrees, to perform the Services (or refrain from the performance of the Services) subject to and in accordance with the Managing Standard and the terms of this Agreement, the other Related Documents and the Managed Documents. With respect to the IP Services, the Manager shall perform such IP Services in accordance with the Managing Standard and the IP License Agreements, unless the Franchise Holder determines, in its sole discretion, that additional action is necessary or desirable in furtherance of the protection of the Securitization IP, in which case the Manager shall perform such IP Services and additional related services as are reasonably requested by the Franchise Holder. The Manager, on behalf of the Securitization Entities, shall have full power and authority, acting alone and subject only to the specific requirements and prohibitions of this Agreement and in accordance with the Managing Standard, the Indenture and the other Related Documents, to do and take any and all actions, or to refrain from taking any such actions, and to do any and all things in connection with performing the Services that the Manager may deem necessary or desirable. Without limiting the generality of the foregoing, but subject to the provisions of this Agreement, including Section 2.8, the Indenture and the other Related Documents, the Manager, in connection with performing the Services, is hereby authorized and empowered to execute and deliver, in the Manager’s own name (in its capacity as agent for the applicable Securitization Entity) or in the name of any Securitization Entity (pursuant to the applicable Power of Attorney), on behalf of any Securitization Entity any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Managed Assets. For the avoidance of doubt, the parties hereto acknowledge and agree that the Manager is providing Services directly to each applicable Securitization Entity. Nothing in this Agreement shall preclude the Securitization Entities from performing the Services or any other act on their own behalf at any time and from time to time.
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(b)Actions to Create and Perfect Security Interests. Subject to the terms of the Indenture, including any applicable Series Supplement, and the Related Documents, the Manager shall take those actions that are required under the Related Documents and Requirements of Law to maintain continuous perfection (where applicable) and priority (subject to Permitted Liens) of any Securitization Entity’s and the Trustee’s respective interests in the Securitized Assets to the extent required by the Indenture and the Guarantee and Collateral Agreement. Without limiting the foregoing, the Manager shall file or cause to be filed with the appropriate government office the financing statements on Form UCC-1, assignments of financing statements on Form UCC-3, any filings related to the Securitization IP as set forth in Section 8.25(c) of the Base Indenture and other filings required to be filed in connection with the Indenture and the other Related Documents. Upon the occurrence of a Mortgage Preparation Event, the Manager shall cause the preparation of fully executed Mortgages for recordation against the Real Estate Assets (excluding the Contributed Restaurant Third-Party Leases) and within ninety (90) days of such Mortgage Preparation Event shall deliver such Mortgages to the Trustee or a third-party service provider engaged by the Trustee in accordance with Section 8.37 of the Base Indenture, to be held for the benefit of the Secured Parties in the event a Mortgage Recordation Event occurs. In accordance with Section 8.37 of the Base Indenture, the Manager shall cause the Trustee to be reimbursed for any and all reasonable costs and expenses in connection with such Mortgage Recordation Event, including all Mortgage Recordation Fees pursuant to and in accordance with the Priority of Payments.
(c)Ownership of Manager-Developed IP.
(i) The Manager acknowledges and agrees that all Securitization IP, including any Manager-Developed IP arising during the Term, shall, as between the parties, be owned by and inure exclusively to the Franchise Holder. Any copyrightable material included in such Manager-Developed IP shall, to the fullest extent allowed by law, be considered a “work made for hire” as that term is defined in Section 101 of the U.S. Copyright Act of 1976, as amended, and owned by the Franchise Holder. The Manager hereby irrevocably assigns and transfers, without further consideration, all right, title and interest in such Manager-Developed IP (and all goodwill connected with the use of and symbolized by Trademarks included therein) to the Franchise Holder. Notwithstanding the foregoing, the Manager-Developed IP to be transferred to the Franchise Holder shall include rights to use third party Intellectual Property only to the extent (but to the fullest extent) that such rights are assignable or sublicensable to the Franchise Holder. All applications to register Manager-Developed IP shall be filed in the name of the Franchise Holder.
(ii) The Manager agrees to cooperate in good faith with the Franchise Holder for the purpose of securing and preserving the Franchise Holder’s rights in and to the applicable Manager-Developed IP, including executing any documents and taking any actions, at the Franchise Holder’s reasonable request, or as deemed necessary or advisable by the Manager, to confirm, file and record in any appropriate registry the Franchise Holder’s sole legal title in and to such Manager-Developed IP, it being acknowledged and agreed that any expenses in connection therewith shall be paid by the Franchise Holder. The Manager hereby appoints the Franchise Holder as its attorney-in- fact authorized to execute such documents in the
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event that Manager fails to execute the same within twenty (20) days following the Franchise Holder’s written request to do so (it being understood that such appointment is a power coupled with an interest and therefore irrevocable) with full power of substitution and delegation.
(d)Grant of Power of Attorney. In order to provide the Manager with the authority to perform and execute its duties and obligations as set forth herein, the Securitization Entities shall execute and deliver on the Closing Date a Power of Attorney in substantially the form set forth as Exhibit A-l (with respect to the Franchise Holder) and Exhibit A-2 (with respect to the Securitization Entities) hereto to the Manager, which Powers of Attorney shall terminate in the event that the Manager’s rights under this Agreement are terminated as provided herein.
(e)Franchisee Insurance. The Manager acknowledges that, to the extent that it or any of its Affiliates is named as a “loss payee” or “additional insured” under any insurance policies of any Franchisee, it shall use commercially reasonable efforts to cause it to be so named in its capacity as the Manager on behalf of the applicable Securitization Entity, and the Manager shall promptly (i) deposit or cause to be deposited to the applicable Concentration Account any proceeds received by it or by any Securitization Entity or any other Affiliate under such insurance policies (other than amounts described in the following clause (ii)) and (ii) disburse to the applicable Franchisee any proceeds of any such insurance policies payable to such Franchisee pursuant to the applicable Franchise Agreement.
(f)Manager Insurance. The Manager shall maintain adequate insurance consistent with the type and amount maintained by the Manager as of the Closing Date, subject, in each case, to any adjustments or modifications made in accordance with the Managing Standard. Such insurance shall cover each of the Securitization Entities, as an additional insured, to the extent that such Securitization Entity has an insurable interest therein. All insurance policies maintained by the Manager on the Closing Date are listed on Schedule 2.1(f) hereto.
Section 2.2 Accounts.
(a)Collection of Payments; Remittances; Collection Account. The Manager shall maintain and manage the Management Accounts (and certain other accounts from time to time) in the name of, and for the benefit of, the Securitization Entities. The Manager shall (on behalf of the Securitization Entities) (i) cause the collection of Collections in accordance with the Managing Standard and subject to and in accordance with the Related Documents and (ii) make all deposits to and withdrawals from the Management Accounts in accordance with this Agreement (including the Managing Standard), the Indenture and the applicable Managed Documents. The Manager shall (on behalf of the Securitization Entities) make all deposits to the Collection Account in accordance with terms of the Indenture.
(b)Deposit of Misdirected Funds; No Commingling; Misdirected Payments. The Manager shall promptly deposit into a Concentration Account, the Collection Account, the Advertising Fund Account or such other appropriate account within three (3) Business Days immediately following Actual Knowledge of the Manager of the receipt thereof and in the form received with
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any necessary endorsement or in cash, all payments in respect of the Managed Assets incorrectly deposited into another account; provided that misdirected payments (other than Advertising Fees) in an aggregate amount of up to $50,000 at any time may be deposited in the correct account within five (5) Business Days following Actual Knowledge of the Manager of the receipt thereof; provided, further, that misdirected payments consisting of Advertising Fees may remain in a Concentration Account for up to one month prior to being transferred to the Advertising Fund Account. In the event that any funds not constituting Collections are incorrectly deposited in any Account, subject to the second proviso to the immediately preceding sentence, the Manager shall promptly withdraw such amounts after obtaining Actual Knowledge thereof and shall pay such amounts to the Person legally entitled to such funds. Except as otherwise set forth herein, in the Base Indenture or in the Company Restaurant Licenses, the Manager shall not commingle any monies that relate to Managed Assets with its own assets and shall keep separate, segregated and appropriately marked and identified all Managed Assets and any other property comprising any part of the Securitized Assets, and for such time, if any, as such Managed Assets or such other property are in the possession or control of the Manager to the extent such Managed Assets or such other property is included in the Securitized Assets, the Manager shall hold the same in trust for the benefit of the Trustee and the Secured Parties (or, following termination of the Indenture, the applicable Securitization Entity). Additionally, the Manager, promptly after obtaining Actual Knowledge thereof, shall notify the Trustee in the Weekly Manager’s Certificate of any amounts incorrectly deposited into any Indenture Trust Account and arrange for the prompt remittance by the Trustee of such funds from the applicable Indenture Trust Account to the Manager. The Trustee shall have no obligation to verify any information provided to it by the Manager in any Weekly Manager’s Certificate and shall remit such funds to the Manager based solely on such Weekly Manager’s Certificate.
(c)Investment of Funds in Management Accounts. The Manager shall have the right to invest and reinvest funds deposited in the Management Accounts in Eligible Investments maturing no later than the Business Day preceding each Weekly Allocation Date. All income or other gain from such Eligible Investments will be credited to the related Management Account, and any loss resulting from such investments will be charged to the related Management Account. The Investment Income (net of losses and expenses) available on deposit in the Management Accounts will be withdrawn on each Weekly Allocation Date for deposit to the Collection Account for application as Collections on such Weekly Allocation Date.
(d)Advertising Funds.
(i)The Manager shall maintain an account designated as the “Advertising Fund Account” in the name of The Wendy’s National Advertising Program, Inc. (or a Subsidiary thereof) for fees payable in respect of Contributed Restaurants to fund the national marketing and advertising activities and local advertising cooperatives with respect to the Wendy’s Brand (the “Advertising Fees”). Advertising Fees will be transferred by the Manager from the Contributed Restaurant Accounts to the Advertising Fund Account. Most Franchisees and Retained Restaurants will make payments to the Advertising Fund Account directly, and such funds will not pass through any Securitization Entity; provided, that to the extent that any Advertising Fees are paid to a Securitization Entity, such Advertising Fees may may be held
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by the Securitization Entities for up to one month before being transferred to the Advertising Fund Account (with any Advertising Fees that are transferred from a Securitization Entity to the Advertising Fund Account being treated as Excluded Amounts at the time that they are transferred). The Manager shall not make or permit or cause any other Person to make or permit any borrowings to be made or Liens to be levied against the Advertising Fund Account or the funds therein. The Manager shall apply the amount on deposit in each Advertising Fund Account solely to cover (a) the costs and expenses (including costs and expenses incurred prior to the Closing Date) associated with the administration of such account and (b) costs and expenses related to the national marketing and advertising programs with respect to the Wendy’s Brand. The Manager may make advances to fund deficits in the Advertising Fund Account from time to time to the extent that it reasonably expects to be reimbursed for such advances from the proceeds of future Advertising Fees, it being agreed that any such advances shall not constitute Manager Advances. The Manager, acting on behalf of the Securitization Entities, may in accordance with this Agreement, increase or reduce the Advertising Fees required to be paid by the Contributed Restaurants pursuant to the terms of this Agreement and in accordance with the Managing Standard.
(ii)Wendy’s Properties hereby agrees to pay Advertising Fees in an amount to be determined by the Manager which is comparable to the Advertising Fees payable by Franchisees to fund Wendy’s regional, national and international marketing and advertising activities, payable from collections in the applicable Contributed Restaurant Accounts. Manager may, in accordance with the Managing Standard, increase or reduce the Advertising Fees required to be paid by Wendy’s Properties from time to time.
(e)Gift Card Sales and Redemptions. The Manager shall be responsible for administering the gift card programs of the Wendy’s Brand and shall collect the proceeds of the initial sale of gift cards that are sold on the internet, at Contributed Restaurants, at New Contributed Restaurants, at third-party retail locations or at other gift card vendors in one or more accounts in the name of the Manager (or a Subsidiary thereof). Following the redemption of any gift card or portion thereof at any Contributed Restaurant or New Contributed Restaurant, the Manager shall deposit the corresponding gift card redemption amount into the Contributed Restaurant Accounts within fourteen (14) days of such redemption. The Manager shall reimburse the applicable Franchisee or Non-Securitization Entity with respect to the redemption of gift cards sold at these locations or any portion thereof in accordance with the Manager’s normal practices and the Managing Standard. The proceeds of the initial sale of gift cards sold at Franchised Restaurants shall be held in accounts in the name of the selling Franchisee, and the Manager will engage a third-party vendor to administer reimbursements of the applicable Franchisee or Non-Securitization Entity with respect to the redemption of gift cards sold at Franchised Restaurants.
(f)Tenant Improvement Funds. The Manager shall be responsible for collecting and administering tenant improvement allowances and similar amounts received from landlords with respect to the Contributed Restaurant Third-Party Leases. Any such amounts received from landlords will be collected and maintained in one or more accounts in the name of the Manager, and will be utilized by the Manager for improvements, renovations or other capital expenditures
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in respect of real property subject to the Contributed Restaurant Third-Party Leases or, to the extent any such funds represent a reimbursement of such expenditures previously made by the Manager, may be retained by the Manager. The Manager shall administer such amounts in accordance with the Managing Standard.
Section 2.3 Records.
(a)The Manager shall, in accordance with the Current Practice, retain all material data (including computerized records) relating directly to, or maintained in connection with, the servicing of the Managed Assets at its address indicated in Section 8.5 (or at an off-site storage facility reasonably acceptable to the Securitization Entities, the Servicer and the Back-Up Manager) or, upon thirty (30) days’ notice to the Securitization Entities, the Rating Agency, the Back-Up Manager, the Trustee and the Servicer, at such other place where the servicing office of the Manager is located (provided that the servicing office of the Manager shall at all times be located in the United States), and shall give the Trustee, the Back-Up Manager and the Servicer access to all such data in accordance with the terms and conditions of the Related Documents; provided, however, that the Trustee shall not be obligated to verify, recalculate or review any such data. The Manager acknowledges that the Franchise Holder shall own the Intellectual Property rights in all such data.
(b)If the rights of Wendy’s, as the initial Manager, shall have been terminated in accordance with Section 6.1 or if this Agreement shall have been terminated pursuant to Section 8.L Wendy’s, as the initial Manager, shall, upon demand of the Trustee (based upon the written direction of the Control Party), in the case of a termination pursuant to Section 6.1, or upon the demand of the Securitization Entities, in the case of a termination pursuant to Section 8.1, deliver to the Successor Manager all data in its possession or under its control (including computerized records) necessary or desirable for the servicing of the Managed Assets.
Section 2.4 Administrative Duties of Manager.
(a) Duties with Respect to the Related Documents. The Manager, in accordance with the Managing Standard, shall perform the duties of the applicable Securitization Entities under the Related Documents except for those duties that are required to be performed by the equity holders, stockholders, directors, or managers of such Securitization Entity pursuant to applicable law. In furtherance of the foregoing, the Manager shall consult with the managers or the directors, as the case may be, of the Securitization Entities as the Manager deems appropriate regarding the duties of the Securitization Entities under the Related Documents. The Manager shall monitor the performance of the Securitization Entities and, promptly upon obtaining Actual Knowledge thereof, shall advise the applicable Securitization Entity when action is necessary to comply with such Securitization Entity’s duties under the Related Documents. The Manager shall prepare for execution by the Securitization Entities or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instalments, certificates, notices and opinions as it shall be the duty of the Securitization Entities to prepare, file or deliver pursuant to the Related Documents.
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(b)Duties with Respect to the Securitization Entities. In addition to the duties of the Manager set forth in this Agreement or any of the Related Documents, the Manager, in accordance with the Managing Standard, shall perform such calculations and shall prepare for execution by the Securitization Entities or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of the Securitization Entities to prepare, file or deliver pursuant to applicable law, including, for the avoidance of doubt, securities laws and franchise laws. Pursuant to the directions of the Securitization Entities and in accordance with the Managing Standard, the Manager shall administer, perform or supervise the performance of such other activities in connection with the Securitization Entities as are not covered by any of the foregoing provisions and as are expressly requested by any Securitization Entity and are reasonably within the capability of the Manager.
(c)Records. The Manager shall maintain appropriate books of account and records relating to the Services performed under this Agreement, which books of account and records shall be accessible for inspection by the Securitization Entities during normal business hours and upon reasonable notice and by the Trustee, the Back-Up Manager, the Servicer and the Controlling Class Representative in accordance with Section 3.1(e).
(d)Election of Controlling Class Representative. Pursuant to Section 11.1(d) of the Base Indenture, if two CCR Candidates both receive votes from Controlling Class Members holding beneficial interests in exactly 50% of the Aggregate Outstanding Principal Amount of Notes of the Controlling Class with respect to which votes were submitted, the Master Issuer or the Manager on its behalf pursuant to this Agreement shall select the Controlling Class Representative from among the CCR Candidates.
Section 2.5 No Offset. The payment obligations of the Manager under this Agreement shall not be subject to, and the Manager hereby waives, in connection with the performance of such obligations, any right of offset that the Manager has or may have against the Trustee, the Servicer or the Securitization Entities, whether in respect of this Agreement, the other Related Documents or any document governing any Managed Asset or otherwise.
Section 2.6 Compensation and Expenses. As compensation for the performance of its obligations under this Agreement, the Manager shall receive the Weekly Management Fee and the Supplemental Management Fee, if any, on each Weekly Allocation Date out of amounts available therefor under the Indenture on such Weekly Allocation Date in accordance with the Priority of Payments. The Manager is required to pay from its own funds all expenses it may incur in performing its obligations hereunder.
Section 2.7 Indemnification.
(a)The Manager agrees to indemnify and hold harmless each of the Securitization Entities, the Trustee, the Back-Up Manager and the Servicer (both in its capacity as Servicer and as Control Party) and their respective members, officers, directors, managers, employees and agents (each, an “Indemnitee”) against all claims, losses, penalties, fines, forfeitures, liabilities, obligations, damages, actions, suits and related costs and judgments and other costs, fees and
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reasonable expenses, including reasonable and documented fees, out-of- pocket charges and disbursements of counsel (other than the allocated costs of in-house counsel), that any of them may incur as a result of (i) the failure of the Manager to perform or observe its obligations under this Agreement or any other Related Document to which it is a party in its capacity as Manager, (ii) the breach by the Manager of any representation, warranty or covenant under this Agreement or any other Related Document to which it is a party in its capacity as Manager; or (iii) the Manager’s bad faith, negligence or willful misconduct in the performance of its duties under this Agreement and the other Related Documents; provided, however, that there shall be no indemnification under this Section 2.7(a) in respect of losses on the value of any Securitized Assets for a breach of any representation, warranty or covenant relating to any New Asset provided in Article V so long as the Manager has complied with Section 2.7(b) and Section 2.7(c) hereunder; provided, further, that the Manager shall have no obligation of indemnity to an Indemnitee to the extent any such claims, losses, penalties, fines, forfeitures, liabilities, obligations, damages, actions, suits and related costs and judgments and other costs, fees and reasonable expenses are caused by the bad faith, gross negligence, willful misconduct, or breach of this Agreement by such Indemnitee (unless caused by the Manager with respect to a Securitization Entity). In the event the Manager is required to make an indemnification payment pursuant to this Section 2.7(a) the Manager shall promptly pay such indemnification payment directly to the applicable Indemnitee (or, if due to a Securitization Entity, shall deposit such indemnification payment directly to the Collection Account).
(b)In the event of a breach of any representation, warranty or covenant relating to any New Asset provided in Article V that is not remedied within thirty (30) days of the Manager having obtained Actual Knowledge of such breach or written notice thereof, the Manager shall promptly notify the Trustee and the Servicer and either (x) repurchase all of the Franchise Assets, Contributed Restaurant Assets and Real Estate Assets relating to such Franchised Restaurant, Contributed Restaurant or New Contributed Restaurant for an amount equal to the related Indemnification Amount or to pay the Indemnification Amount to the applicable Securitization Entity and (y) reimburse the applicable Securitization Entity for the expenses related to defending or enforcing its rights in such Securitization IP; provided, that if the applicable breach affects only a portion of the Franchise Assets, Contributed Restaurant Assets and/or Real Estate Assets relating to a Franchised Restaurant, Contributed Restaurant or New Contributed Restaurant without Material Adverse Effect on the cash flow generated by the unaffected Franchise Assets, Contributed Restaurant Assets and/or Real Estate Assets, the Manager shall only be required to repurchase or pay the Indemnification Amount with respect to the affected Franchise Assets, Contributed Restaurant Assets and/or Real Estate Assets. Upon confirmation by the Trustee or the Servicer of the payment by the Manager of the Indemnification Amount to the Collection Account with respect to any Franchised Restaurant, Contributed Restaurant or New Contributed Restaurant in accordance with the preceding sentence and all amounts, if any, owing at such time under Section 2.7(c) below, the applicable Securitization Entity shall, to the extent permitted by applicable law and subject to receipt of necessary landlord consents, assign all such Franchise Assets, Contributed Restaurant Assets or Real Estate Assets to the Manager and the Manager shall accept assignment of such Franchise Assets, Contributed Restaurant Assets and Real Estate Assets from the relevant Securitization Entity. Such Securitization Entity shall, in such event, make all assignments of such Franchise Assets, Contributed Restaurant
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Assets and Real Estate Assets necessary to effect such assignment, as applicable. Any such assignment by any Securitization Entity shall be without recourse to, or representation or warranty by, such Securitization Entity and such Franchise Assets, Contributed Restaurant Assets and Real Estate Assets shall no longer be subject to the Lien of the Indenture.
(c)In addition to the rights provided in Section 2.7(b), the Manager agrees to indemnify and hold each Indemnitee harmless if any action or proceeding (including any governmental investigation and/or the assessment of any fines or similar items) shall be brought or asserted against such Indemnitee in respect of a material breach of any representation, warranty or covenant relating to any New Asset provided in Article V to the extent provided in Section 2.7(a).
(d)Any Indemnitee that proposes to assert the right to be indemnified under this Section 2.7 shall promptly, after receipt of notice of the commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against the Manager, notify the Manager of the commencement of such action, suit or proceeding, enclosing a copy of all papers served. In the event that any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee shall notify the Manager of the commencement thereof and the Manager shall be entitled to participate in, and to the extent that it shall wish, to assume the defense thereof, with its counsel reasonably satisfactory to such Indemnitee (which, in the case of a Securitization Entity, shall be reasonably satisfactory to the Control Party as well), and after notice from the Manager to such Indemnitee of its election to assume the defense thereof, the Manager shall not be liable to such Indemnitee for any legal expenses subsequently incurred by such Indemnitee in connection with the defense thereof; provided that the Manager shall not enter into any settlement with respect to any claim or proceeding unless such settlement includes a release of such Indemnitee from all liability on claims that are the subject matter of such settlement; and provided, further, that the Indemnitee shall have the right to employ its own counsel in any such action the defense of which is assumed by the Manager in accordance with this Section 2.7(d), but the fees and expenses of such counsel shall be at the expense of such Indemnitee unless (i) the employment of counsel by such Indemnitee has been specifically authorized by the Manager, (ii) the Manager is advised in writing by counsel to such Indemnitee or the Control Party that joint representation would give rise to a conflict of interest between such Indemnitee’s position and the position of the Manager in respect of the defense of the claim, (iii) the Manager shall have failed within a reasonable period of time to assume the defense of such action or proceeding and employ counsel reasonably satisfactory to the Indemnitee in any such action or proceeding or (iv) the named parties to any such action or proceeding (including any impleaded parties) include both the Indemnitee and the Manager, and the Indemnitee shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Manager (in which case, the Indemnitee notifies the Manager in writing that it elects to employ separate counsel at the expense of the Manager, the reasonable fees and expenses of such Indemnitee’s counsel shall be borne by the Manager and the Manager shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnitee, it being understood, however, that the Manager shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for
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such fees and expenses of more than one separate firm of attorneys at any time for the Indemnitee). The provisions of this Section 2.7 shall survive the termination of this Agreement or the earlier resignation or removal of any party hereto; provided, however, that no Successor Manager shall be liable under this Section 2.7 with respect to any Defective New Asset or any other matter occurring prior to its succession hereunder. Notwithstanding anything in this Section 2.7 to the contrary, any delay or failure by an Indemnitee in providing the Manager with notice of any action shall not relieve the Manager of its indemnification obligations except to the extent the Manager is materially prejudiced by such delay or failure of notice.
Section 2.8 Nonpetition Covenant. The Manager shall not, prior to the date that is one year and one day, or if longer, the applicable preference period then in effect, after the payment in full of the Outstanding Principal Amount of the Notes of each Series, petition or otherwise invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against any Securitization Entity under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of such Securitization Entity or any substantial part of its property, or ordering the winding up or liquidation of the affairs of such Securitization Entity.
Section 2.9 Franchisor Consent. Subject to the Managing Standard and the terms of the Indenture, the Manager shall have the authority, on behalf of the applicable Securitization Entities, to grant or withhold consents of the “franchisor” required under the Franchise Documents.
Section 2.10 Appointment of Sub-managers. The Manager may enter into Sub-managing Arrangements with third parties (including Affiliates) (each, a “Sub-manager”) to provide the Services hereunder; provided, other than with respect to a Sub-managing Arrangement with an Affiliate of the Manager, that no Sub-managing Arrangement shall be effective unless and until (i) the Manager receives the consent of the Control Party, (ii) such sub-manager executes and delivers an agreement, in form and substance reasonably satisfactory to the Control Party, to perform and observe, or in the case of an assignment, an assumption by such successor entity of the due and punctual performance and observance of, the applicable covenants and conditions to be performed or observed by the Manager under this Agreement; provided that such Sub-managing Arrangement shall be terminable by the Control Party upon a Manager Termination Event and shall contain transitional servicing provisions substantially similar to those provided in Section 6.3 and intellectual property provisions substantially similar to those provided in Section 6.4, (iii) a written notice has been provided to the Trustee, the Back- Up Manager and the Control Party and (iv) such Sub-managing Arrangement, or assignment and assumption by such Sub-manager, satisfies the Rating Agency Condition. The Manager shall not enter into any Sub-managing Arrangement which delegates the performance of any fundamental business operations such as responsibility for the franchise development, operations and marketing strategies for the Wendy’s Brand and Branded Restaurants to any Person that is not an Affiliate without receiving the prior written consent of the Control Party. Notwithstanding anything to the contrary herein or in any Sub-managing Arrangement, the Manager shall remain primarily and directly liable for its obligations hereunder and in connection with any Sub-managing Arrangement.
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Section 2.11 Insurance/Condemnation Proceeds. Upon receipt of any Insurance/Condemnation Proceeds, the Manager (on behalf of the Securitization Entities), in accordance with Section 5.10(f) of the Base Indenture, shall deposit or cause the deposit of such Insurance/Condemnation Proceeds to the Insurance Proceeds/Asset Disposition Proceeds Account; provided that, on or after the 2025-1 Springing Amendments Implementation Date, the Manager shall only be required to deposit Insurance/Condemnation Proceeds in the Insurance Proceeds/Asset Disposition Proceeds Account to the extent that the aggregate amount of such Insurance/Condemnation Proceeds in any fiscal year exceeds the Insurance/Condemnation Proceeds Materiality Threshold (it being understood that any Insurance/Condemnation Proceeds not required to be deposited in the Insurance Proceeds/Asset Disposition Proceeds Account shall be treated as Collections). At the election of the Manager (on behalf of the applicable Securitization Entity) (as notified by the Manager to the Trustee, the Servicer, and the Back-Up Manager promptly after receipt of the Insurance/Condemnation Proceeds) and so long as no Rapid Amortization Event shall have occurred and be continuing, the Manager (on behalf of the Securitization Entities) may reinvest such Insurance/Condemnation Proceeds to repair or replace the assets in respect of which such proceeds were received within the applicable Casualty Reinvestment Period; provided that (i) in the event the Manager has repaired or replaced the assets with respect to which such Insurance/Condemnation Proceeds have been received prior to the receipt of such Insurance/Condemnation Proceeds, such Insurance/Condemnation Proceeds shall be used to reimburse the Manager for any expenditures in connection with such repair or replacement and (ii) any Insurance/Condemnation Proceeds received in connection with the exercise of any non-temporary condemnation, eminent domain or similar powers exercised pursuant to Requirements of Law may be reinvested in Eligible Assets.
Section 2.12 Permitted Asset Dispositions. The Manager (acting on behalf of the Securitization Entities), in accordance with Section 8,16 of the Base Indenture and the Managing Standard, may dispose of property of the Securitization Entities from time to time pursuant to a Permitted Asset Disposition. Upon receipt of any Asset Disposition Proceeds from any Permitted Asset Disposition, the Manager (on behalf of the Securitization Entities), in accordance with Section 5.10(e) of the Base Indenture, shall deposit or cause the deposit of such Asset Disposition Proceeds to the Insurance Proceeds/Asset Disposition Proceeds Account. At the election of the Manager (on behalf of the applicable Securitization Entity) and so long as no Rapid Amortization Event shall have occurred and be continuing, the Manager (on behalf of the Securitization Entities) may reinvest such Asset Disposition Proceeds in Eligible Assets within the applicable Asset Disposition Reinvestment Period.
Section 2.13 Letter of Credit Reimbursement Agreement. In the event that any of TWC or Wendy’s (together, the “Parent Entities”) has deposited cash collateral as security for its obligations under the Letter of Credit Reimbursement Agreement into a bank account maintained in the name of the Master Issuer, (i) if the Parent Entities fail to make any payment to the Master Issuer when due under the Letter of Credit Reimbursement Agreement, the Manager shall withdraw the amount of such delinquent payment from such bank account within one Business Day of the due date of such payment under the Letter of Credit Reimbursement Agreement and deposit such amount into the Collection Account, and (ii) if the amount on deposit in such account exceeds an amount equal to 105% of the sum of (x)the aggregate exposure under all
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outstanding letters of credit under the Letter of Credit Reimbursement Agreement plus (y) the aggregate amount then due to the Master Issuer under Section 4 or Section 5 of the Letter of Credit Reimbursement Agreement, the Manager shall withdraw the amount of such excess from such account and pay such excess to the applicable Parent Entity.
Section 2.14 Manager Advances. The Manager may, but is not obligated to, make Manager Advances to, or on behalf of, any Securitization Entity in connection with the operation of the Contributed Franchised Restaurant Business, the Contributed Restaurant Business and other Managed Assets. Manager Advances will accrue interest at the Advance Interest Rate and shall be reimbursable on each Weekly Allocation Date in accordance with the Priority of Payments.
ARTICLE III
STATEMENTS AND REPORTS
Section 3.1 Reporting by the Manager.
(a)Reports Required Pursuant to the Indenture. The Manager, on behalf of the Securitization Entities, shall furnish, or cause to be furnished, to the Trustee, the Servicer (including in its capacity as Control Party) and the Back-Up Manager, all reports and notices required to be delivered to such persons by any Securitization Entity pursuant to the Indenture (including pursuant to Article IV of the Base Indenture) or any other Related Document.
(b)Delivery of Financial Statements. The Manager shall provide the financial statements of TWC and the Securitization Entities as required under Section 4.1(g) and (h) of the Base Indenture.
(c)Franchisee Termination Notices. The Manager shall send to the Trustee, the Servicer and the Back-Up Manager, as soon as reasonably practicable but in no event later than fifteen (15) Business Days of the receipt thereof, a copy of any notices of termination of one or more Franchise Agreements sent by the Manager on behalf of the Franchise Holder to any Franchisee unless (i) the related Franchised Restaurant(s) generated less than $500,000 in royalties during the immediately preceding fiscal year or (ii) the related Franchised Restaurant(s) continue to operate pursuant to an agreement between the Franchise Holder or the Manager on its behalf and such Franchisee.
(d)Notice Regarding Real Estate Assets. In the event that any Securitization Entity, or the Manager on behalf of any Securitization Entity, receives any written notice from a lessor of any lease included in the Real Estate Assets regarding the lack of payment or alleging any breach, violation or default under the applicable leases or action be taken to remedy a breach, violation or default, excluding any such notice in respect of non-monetary breach, violation or default as to which the Manager is contesting or expects to contest in good faith, the Manager shall promptly, but in any event within fifteen (15) Business Days from such receipt, notify the Trustee and the Servicer.
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(e)Additional Information; Access to Books and Records. The Manager shall furnish from time to time such additional information regarding the Securitized Assets or compliance with the covenants and other agreements of Wendy’s and any Securitization Entity under the Related Documents as the Trustee, the Back-Up Manager or the Servicer may reasonably request, subject at all times to compliance with the 1934 Act, the 1933 Act and any other applicable law. The Manager shall, and shall cause each Securitization Entity to, permit, at reasonable times upon reasonable notice, the Servicer, the Controlling Class Representative, the Back-Up Manager and the Trustee or any Person appointed by any of them as its agent to visit and inspect any of its properties, examine its books and records and discuss its affairs with its officers, directors, managers, employees and independent certified public accountants, and up to one such visit and inspection by each of the Servicer, the Controlling Class Representative and the Trustee, or any Person appointed by them shall be reimbursable as a Securitization Operating Expense per calendar year, with any additional visit or inspection by any such Person being at such Person’s sole cost and expense; provided, however that during the continuance of a Warm Back-Up Management Trigger Event, a Rapid Amortization Event, a Default, or an Event of Default, or to the extent expressly required without the instruction of any other party under the terms of any Related Documents, any such Person may visit and conduct such activities at any time and all such visits and activities will constitute a Securitization Operating Expense. Notwithstanding the foregoing, the Manager shall not be required to disclose or make available communications protected by the attorney-client privilege, provided, further that the terms and conditions (including, without limitation, any expense reimbursement) of all visits, inspections and examinations conducted by the Back-Up Manager are set forth in the Back-Up Management Agreement.
(f)Leadership Team Changes. The Manager shall promptly notify the Trustee, the Back-Up Manager and the Servicer of any termination or resignation of any persons included in the Leadership Team that occurs within 12 months following a Change of Control.
Section 3.2 Appointment of Independent Auditor. On or before the Closing Date, the Securitization Entities shall appoint a firm of independent public accountants of recognized national reputation that is reasonably acceptable to the Control Party to serve as the independent auditors (“Independent Auditors”) for purposes of preparing and delivering the reports required by Section 3.3. It is hereby acknowledged that the accounting firm of Deloitte & Touche LLP is acceptable for purposes of serving as Independent Auditors. The Securitization Entities may not remove the Independent Auditors without first giving thirty (30) days’ prior written notice to the Independent Auditors, with a copy of such notice also given concurrently to the Trustee, the Rating Agency, the Control Party, the Back-Up Manager (if applicable), the Manager and the Servicer. Upon any resignation by such firm or removal of such firm, the Securitization Entities shall promptly appoint a successor thereto that shall also be a firm of independent public accountants of recognized national reputation to serve as the Independent Auditors hereunder. If the Securitization Entities shall fail to appoint a successor firm of Independent Auditors within thirty (30) days after the effective date of any such resignation or removal, the Control Party shall promptly appoint a successor firm of independent public accountants of recognized national reputation that is reasonably satisfactory to the Manager to serve as the Independent Auditors hereunder. The fees of any Independent Auditors shall be payable by the Securitization Entities.
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Section 3.3 Annual Accountants’ Reports. The Manager shall furnish, or cause to be furnished to the Trustee, the Servicer, the Back-Up Manager (to the extent the Back-Up Manager is not providing such reports) and the Rating Agency, within one hundred twenty (120) days after the end of each fiscal year of the Manager, commencing with the fiscal year ending on or about January 3, 2016, (i) a report of the Independent Auditors (who may also render other services to the Manager) or the Back-Up Manager summarizing the findings of a set of agreed-upon procedures performed by the Independent Auditors or the Back-Up Manager with respect to compliance with the Quarterly Noteholders’ Reports for such fiscal year (or other period) with the standards set forth herein, and (ii) a report of the Independent Auditors or the Back-Up Manager to the effect that such firm has examined the assertion of the Manager’s management as to its compliance with its management requirements for such fiscal year (or other period), and that (x) in the case of the Independent Auditors, such examination was made in accordance with standards established by the American Institute of Certified Public Accountants and (y) except as described in the report, management’s assertion is fairly stated in all material respects. In the case of the Independent Auditors, the report will also indicate that the firm is independent of the Manager within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants (each, an “Annual Accountants’ Report”). In the event such Independent Auditors require the Trustee to agree to the procedures to be performed by such firm in any of the reports required to be prepared pursuant to this Section 3.3, the Manager shall direct the Trustee in writing to so agree as to the procedures described therein; it being understood and agreed that the Trustee shall deliver such letter of agreement (which shall be in a form satisfactory to the Trustee) in conclusive reliance upon the direction of the Manager, and the Trustee has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.
Section 3.4 Available Information. The Manager, on behalf of the Securitization Entities, shall make available the information requested by prospective purchasers necessary to satisfy the requirements of Rule 144A under the 1933 Act, as amended, and the 1940 Act, as amended. The Manager shall deliver such information, and shall promptly deliver copies of all Quarterly Noteholders’ Reports and Annual Accountants’ Reports, to the Trustee as contemplated by Section 4.1 of the Base Indenture, to enable the Trustee to redeliver such information to purchasers or prospective purchasers of the Notes as contemplated by Section 4.4 of the Base Indenture.
ARTICLE IV
THE MANAGER
Section 4.1 Representations and Warranties Concerning the Manager. The Manager represents and warrants to each Securitization Entity, the Trustee and the Servicer, as of the Closing Date (except if otherwise expressly noted), as follows:
(a)Organization and Good Standing. The Manager (i) is a limited liability company, duly formed and organized, validly existing and in good standing under the laws of the State of Ohio,
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(ii) is duly qualified to do business as a foreign corporation and in good standing under the laws of each jurisdiction where the character of its property, the nature of its business or the performance of its obligations under the Related Documents make such qualification necessary and (iii) has the power and authority (x) to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted and (y) to perform its obligations under this Agreement, except in each case referred to in clause (ii) or (iii) to the extent that a failure to do so would not reasonably be expected to result in a Material Adverse Effect on the Manager.
(b)Power and Authority: No Conflicts. The execution and delivery by the Manager of this Agreement and its performance of, and compliance with, the terms hereof are within the power of the Manager and have been duly authorized by all necessary corporate action on the part of the Manager. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein, nor compliance with the provisions hereof, shall conflict with or result in a breach of, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, any order of any Governmental Authority or any of the provisions of any Requirement of Law binding on the Manager or its properties, or the charter or bylaws or other organizational documents of the Manager, or any of the provisions of any material indenture, mortgage, lease, contract or other instrument to which the Manager is a party or by which it or its property is bound or result in the creation or imposition of any Lien upon any of its property pursuant to the terms of any such indenture, mortgage, leases, contract or other instrument, except to the extent such default, creation or imposition would not reasonably be expected to result in a Material Adverse Effect on the Manager, the Securitized Assets, or the Securitization Entities.
(c)Consents. Except (i) for registrations as a franchise broker or franchise sales agent as may be required under state franchise statutes and regulations, (ii) to the extent that a state or foreign franchise law requires filing and other compliance actions by virtue of considering the Manager as a “subfranchisor”, (iii) for any consents, licenses, approvals, authorizations, registrations, notifications, waivers or declarations that have been obtained or made and are in full force and effect and (iv) to the extent that a failure to do so would not reasonably be expected to result in a Material Adverse Effect on the Manager, the Securitized Assets or the Securitization Entities, the Manager is not required to obtain the consent of any other party or the consent, license, approval or authorization of, or file any registration or declaration with, any Governmental Authority in connection with the execution, delivery or performance by the Manager of this Agreement, or the validity or enforceability of this Agreement against the Manager.
(d)Due Execution and Delivery. This Agreement has been duly executed and delivered by the Manager and constitutes a legal, valid and binding obligation of the Manager enforceable against the Manager in accordance with its terms (subject to applicable insolvency laws and to general principles of equity).
(e)No Litigation. There are no actions, suits, investigations or proceedings pending or, to the Actual Knowledge of the Manager, threatened against or affecting the Manager, before or by any Governmental Authority having jurisdiction over the Manager or any of its properties or with
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respect to any of the transactions contemplated by this Agreement (i) asserting the illegality, invalidity or unenforceability, or seeking any determination or ruling that would affect the legality, binding effect, validity or enforceability of this Agreement or (ii) which would reasonably be expected to result in a Material Adverse Effect on the Manager, the Securitized Assets or the Securitization Entities.
(f)Compliance with Requirements of Law. The Manager is in compliance with all Requirements of Law except to the extent that the failure to comply therewith would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect on the Manager, the Securitized Assets or the Securitization Entities.
(g)No Default. The Manager is not in default under any agreement, contract, instrument or indenture to which the Manager is a party or by which it or its properties is or are bound, or with respect to any order of any Governmental Authority, except to the extent such default would not reasonably be expected to result in a Material Adverse Effect on the Manager or the Securitized Assets; and no event has occurred which with notice or lapse of time or both would constitute such a default with respect to any such agreement, contract, instrument or indenture, or with respect to any such order of any Governmental Authority.
(h)Taxes. The Manager has filed or caused to be filed and shall file or cause to be filed all federal tax returns and all material state and other tax returns that are required to be filed except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect. The Manager has paid or caused to be paid, and shall pay or cause to be paid, all taxes owed by the Manager pursuant to said returns or pursuant to any assessments made against it or any of its property (other than any amount of tax the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of the Manager).
(i)Accuracy of Information. No written report, financial statements, certificate or other information furnished (other than projections, budgets, other estimates and general market, industry and economic data) to the Servicer by or on behalf of the Manager in connection with the transactions contemplated hereby or pursuant to any provision of this Agreement or any other Related Document (when taken together with all other information furnished by or on behalf of the Manager to the Servicer), contains any material misstatement of fact as of the date furnished or omits to state any material fact necessary to make the statements therein not materially misleading in each case when taken as a whole and in the light of the circumstances under which they were made; and with respect to its projected financial information, the Manager represents only that such information was prepared in good faith based on assumptions believed to be reasonable at the time.
(j)Financial Statements. As of the Closing Date, the audited consolidated financial statements in TWC’s annual report on Form 10-K for the fiscal year ended December 28, 2014 and the unaudited condensed consolidated financial statements in TWC’s quarterly report on Form 10-Q for the fiscal quarter ended March 29, 2015 incorporated by reference in the offering memorandum for the Notes (i) present fairly in all material respects the financial condition of
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TWC and its Subsidiaries as of such date, and the results of operations for the respective periods then ended and (ii) were prepared in accordance with GAAP (except as otherwise stated therein) applied consistently through the periods involved subject, in the case of such quarterly financial statements, to the absence of footnotes and to normal year-end audit adjustments.
(k)No Material Adverse Change. Since December 28, 2014, except as otherwise set forth in the offering memorandum for the Notes, there has been no development or event that has had or would reasonably be expected to result in a Material Adverse Effect on the Manager or the Securitized Assets.
(l)ERISA. Neither the Manager nor any member of a Controlled Group that includes the Manager has established, maintains, contributes to, or has any liability in respect of (or has in the past six years established, maintained, contributed to, or had any liability in respect of) any Pension Plan. Neither the Manager nor any of its Affiliates has any contingent liability with respect to any post-retirement welfare benefits under a Welfare Plan, other than liability for continuation (i) described in Part 6 of Subtitle B of Title I of ERISA or other applicable continuation of coverage laws, (ii) provided in connection with the payment of severance benefits or (iii) that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Each Employee Benefit Plan presently complies and has been maintained in compliance with its terms and with the requirements of all applicable statutes, rules and regulations, including ERISA and the Code, except for such instances of noncompliance as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. No “prohibited transaction” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to any Employee Benefit Plan, other than transactions effected pursuant to a statutory or administrative exemption or such transactions as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Except as would not reasonably be expected to result in a Material Adverse Effect, each such Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
(m) No Manager Termination Event. No Manager Termination Event has occurred or is continuing, and, to the Actual Knowledge of the Manager, there is no event which, with notice or lapse of time, or both, would constitute a Manager Termination Event.
(n)Location of Records. The offices at which the Manager keeps its records concerning the Managed Assets are located at the addresses indicated in Section 8.5.
DISCLAIMER. EXCEPT FOR THE MANAGER’S REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN AND IN ANY OTHER RELATED DOCUMENT, THE MANAGER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SUBJECT MATTER HEREOF TO ANY OTHER PARTY, AND EACH PARTY EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES, INCLUDING WARRANTY OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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Section 4.2 Existence; Status as Manager. The Manager shall (a) keep in full effect its existence under the laws of the state of its incorporation, (b) maintain all rights and privileges necessary or desirable in the normal conduct of its business and the performance of its obligations hereunder except to the extent that failure to do so would not reasonably be expected to result in a Material Adverse Effect and (c) obtain and preserve its qualification to do business in each jurisdiction in which the failure to so qualify either individually or in the aggregate would reasonably be expected to result in a Material Adverse Effect.
Section 4.3 Performance of Obligations.
(a)Performance. The Manager shall perform and observe all of its obligations and agreements contained in this Agreement and the other Related Documents in accordance with the terms hereof and thereof and in accordance with the Managing Standard.
(b)Special Provisions as to Securitization IP.
(i) The Manager acknowledges and agrees that the Franchise Holder has the right and duty to control the quality of the goods and services offered under the Franchise Holder’s Trademarks included in the Securitization IP and the manner in which such Trademarks are used in order to maintain the validity and enforceability of and its ownership of the Trademarks included in the Securitization IP. The Manager shall not take any action contrary to the express written instruction of the Franchise Holder with respect to: (A) the promulgation of standards with respect to the operation of Branded Restaurants, including quality of food, cleanliness, appearance, and level of service (or the making of material changes to the existing standards), (B) the promulgation of standards with respect to new businesses, products and services which the Franchise Holder approves for inclusion in the license granted under any IP License Agreement (or other license agreement or sublicense agreement for which the Manager is performing IP Services), (C) the nature and implementation of means of monitoring and controlling adherence to the standards, (D) the terms of any Franchise Agreements or other sublicense agreements relating to the quality standards which licensees must follow with respect to businesses, products, and services offered under the Trademarks included in the Securitization IP and the usage of such Trademarks, (E) the commencement and prosecution of enforcement actions with respect to the Trademarks included in the Securitization IP and the terms of any settlements thereof, (F) the adoption of any variations on the Wendy’s Brand which are not in use on the date hereof, or other new Trademarks to be included in the Securitization IP, (G) the abandonment of any Securitization IP and (H) any uses of the Securitization IP that are not consistent with the Managing Standard. The Franchise Holder shall have the right to monitor the Manager’s compliance with the foregoing and its performance of the IP Services and, in furtherance thereof, Manager shall provide the Franchise Holder, at the Franchise Holder’s written request from time to time, with copies of Franchise Documents and other sublicenses, samples of products and materials bearing the Trademarks included in the Securitization IP used by Franchisees and other licensees and sublicensees. Nothing in this Agreement shall limit the Franchise Holder’s rights or the licensees’ obligations under the IP License
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Agreements or any other agreement with respect to which the Manager is performing IP Services.
(ii) The Franchise Holder hereby grants to the Manager a non-exclusive, royalty-free license to use and sublicense the Securitization IP in connection with the performance of the Services under this Agreement. In connection with the Manager’s use of any Intellectual Property included in the Securitization IP pursuant to the foregoing license, the Manager agrees to adhere to the quality control provisions and sublicensing provisions, with respect to sublicenses issued hereunder, which are contained in each IP License Agreement, as applicable to the product or service to which such Intellectual Property pertains, as if such provisions were incorporated by reference herein.
(c)License from Manager to Franchise Holder. The Manager hereby grants the Franchise Holder and any Successor Manager a perpetual, non-exclusive, royalty-free, sublicensable, worldwide right and license to use any proprietary software owned by Wendy’s for use in connection with operation of the Wendy’s System.
(d)Right to Receive Instructions. Without limiting the Manager’s obligations under Section 4.3(b) above, in the event that the Manager is unable to decide between alternative courses of action, or is unsure as to the application of any provision of this Agreement, the other Related Documents or any Managed Documents, or any such provision is, in the good faith judgment of the Manager, ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement, any other Related Document or any Managed Document permits any determination by the Manager or is silent or is incomplete as to the course of action which the Manager is required to take with respect to a particular set of facts, the Manager may make a Consent Request to the Control Party for written instructions in accordance with the Indenture and the other Related Documents and, to the extent that the Manager shall have acted or refrained from acting in good faith in accordance with instructions, if any, received from the Control Party with respect to such Consent Request, the Manager shall not be liable on account of such action or inaction to any Person; provided that the Control Party shall be under no obligation to provide any such instruction if it is unable to decide between alternative courses of action. Subject to the Managing Standard, if the Manager shall not have received appropriate instructions from the Control Party within ten days of such notice (or within such shorter period of time as may be specified in such notice), the Manager may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Related Documents, as the Manager shall deem to be in the best interests of the Noteholders and the Securitization Entities. The Manager shall have no liability to any Secured Party or the Controlling Class Representative for such action or inaction taken in reliance on the preceding sentence except for the Manager’s own bad faith, negligence or willful misconduct.
(e)Limitation on Manager’s Duties and Responsibilities.
(i)The Manager shall not have any duty or obligation to manage, make any payment in respect of, register, record, sell, reinvest, dispose of, create, perfect or maintain title to, or any security interest in, or otherwise deal with the Securitized Assets, to prepare or file any
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report or other document or to otherwise take or refrain from taking any action under, or in connection with, any document contemplated hereby to which the Manager is a party, except as expressly provided by the terms of this Agreement or the other Related Documents and consistent with the Managing Standard, and no implied duties or obligations shall be read into this Agreement against the Manager. The Manager nevertheless agrees that it shall, at its own cost and expense, promptly take all action as may be necessary to discharge any Liens (other than Permitted Liens) on any part of the Managed Assets which result from valid claims against the Manager personally whether or not related to the ownership or administration of the Managed Assets or the transactions contemplated by the Related Documents.
(ii) Except as otherwise set forth herein and in the other Related Documents, the Manager shall have no responsibility under this Agreement other than to render the Services in good faith and consistent with the Managing Standard.
(iii) The Manager shall not manage, control, use, sell, reinvest, dispose of or otherwise deal with any part of the Securitized Assets except in accordance with the powers granted to, and the authority conferred upon, the Manager pursuant to this Agreement or the other Related Documents.
(f)Limitations on the Manager’s Liabilities. Duties and Responsibilities. Subject to Section 2.7 and except for any loss, liability, expense, damage, action, suit or injury arising out of, or resulting from, (i) any breach or default by the Manager in the observance or performance of any of its agreements contained in this Agreement or any other Related Document to which it is a party in its capacity as Manager, (ii) the breach by the Manager of any representation, warranty or covenant made by it herein or in any other Related Document to which it is a party in its capacity as Manager or (iii) acts or omissions constituting the Manager’s own bad faith, negligence or willful misconduct, in the performance of its duties hereunder or under any other Related Documents to which it is a party in its capacity as Manager, neither the Manager nor any of its Affiliates (other than any Securitization Entity), managers, officers, members or employees shall be liable to any Securitization Entity, the Noteholders or any other Person under any circumstances, including, without limitation:
(1)for any action taken or omitted to be taken by the Manager in good faith in accordance with the instructions of the Trustee or the Control Party;
(2)for any representation, warranty, covenant, agreement or Indebtedness of any Securitization Entity under the Notes, any other Related Documents or the Managed Documents, or for any other liability or obligation of any Securitization Entity;
(3)for the validity or sufficiency of this Agreement or the due execution hereof by any party hereto other than the Manager, or the form, character, genuineness, sufficiency, value or validity of any part of the Securitized Assets (including, without limitation, the creditworthiness of any Franchisee, lessee or other obligor thereunder), or for, or in respect of, the validity or sufficiency of the Related Documents;
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(4)for any action or inaction of the Trustee, the Back-Up Manager or the Servicer or for the performance of, or the supervision of the performance of, any obligation under this Agreement or any other Related Document that is required to be performed by the Trustee, the Back-Up Manager or the Servicer; and
(5)for any error of judgment made in good faith that does not violate the Managing Standard.
(g)No Financial Liability. No provision of this Agreement (other than Sections 2.6, 2.7, 4.3(e)(i) and 4.3(f)) shall require the Manager to expend or risk its funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder, if the Manager shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not compensated by the payment of the Weekly Management Fees and is otherwise not reasonably assured or provided to the Manager. Further, the Manager shall not be obligated to perform any services not enumerated or otherwise contemplated hereunder, unless the Manager determines that it is more likely than not that it shall be reimbursed for all of its expenses incurred in connection with such performance. The Manager shall not be liable under the Notes and shall not be responsible for any amounts required to be paid by the Securitization Entities under or pursuant to the Indenture.
(h)Reliance. The Manager may, reasonably and in good faith, conclusively rely on, and shall be protected in acting or refraining from acting when doing so, in each case in accordance with any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and believed by it to be signed by the proper party or parties other than its Affiliates. The Manager may reasonably accept a certified copy of a resolution of the board of directors or other governing body of any corporate or other entity other than its Affiliates as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the manner or ascertainment of which is not specifically prescribed herein, the Manager may in good faith for all purposes hereof reasonably rely on a certificate, signed by any Authorized Officer of the relevant party, as to such fact or matter, and such certificate reasonably relied upon in good faith shall constitute full protection to the Manager for any action taken or omitted to be taken by it in good faith in reliance thereon.
(i)Consultations with Third Parties; Advice of Counsel. In the exercise and performance of its duties and obligations hereunder or under any of the Related Documents, the Manager (A) may act directly or through agents or attorneys pursuant to agreements entered into with any of them; provided that the Manager shall remain primarily liable hereunder for the acts or omissions of such agents or attorneys and (B) may, at the expense of the Manager, consult with external counsel or accountants selected and monitored by the Manager in good faith and in the absence of negligence, and the Manager shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such external counsel or accountants with respect to legal or accounting matters.
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(j)Independent Contractor. In performing its obligations as manager hereunder the Manager acts solely as an independent contractor of the Securitization Entities, except to the extent the Manager is deemed to be an agent of the Securitization Entities by virtue of engaging in franchise sales activities, as a broker, or receiving payments on behalf of the Securitization Entities, as applicable. Nothing in this Agreement shall, or shall be deemed to, create or constitute any joint venture, partnership, employment, or any other relationship between the Securitization Entities and the Manager other than the independent contractor contractual relationship established hereby. Nothing herein shall be deemed to vest in the Manager title to, or ownership or property interest in, any of the Securitization IP. Except as otherwise provided herein or in the other Related Documents, the Manager shall not be, nor shall be deemed to be, liable for any acts or obligations of the Securitization Entities, the Trustee, the Back-Up Manager or the Servicer.
Section 4.4 Merger and Resignation.
(a)Preservation of Existence. The Manager shall not merge into any other Person or convey, transfer or lease substantially all of its assets; provided, however, that nothing contained in this Agreement shall be deemed to prevent (i) the merger into the Manager of another Person, (ii) the consolidation of the Manager and another Person, (iii) the merger of the Manager into another Person or (iv) the sale of substantially all of the property or assets of the Manager to another Person, so long as (A) the surviving Person of the merger or consolidation or the purchaser of the assets of the Manager shall continue to be engaged in the same line of business as the Manager and shall have the capacity to perform its obligations hereunder with at least the same degree of care, skill and diligence as measured by customary practices with which the Manager is required to perform such obligations hereunder, (B) in the case of a merger, consolidation or sale, the surviving Person of the merger or the purchaser of the assets of the Manager shall expressly assume the obligations of the Manager under this Agreement and expressly agree to be bound by all other provisions applicable to the Manager under this Agreement in a supplement to this Agreement in form and substance reasonably satisfactory to the Trustee and the Control Party and (C) with respect to such event, in and of itself, the Rating Agency Condition has been satisfied.
(b)Resignation. The Manager shall not resign from the rights, powers, obligations and duties hereby imposed on it except upon determination that (A) the performance of its duties hereunder is no longer permissible under applicable law and (B) there is no reasonable action that the Manager could take to make the performance of its duties hereunder permissible under applicable law. Any such determination permitting the resignation of the Manager pursuant to clause (A) above shall be evidenced by an Opinion of Counsel to such effect, delivered to the Trustee, the Back-Up Manager and the Control Party. No such resignation shall become effective until a Successor Manager (other than the Back-Up Manager) shall have been appointed by the Control Party (acting at the direction of the Controlling Class Representative) and shall have assumed the responsibilities and obligations of the Manager in accordance with Section 6.1(b). The Trustee, the Securitization Entities, the Back-Up Manager, the Control Party, the Servicer
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and the Rating Agency shall be notified of such resignation in writing by the Manager. From and after such effectiveness, the Successor Manager shall be, to the extent of the assignment, the “Manager” hereunder. Except as provided above in this Section 4.4 the Manager may not assign this Agreement or any of its rights, powers, duties or obligations hereunder.
(c)Term of Manager’s Obligations. Except as provided in Section 4.4(a) and Section 4.4(b). the duties and obligations of the Manager under this Agreement shall commence on the date hereof and continue until this Agreement shall have been terminated as provided in Section 6.1 or Section 8.1, and shall survive the exercise by any Securitization Entity, the Trustee or the Control Party of any right or remedy under this Agreement (other than the right of termination pursuant to Section 6.1), or the enforcement by any Securitization Entity, the Trustee, the Servicer, the Back-Up Manager, the Control Party, the Controlling Class Representative or any Noteholder of any provision of the Indenture, the Notes, this Agreement or the other Related Documents.
Section 4.5 Notice of Certain Events. The Manager shall give written notice to the Trustee, the Back-Up Manager, the Servicer and the Rating Agency promptly upon the occurrence of any of the following events (but in any event no later than five (5) Business Days after the Manager has Actual Knowledge of the occurrence of such an event): (a) the Manager, the Securitization Entities or any Affiliate thereof shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (b) any “accumulated funding deficiency” or failure to meet “minimum funding standard” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, or any Lien in favor of the PBGC or a Plan shall arise on the assets of either the Securitization Entities or any Affiliate thereof, (c) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Control Party, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (d) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (e) the Manager, the Securitization Entities or any Affiliate thereof incur, or in the reasonable opinion of the Control Party are likely to incur, any liability in connection with a complete or partial withdrawal from, or the Insolvency, Reorganization or termination of, a Multiemployer Plan; (f) any other event or condition shall occur or exist with respect to a Plan (but in each case in clauses (a) through (f) above, only if such event or condition, together with all other such events or conditions, if any, would reasonably be expected to result in a Material Adverse Effect); (g) a Manager Termination Event, an Event of Default, a Hot Back-Up Management Trigger Event (as defined in the Back- Up Management Agreement), a Warm Back-Up Management Trigger Event (as defined in the Back-Up Management Agreement) or Rapid Amortization Event or any event which would, with the passage of time or giving of notice or both, would become one or more of the same; or (h) any action, suit, investigation or proceeding pending or, to the Actual Knowledge of the Manager, threatened against or affecting the Manager, before or by any court, administrative agency, arbitrator or governmental body having jurisdiction over the Manager or any of its properties either asserting the illegality, invalidity or unenforceability of any of the Related Documents, seeking any determination or ruling that would affect the legality, binding effect, validity or enforceability of
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any of the Related Documents or that would reasonably be expected to result in a Material Adverse Effect.
Section 4.6 Capitalization. The Manager shall have sufficient capital to perform all of its obligations under this Agreement at all times from the Closing Date and until the Indenture has been terminated in accordance with the terms thereof.
Section 4.7 Maintenance of Separateness. The Manager covenants that, except as otherwise contemplated by the Related Documents:
(a)the books and records of the Securitization Entities shall be maintained separately from those of the Manager and each of its Affiliates that is not a Securitization Entity;
(b)the Manager shall observe (and shall cause each of its Affiliates that is not a Securitization Entity to observe) corporate and limited liability company formalities in its dealings with any Securitization Entity;
(c)all financial statements of the Manager or TWC that are consolidated to include any Securitization Entity and that are distributed to any party shall contain detailed notes clearly stating that (i) all of such Securitization Entity’s assets are owned by such Securitization Entity and (ii) such Securitization Entity is a separate entity and has separate creditors;
(d)except as contemplated under Sections 2.2(d). 2.2(e). and 2.2(f). of this Agreement, the Manager shall not (and shall not permit any of its Affiliates that is not a Securitization Entity to) commingle its funds with any funds of any Securitization Entity; provided that the foregoing shall not prohibit the Manager or any successor to or assignee of the Manager from holding funds of the Securitization Entities in its capacity as Manager for such entity in a segregated account identified for such purpose;
(e)the Manager shall (and shall cause each of its Affiliates that is not a Securitization Entity to) maintain arm’s length relationships with each Securitization Entity, and each of the Manager and each of its Affiliates that is not a Securitization Entity shall be compensated at market rates for any services it renders or otherwise furnishes to any Securitization Entity, it being understood that the Weekly Management Fee, the Supplemental Management Fee and this Agreement are representative of such arm’s length relationship;
(f)the Manager shall not be, and shall not hold itself out to be, liable for the debts of any Securitization Entity or the decisions or actions in respect of the daily business and affairs of any Securitization Entities and the Manager shall not permit any Securitization Entities to hold the Manager out to be liable for the debts of such Securitization Entity or the decisions or actions in respect of the daily business and affairs of such Securitization Entity; and
(g)upon an officer or other responsible party of the Manager obtaining Actual Knowledge that any of the foregoing provisions in this Section 4.7 has been breached or violated in any material respect, the Manager shall promptly notify the Trustee, the Back-Up Manager, the
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Control Party and the Rating Agency of same and shall take such actions as may be reasonable and appropriate under the circumstances to correct and remedy such breach or violation as soon as reasonably practicable under such circumstances.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties Made in Respect of New Assets.
(a)New Franchise Agreements.
(i)As of the applicable New Asset Addition Date with respect to a New Franchise Agreement in the United States (a “New U.S. Franchise Agreement”) acquired or entered into on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) such New U.S. Franchise Agreement does not contain terms and conditions that are reasonably expected to result in (A) a material decrease in the amount of Collections or Retained Collections, taken as a whole, (B) a material adverse change in the nature, quality or timing of Collections, taken as a whole, or (C) a material adverse change in the types of underlying assets generating Collections, taken as a whole, in each case when compared to the amount, nature or quality of, or types of assets generating Collections that would have been reasonably expected to result had such New U.S. Franchise Agreement been entered into in accordance with the then-current Franchise Documents; (ii) such New U.S. Franchise Agreement is genuine, and is the legal, valid and binding obligation of the parties thereto and is enforceable against the parties thereto in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law); (iii) such New U.S. Franchise Agreement complies in all material respects with all applicable Requirements of Law; (iv) the Franchisee related to such New U.S. Franchise Agreement is not, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding; (v) royalty fees payable pursuant to such New U.S. Franchise Agreement are payable by the related Franchisee at least monthly; (vi) except as required by applicable Requirements of Law, such New U.S. Franchise Agreement contains no contractual rights of set-off; and (vii) except as required by applicable Requirements of Law, such New Franchise Agreement is freely assignable by the applicable Securitization Entities.
(ii)As of the applicable New Asset Addition Date with respect to a New Franchise Agreement that is not a New U.S. Franchise Agreement (a “New Foreign Franchise Agreement”) acquired or entered into on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) such New Foreign Franchise Agreement does not contain terms and conditions that are reasonably expected to result in (A) a material decrease in the amount of Collections or Retained Collections, taken as a whole, (B) a material adverse change in the nature, quality or timing of Collections, taken as a whole, or (C) a material adverse change in the types of underlying
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assets generating Collections, taken as a whole, in each case when compared to the amount, nature or quality of, or types of assets generating Collections that would have been reasonably expected to result had such New Foreign Franchise Agreement been entered into in accordance with the then-current Franchise Documents, (ii) such New Foreign Franchise Agreement is the legal, valid and binding obligation of the parties thereto, has been fully and properly executed by the Securitization Entities party thereto and is enforceable in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law), (iii) such New Foreign Franchise Agreement complies in all material respects with all applicable Requirements of Law and, in the case of a New Foreign Franchise Agreement governing (A) the operation of the first Franchised Restaurant opened in a New Foreign Country or (B) the operation of a Franchised Restaurant under a different business relationship than previously existed between a Securitization Entity and any Franchisee in such Foreign Country, the Manager has obtained a legal opinion or other evidence reasonably acceptable to the Control Party to the effect that such New Foreign Franchise Agreement complies in all material respects with all applicable Requirements of Law in such Foreign Country; (iv) except as required by applicable Requirements of Law, such New Foreign Franchise Agreement contains no contractual rights of set-off; and (v) no Franchisee party to such New Foreign Franchise Agreement is, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding.
(b)New Development Agreements.
(i)As of the applicable New Asset Addition Date with respect to a New Development Agreement in the United States (a “New U.S. Development Agreement”) acquired or entered into on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) such New U.S. Development Agreement does not contain terms and conditions that are reasonably expected to result in (A) a material decrease in the amount of Collections or Retained Collections, taken as a whole, (B) a material adverse change in the nature, quality or timing of Collections, taken as a whole, or (C) a material adverse change in the types of underlying assets generating Collections, taken as a whole, in each case when compared to the amount, nature or quality of, or types of assets generating Collections that would have been reasonably expected to result had such New U.S. Development Agreement been entered into in accordance with the then-current Franchise Documents; (ii) such New U.S. Development Agreement is genuine, and is the legal, valid and binding obligation of the parties thereto and is enforceable against the parties thereto in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law); (iii) such New U.S. Development Agreement complies in all material respects with all applicable Requirements of Law; (iv) the Franchisee related to such New U.S. Development Agreement is not, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding; (v) except as required by applicable Requirements of Law, such New U.S. Development Agreement contains no contractual rights of set-off; and (vi) except
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as required by applicable Requirements of Law, such New U.S. Development Agreement is freely assignable by the applicable Securitization Entities.
(ii)As of the applicable New Asset Addition Date with respect to a New Development Agreement that is not a New U.S. Development Agreement (a “New Foreign Development Agreement”) acquired or entered into on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) such New Foreign Development Agreement does not contain terms and conditions that are reasonably expected to result in (A) a material decrease in the amount of Collections or Retained Collections, taken as a whole, (B) a material adverse change in the nature, quality or timing of Collections, taken as a whole, or (C) a material adverse change in the types of underlying assets generating Collections, taken as a whole, in each case when compared to the amount, nature or quality of, or types of assets generating Collections that would have been reasonably expected to result had such New Foreign Development Agreement been entered into in accordance with the then-current Franchise Documents, (ii) such New Foreign Development Agreement is the legal, valid and binding obligation of the parties thereto, has been fully and properly executed by the Securitization Entities party thereto and is enforceable in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law), (iii) such New Foreign Development Agreement complies in all material respects with all applicable Requirements of Law and, in the case of a New Foreign Development Agreement governing (A) the operation of the first Franchised Restaurant opened in a New Foreign Country or (B) the operation of a Franchised Restaurant under a different business relationship than previously existed between a Securitization Entity and any Franchisee in such Foreign Country, the Manager has obtained a legal opinion or other evidence reasonably acceptable to the Control Party to the effect that such New Foreign Development Agreement complies in all material respects with all applicable Requirements of Law in such Foreign Country; (iv) except as required by applicable Requirements of Law, such New Foreign Development Agreement contains no contractual rights of set-off; and (v) no Franchisee party to such New Foreign Development Agreement is, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding.
(c)New Contributed Restaurant Assets. As of the applicable New Asset Addition Date, with respect to each Contributed Restaurant Asset acquired on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) the applicable Securitization Entity owns full legal and equitable title to each such Contributed Restaurant Asset, free and clear of any Lien (other than Permitted Liens) and (ii) the addition of such Contributed Restaurant Asset could not be reasonably expected to have a Material Adverse Effect.
(d)New Franchisee Notes. As of the applicable New Asset Addition Date with respect to a New Franchisee Note acquired or entered into on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) such agreement is genuine, and is the legal, valid and binding obligation of the parties thereto
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and is enforceable against the parties thereto in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law); (ii) such agreement complies in all material respects with all applicable Requirements of Law; (iii) the Franchisee related to such agreement is not the subject of a bankruptcy proceeding; and (iv) except as required by applicable Requirements of Law, such agreement is freely assignable by the applicable Securitization Entities.
(e)New Owned Real Property. As of the applicable New Asset Addition Date with respect to New Owned Real Property acquired on such date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) Wendy’s Properties holds fee simple title to the premises of such New Owned Real Property, free and clear of all Liens (other than Permitted Liens); (ii) such New Owned Real Property is leased to a Franchisee or (in the case of the site of a Retained Restaurant or a Reacquired Restaurant) a Non-Securitization Entity or is expected to be used as the location of a Contributed Restaurant or a Franchised Restaurant in the future; (iii) Wendy’s Properties is not in material default in any respect in the performance, observance or fulfillment of any obligations, covenants or conditions applicable to such New Owned Real Property, the violation of which could create a reversion of title to such New Owned Real Property to any Person; (iv) to the Manager’s Actual Knowledge, the use of such New Owned Real Property complies in all material respects with all applicable legal requirements, including building and zoning ordinances and codes and the certificate of occupancy issued for such property, except where a failure to comply would not reasonably be expected to have a Material Adverse Effect; (v) neither Wendy’s Properties nor, to the Actual Knowledge of the Manager, any Person leasing such property from Wendy’s Properties, is in material default under any lease of such property and no condition or event exists, that, after the notice or lapse of time or both, would constitute a material default thereunder by Wendy’s Properties or, to the Actual Knowledge of the Manager, by any other party thereto, except where such default would not reasonably be expected to have a Material Adverse Effect; (vi) no condemnation or similar proceeding has been commenced nor, to the Actual Knowledge of the Manager, is threatened in writing with respect to all or any material portion of such New Owned Real Property that was not considered in the acquisition of such New Owned Real Property; (vii) all material certifications, permits, licenses and approvals, including certificates of completion and occupancy permits required for the legal use, occupancy and operation of the Branded Restaurant on such New Owned Real Property, if such property is open for business, have been obtained and are in full force and effect, except as would not reasonably be expected to have a Material Adverse Effect; and (viii) the Manager has paid, caused to be paid, or confirmed that all taxes required to be paid by Wendy’s Properties in connection with the acquisition of such New Owned Real Property have been paid in full from funds of the Securitization Entities.
(f)New Leased Real Property. As of the applicable New Asset Addition Date with respect to New Franchised Restaurant Leases and New Retained Restaurant Leases (“New Leased Real Property”) acquired or entered into on such New Asset Addition Date, the Manager shall represent and warrant to the Securitization Entities, the Trustee and the Servicer that: (i) no material default by Wendy’s Properties, or to the Actual Knowledge of the Manager, by any other party, exists under any provision of such lease, and no condition or event exists, that, after
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the notice or lapse of time or both, would constitute a material default thereunder by Wendy’s Properties or, to the Actual Knowledge of the Manager, by any other party, except where such default would not be reasonably expected to have a Material Adverse Effect; (ii) to Manager’s Actual Knowledge, such New Leased Real Property, and the use thereof, complies in all material respects with all applicable legal requirements, including local building and zoning ordinances and codes and the certificate of occupancy issued for such property, except where such failure to comply would not be reasonably expected to have a Material Adverse Effect; (iii) neither Wendy’s Properties, nor, to the Actual Knowledge of the Manager, the related sub-lessee has committed any act or omission affording any Governmental Authority the right of forfeiture against such property; (iv) no condemnation or similar proceeding has been commenced nor, to the Actual Knowledge of the Manager, is threatened in writing with respect to all or any material portion of such New Leased Real Property that was not considered in the leasing of such New Leased Real Property; (v) all policies of insurance (a) required to be maintained by Wendy’s Properties under such lease and (b) to the Actual Knowledge of the Manager, required to be maintained by the Franchisee under the related sublease, if applicable, are valid and in full force and effect, except where a failure to maintain such insurance would not be reasonably expected to have a Material Adverse Effect; provided that such representation will be deemed accurate if Wendy’s Properties has contractually obligated the Franchisee party to such New Franchised Restaurant Leases to maintain insurance with respect to such New Franchised Restaurant Lease in a manner that is customary for business operations of this type; and (vi) all material certifications, permits, licenses and approvals, including certificates of completion and occupancy permits required for the legal use, occupancy and operation of the Branded Restaurant on such New Leased Real Property, if such property is open for business, have been obtained and are in full force and effect.
(g)The Manager shall not enter into any lease included in the New Real Estate Assets after the Closing Date which (i) requires TWC or its Affiliates (other than the Securitization Entities) to provide a guaranty of any obligation of any Securitization Entity or (ii) includes any event of default under such lease on the part of any Securitization Entity due to a bankruptcy of TWC or its Affiliates (other than the Securitization Entities).
Section 5.2 Assets Acquired After the Closing Date.
(a)The Manager shall cause the applicable Securitization Entity to enter into or acquire each of the following, to the extent entered into or acquired after the Closing Date: (a) all New Franchise Agreements, New Development Agreements and New Franchisee Notes, (b) all After-Acquired Securitization IP, (c) all New Contributed Restaurants and the related Contributed Restaurant Assets and (d) all New Real Estate Assets. The Manager may, but shall not be obligated to, cause the Securitization Entities to enter into, develop or acquire assets other than the foregoing from time to time. Unless otherwise agreed to in writing by the Control Party, the entry into, development or acquisition of assets by the Securitization Entities will be subject to all applicable provisions of the Indenture, this Agreement, the IP License Agreements and the other relevant Related Documents.
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(b)Unless otherwise agreed to in writing by the Control Party, any contribution to, or development or acquisition by, any Securitization Entity of assets obtained after the Closing Date described in Section 5.2(a) shall be subject to all applicable provisions of the Indenture, this Agreement (including the applicable representations and warranties and covenants in Articles II and V of this Agreement), the IP License Agreements and the other Related Documents.
Section 5.3 Securitization IP. All Securitization IP shall be owned solely by the Franchise Holder and shall not be assigned, transferred or licensed out by the Franchise Holder to any other entity other than as permitted or provided under the Related Documents.
Section 5.4 Allocated Note Amount. The Manager shall recalculate the Allocated Note Amount attributable to each Contributed Restaurant (and the related Contributed Restaurant Assets and Real Estate Assets), New Contributed Restaurant (and the related Contributed Restaurant Assets and Real Estate Assets), Contributed Franchised Restaurant (and the related Franchise Assets) and New Franchised Restaurant (and the related Franchise Assets) as of each date on which the Manager or other applicable Non-Securitization Entity is required to reacquire such assets in accordance with the Contribution Agreement or this Agreement. The Allocated Note Amount determined by the Manager in such manner shall be (i) recorded in the books and records of the Manager and (ii) reported to the Servicer.
Section 5.5 Specified Non-Securitization Debt Cap. Following the Closing Date, Wendy’s shall not and shall not permit the other Non-Securitization Entities to incur any additional Indebtedness for borrowed money (such additional Indebtedness, “Specified Non- Securitization Debt”) if, after giving effect to such incurrence (and any repayment of Specified Non-Securitization Debt on such date), such incurrence would cause (1) before the 2025 Springing Amendments Implementation Date, the aggregate outstanding principal amount of the Specified Non-Securitization Debt of the Non-Securitization Entities as of such date to exceed $25,000,000 or, if the Unsecured Debentures have been paid in full, $100,000,000 or (2) on and after the 2025 Springing Amendments Implementation Date, (i) the aggregate outstanding principal amount of the Specified Non-Securitization Debt to exceed the greater of (A) 20% of Net Cash Flow over the four (4) Quarterly Collection Periods immediately preceding the relevant date of determination and (B) $125,000,000 (the “Specified Non-Securitization Debt Cap”); provided that the Specified Non- Securitization Debt Cap shall not be applicable to Specified Non-Securitization Debt that is (i) issued or incurred to refinance the Notes in whole or that otherwise constitutes Permitted Refinancing Indebtedness at such time, (ii) in excess of the Specified Non- Securitization Debt Cap if (a) after giving pro forma effect to the incurrence of such Indebtedness (and any repayment of existing Indebtedness and any related acquisition or other transaction occurring prior to or substantially concurrently with the incurrence of such Indebtedness), the Holdco Leverage Ratio (as calculated without regard to any Indebtedness that is subject to the Specified Non-Securitization Debt Cap) is less than or equal to 7.00x (or, on and after the Springing Amendments Implementation Date, 7.50x) (the “Holdco Debt Incurrence Test”) and (b) the creditors under and with respect to such Indebtedness execute a non-disturbance agreement with the Trustee, as directed by the Manager and in a form reasonably satisfactory to the Servicer and the Trustee, that acknowledges the terms of the Securitization Transaction including the bankruptcy remote status of the Securitization Entities and their assets;
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provided, that a non-disturbance agreement shall not be required with respect to any Indebtedness (x) in an aggregate amount outstanding that is less than $100,000 (or, on and after the 2022 Springing Amendments Implementation Date, $500,000), (y) that was incurred by any Person prior to such Person becoming a Non-Securitization Entity or (z) on and after the 2025 Springing Amendments Implementation Date, to the extent that, after giving pro forma effect to the incurrence of such Indebtedness (and any repayment of existing Indebtedness and any related acquisition or other transaction occurring prior to or substantially concurrently with the incurrence of such Indebtedness), the Holdco Leverage Ratio (as calculated without regard to any Indebtedness that is subject to the Specified Non-Securitization Debt Cap) is less than or equal to 6.50x, (iii) considered Indebtedness due solely to a change in accounting rules that takes effect subsequent to the Closing Date but that was not considered Indebtedness prior to such date, (iv) in respect of any obligation of any Non-Securitization Entity to reimburse the Master Issuer for any draws under any one or more letters of credit, (v) in respect of intercompany notes among Non-Securitization Entities or (vi) with respect to any Cash Collateralized Letters of Credit. A violation of the foregoing covenant shall result in a Manager Termination Event and therefore a Rapid Amortization Event. Notwithstanding anything herein to the contrary, after the Initial Closing Date and prior to the 2025 Springing Amendments Implementation Date, if the principal balance of the Unsecured Debentures is prepaid or repurchased, the Specified Non-Securitization Debt Cap will increase by the product of (x) the ratio of (i) the amount so prepaid or repurchased, as the case may be, to (ii) $100,000,000 (being the principal amount of the Unsecured Debentures that was outstanding as of the Initial Closing Date), multiplied by (y) $75,000,000; provided that, for the avoidance of doubt, the Specified Non-Securitization Debt Cap shall never exceed $100,000,000 (e.g. if $10,000,000 (or 10%) of the Unsecured Debentures is prepaid/repurchased after the Initial Closing Date, the Specified Non-Securitization Debt Cap shall increase from $25,000,000 to $32,500,000 (i.e. 10% of $75,000,000 will be added to $25,000,000)).
Section 5.6 Competition. The Manager shall not, and shall not permit Non- Securitization Entities to, purchase Branded Restaurants or other assets similar to the Contributed Assets with the intention of competing with the Securitization Entities; provided that, the foregoing will not limit the Manager or the Non-Securitization Entities from (i) operating Retained Restaurants, Reacquired Restaurants or any other asset intended at the time of acquisition of such asset to be contributed the Securitization Entities or (ii) franchising Branded Restaurants in jurisdictions outside of the United States so long as the relevant Non-Securitization Entities pay the Franchise Holder or other applicable Securitization Entity an arm’s length royalty for use of the Securitization IP in connection therewith; provided, further, that the foregoing will not limit the Manager or the Non-Securitization Entities from operating any brand prior to such brand becoming a Future Brand.
Section 5.7 Restrictions on Liens. The Manager shall not, and shall not permit any of its Subsidiaries to, create, incur, assume, permit or suffer to exist any Lien (other than Liens in favor of the Trustee for the benefit of the Secured Parties and any Permitted Lien set forth in clauses (a), (h) or (k) of the definition thereof) upon the Equity Interests of any Securitization Entity.
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ARTICLE VI
MANAGER TERMINATION EVENTS
Section 6.1 Manager Termination Events.
(a)Manager Termination Events. Any of the following acts or occurrences shall constitute a “Manager Termination Event” under this Agreement, the assertion as to the occurrence of which may be made, and notice of which may be given, by either a Securitization Entity, the Back-Up Manager, the Servicer or the Trustee (acting at the direction of the Control Party):
(i)any failure by the Manager to remit a payment required to be deposited from a Concentration Account to the Collection Account or any other Indenture Trust Account, within three (3) Business Days (unless such payment requires an international funds transfer, in which case such funds must be deposited to the applicable account within five (5) Business Days of receipt) of the later of (a) its Actual Knowledge of its receipt thereof and (b) the date such deposit is required to be made pursuant to the Related Documents; provided that any inadvertent failure to remit such a payment shall not be a breach of this clause (i) if in an amount less than $5 million and cured within three (3) Business Days of a Manager Termination Event under this clause (i) (unless such payment requires an international funds transfer, in which case such may be cured within five (5) Business Days of a Manager Termination Event under this clause (i)) after the Manager obtains Actual Knowledge thereof (it being understood that the Manager shall not be responsible for the failure of the Trustee to remit funds that were received by the Trustee from or on behalf of the Manager in accordance with the applicable Related Documents);
(ii)the Interest-Only DSCR as calculated as of any Quarterly Calculation Date is less than 1.20x; provided, that, on and after the 2022 Springing Amendments Implementation Date, such threshold may be increased at the request of the Manager, subject to approval by the Control Party and, to the extent that any Rapid Amortization Event has occurred and is continuing, each Noteholder of each Series of applicable Notes Outstanding.
(iii) any failure by the Manager to provide any required certificate or report set forth in Sections 4.1(a), (b), (c), (d), (e), (f) or (g) of the Base Indenture within three (3) Business Days of its due date;
(iv) a material default by the Manager in the due performance and observance of any provision of this Agreement or any other Related Document to which it is party (other than as described above) and the continuation of such default for a period of thirty (30) days after the Manager has been notified thereof in writing by any Securitization Entity or the Control Party; provided, that if any such default is capable of being remedied within thirty (30) days after the Manager has obtained Actual Knowledge of such breach or the Manager’s receipt of written notice thereof, then a Manager Termination Event shall only occur under this clause (iv) as a result of such breach if it is not cured in all material respects by the end of such 30-
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day period; provided, further, that no Manager Termination Event shall occur pursuant to this clause
(iv) due to the breach of any covenant relating to any New Asset set forth in Article V so long as the Manager has complied with Section 2.7(b) and Section 2.7(c) if such damages are required to be paid with respect to such breach;
(v)any material breach by the Manager of any representation, warranty or statement of the Manager made in this Agreement or any other Related Document or in any certificate, report or other writing delivered pursuant thereto that is not qualified by materiality or the definition of “Material Adverse Effect” as of the time when the same was made or deemed to have been made or as of any other date specified in such document or agreement; provided that if any such breach is capable of being remedied within thirty (30) days after the Manager has obtained Actual Knowledge of such breach or the Manager’s receipt of written notice thereof, then a Manager Termination Event shall only occur under this clause (v) as a result of such breach if it is not cured in all material respects by the end of such 30-day period; provided, further, that no Manager Termination Event shall occur pursuant to this clause (v) due to the breach of any representation, warranty or statement relating to any New Asset set forth in Article V so long as the Manager has complied with Section 2.7(b) and Section 2.7(c) if such damages are required to be paid with respect to such breach;
(vi) any breach by the Manager of any representation, warranty or statement of the Manager made in this Agreement or in any other Related Document or any certificate, report or other writing delivered pursuant thereto that is qualified by materiality or the definition of “Material Adverse Effect” as of the time when the same was made or deemed to have been made or as of any other date specified in such document or agreement; provided that if any such breach is capable of being remedied within thirty (30) days after the Manager has obtained Actual Knowledge of such breach or the Manager’s receipt of written notice thereof, then a Manager Termination Event shall only occur under this clause (vi) as a result of such breach if it is not cured in all material respects by the end of such 30-day period; provided, further, that no Manager Termination Event shall occur under this clause (vi) due to the breach of a representation or warranty relating to any New Asset set forth in Article V so long as the Manager has complied with Section 2.7(b) and Section 2.7(c) with respect to such breach by taking any action required to be taken;
(vii) an Event of Bankruptcy with respect to the Manager;
(viii) any final, non-appealable order against the Manager decreeing the dissolution of the Manager that is in effect for more than ten (10) days;
(ix) a final, non-appealable judgment for an amount in excess of $45 million (exclusive of any portion thereof which is insured) is rendered against the Manager, and is not paid, discharged or stayed within sixty (60) days of the date when due;
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(x)an acceleration of more than $45 million of the Indebtedness of the Manager, which Indebtedness has not been discharged or which acceleration has not been rescinded and annulled;
(xi) this Agreement or a material portion thereof ceases to be in full force and effect or enforceable in accordance with its terms (other than in accordance with the express termination provisions thereof) or the Manager asserts as much in writing;
(xii)a failure by any Non-Securitization Entity to comply with the Specified Non-Securitization Debt Cap, and such failure has continued for a period of forty-five (45) days after the Manager has been notified in writing by any Securitization Entity, the Control Party, the Back-Up Manager or the Trustee, or otherwise has obtained Actual Knowledge of such non-compliance; or
(xiii) the occurrence of a Change in Management with respect to the Manager following the occurrence of a Change of Control.
(b)If a Manager Termination Event has occurred and is continuing, the Control Party (acting at the direction of the Controlling Class Representative) may (i) waive such Manager Termination Event (except for a Manager Termination Event described in clauses (vii) or (viii) above) or (ii) direct the Trustee to terminate the Manager in its capacity as such by the delivery of a termination notice (a “Termination Notice”) to the Manager (with a copy to each of the Securitization Entities, the Back-Up Manager and the Rating Agency); provided, that the delivery of a Termination Notice will not be required in respect of any Manager Termination Event relating to the Manager Termination Events described in clauses (vii) or (viii) above; provided, further, that upon the occurrence of an automatic termination in the event of a Manager Termination Event described in clauses (vii) or (viii) above, the Control Party shall direct the Trustee to deliver a copy of the Termination Notice to the Back-Up Manager solely for the purpose of notifying the Back-Up Manager of such Manager termination and directing the Back-Up Manager to promptly initiate the performance of the Hot Back-Up Management Duties. If the Trustee, acting at the direction of the Control Party (acting at the direction of the Controlling Class Representative), delivers a Termination Notice to the Manager pursuant to this Agreement (or automatically upon the occurrence of any Manager Termination Event relating to the Manager Termination Events described in clauses (vii) or (viii) above), all rights, powers, duties, obligations and responsibilities of the Manager under this Agreement and the other Related Documents (other than with respect to the payment of Indemnification Amounts or its obligations with respect to Disentanglement and Continuity of Services), including with respect to the Accounts or otherwise, will vest in and be assumed by the Successor Manager appointed by the Control Party (acting at the direction of the Controlling Class Representative). If no Successor Manager has been appointed by the Control Party (acting at the direction of the Controlling Class Representative), the Back-Up Manager shall serve as the Interim Successor Manager and shall work with the Servicer to implement the approved Transition Plan until a Successor Manager (other than the Back-Up Manager) has been appointed by the Control Party (acting at the direction of the Controlling Class Representative).
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(c)From and during the continuation of a Manager Termination Event, each Securitization Entity and the Trustee (acting at the direction of the Control Party) are hereby irrevocably authorized and empowered to execute and deliver, on behalf of the Manager, as attorney-in-fact or otherwise, all documents and other instruments (including any notices to Franchisees deemed necessary or advisable by the applicable Securitization Entity or the Control Party), and to do or accomplish all other acts or take other measures necessary or appropriate, to effect such vesting and assumption.
Section 6.2 Manager Termination Event Remedies. If the Trustee, acting at the written direction of the Control Party (acting at the direction of the Controlling Class Representative), delivers a Termination Notice to the Manager pursuant to Section 6.1(b) (or automatically upon the occurrence of any Manager Termination Event described in clauses (vii) or (viii) of Section 6.1(a)). all rights, powers, duties, obligations and responsibilities of the Manager under this Agreement (other than with respect to the obligation to pay any Indemnification Amounts) and the other Related Documents, including with respect to the Managed Assets, the Indenture Trust Accounts, the Management Accounts, the Advertising Fund Accounts or otherwise shall vest in and be assumed by the Successor Manager without incurring any additional cost.
Section 6.3 Manager’s Transitional Role.
(a)Disentanglement. Following the delivery of a Termination Notice to the Manager pursuant to Section 6.1(b) or Section 6.2 above (or automatic termination upon the occurrence of any Manager Termination Event described in clauses (vii) or (viii) of Section 6.1(a), as the case may be) or notice of resignation of the Manager pursuant to Section 4.4(b), the Manager shall cooperate with the Back-Up Manager (including in its capacity as Interim Successor Manager) and the Control Party in connection with the implementation of the approved Transition Plan and the complete transition to a Successor Manager, (including in connection with any resignation of the Manager) without interruption or adverse impact on the provision of Services (the “Disentanglement”). The Manager will (i) use its commercially reasonable efforts during the Disentanglement Period to not materially reduce its existing staff and resources that were devoted to or shared with the provision of the Services prior to the date of such Termination Notice (or date of the automatic termination, upon the occurrence of any Manager Termination Event described in clauses (vii) or (viii) above, as the case may be) or resignation notice, (ii) allow reasonable access to the Manager’s premises, systems and offices during the Disentanglement Period and (iii) unless otherwise directed by the Back-Up Manager, the Control Party or the Trustee, continue to perform all Services not being performed by the Back-Up Manager or a Successor Manager as part of the Hot Back-Up Management Duties (such activities described in clauses (i) through (iii) above being collectively referred to as “Continuity of Services”). The Manager shall cooperate fully with the Successor Manager or Interim Successor Manager as the case may be, and otherwise promptly take all actions required to assist in effecting a complete Disentanglement while using commercially reasonable efforts to maintain Continuity of Services and shall follow any directions that may be provided by the Back-Up Manager (including in its capacity as Interim Successor Manager) and/or the Control Party. The Manager shall provide all information and assistance regarding the terminated Services required
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for Disentanglement and Continuity of Services, including data conversion and migration, interface specifications, and related professional services and provide for the prompt and orderly conclusion of all work, as the Control Party and/or the Back-Up Manager (including in its capacity as Interim Successor Manager) may reasonably direct, including completion or partial completion of projects, documentation of all work in progress, and other measures to assure an orderly transition to the Successor Manager or Interim Successor Manager, as the case may be. All services relating to Disentanglement and Continuity of Services (“Disentanglement Services”), including all reasonable training for personnel of the Back-Up Manager (including in its capacity as Interim Successor Manager, as may be applicable), the Successor Manager or the Successor Manager’s designated alternate service provider in the performance of the Services, will be deemed a part of the Services to be performed by the Manager. So long as the Manager continues to provide the Services (whether or not the Manager has been terminated as the Manager) during the Disentanglement Period, the Manager shall continue to be paid the Weekly Management Fee. Upon the Successor Manager’s assumption of the obligation to perform the Services, the Manager will be entitled to reimbursement of its actual costs for the provision of any Disentanglement services other than those related to Continuity of Services, which shall remain separate obligations of the Manager. After the occurrence of a Hot Back-Up Management Trigger Event, but prior to the Disentanglement Period, the Manager shall, unless otherwise directed by the Trustee (acting at the direction of the Control Party acting at the direction of the Controlling Class Representative), continue to perform all management functions under this Agreement and the other Related Documents other than those being performed by the Back-Up Manager as part of the Hot Back-Up Management Duties.
(b)Duration of Obligations. The Manager’s obligation to provide Disentanglement Services shall continue during the period commencing on the earlier of (A) delivery of the Termination Notice to the Manager or (B) delivery of a resignation notice by the Manager and ending on the date on which a Successor Manager or the re-engaged Manager assumes all of the obligations of Manager under this Agreement (the “Disentanglement Period”).
(c)Sub-managing Arrangements; Authorizations.
(i)With respect to each Sub-managing Arrangement and unless the Control Party elects to terminate such Sub-managing Arrangement in accordance with Section 2.10, the Manager shall:
(x)assign to the Successor Manager or upon the request of the Interim Successor Manager, the Interim Successor Manager to the extent necessary to perform its duties under the Back-Up Management Agreement (or such Successor Manager’s or Interim Successor Manager’s designated alternate service provider) all of the Manager’s rights under such Sub-managing Arrangement to which it is party used by the Manager in performance of the transitioned Services; and
(y) procure any third party authorizations necessary to grant the Successor Manager or upon the request of the Interim Successor Manager, the Interim Successor Manager to the extent necessary to perform its duties under the Back-Up Management
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Agreement (or such Successor Manager’s or Interim Successor Manager’s designated alternate service provider) the use and benefit of such Sub-managing Arrangement to which it is party (used by the Manager in performing the transitioned Services), pending their assignment to the Successor Manager under this Agreement.
(ii)If the Control Party elects to terminate such Sub-managing Arrangement in accordance with Section 2.10, the Manager shall take all reasonable actions necessary or reasonably requested by the Control Party to accomplish a complete transition of the Services performed by such Sub-manager to the Successor Manager, or to any alternate service provider designated by the Control Party, without interruption or adverse impact on the provision of Services.
Section 6.4 Intellectual Property. Within thirty (30) days of termination of this Agreement for any reason, the Manager shall deliver and surrender up to the Franchise Holder (with a copy to the Back-Up Manager (including in its capacity as Interim Successor Manager), Successor Manager and the Servicer) any and all products, materials, or other physical objects containing the Trademarks included in the Securitization IP or Confidential Information of the Franchise Holder and any copies of copyrighted works included in the Securitization IP in the Manager’s possession or control, and shall terminate all use of all Securitization IP, including Trade Secrets; provided that (for the avoidance of doubt) any rights granted to Wendy’s and the other Non-Securitization Entities as licensees pursuant to the Wendy’s IP License and the Company Restaurant Licenses shall continue pursuant to the terms thereof notwithstanding the termination of this Agreement and/or Wendy’s role as Manager.
Section 6.5 Third Party Intellectual Property. The Manager shall assist and fully cooperate with the Successor Manager and/or the Interim Successor Manager or their designated alternate service provider in obtaining any necessary licenses or consents to use any third party Intellectual Property then being used by the Manager or any Sub-manager. The Manager shall assign, and shall cause each Sub-manager to assign, any such license or sublicense directly to the Successor Manager or its designated alternate service provider to the extent the Manager, or each Sub-manager as applicable, has the rights to assign such agreements to the Successor Manager.
Section 6.6 No Effect on Other Parties. Upon any termination of the rights and powers of the Manager from time to time pursuant to Section 6.1 or upon any appointment of a Successor Manager, all the rights, powers, duties, obligations, and responsibilities of the Securitization Entities or the Trustee under this Agreement, the Indenture and the other Related Documents shall remain unaffected by such termination or appointment and shall remain in full force and effect thereafter, except as otherwise expressly provided in this Agreement or in the Indenture.
Section 6.7 Rights Cumulative. All rights and remedies from time to time conferred upon or reserved to the Securitization Entities, the Trustee, the Servicer, the Control Party, the Back-Up Manager and the Noteholders or to any or all of the foregoing are cumulative, and none is intended to be exclusive of another or any other right or remedy which they may have at law or in equity. Except as otherwise expressly provided herein, no delay or omission in insisting upon the strict observance or performance of any provision of this Agreement, or in exercising any
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right or remedy, shall be construed as a waiver or relinquishment of such provision, nor shall it impair such right or remedy. Every such right and remedy may be exercised from time to time and as often as deemed expedient.
ARTICLE VII
CONFIDENTIALITY
Section 7.1 Confidentiality.
(a)Each of the parties hereto acknowledges that during the Term of this Agreement such party (the “Recipient”) may receive Confidential Information from another party hereto (the “Discloser”). Each such party (except for the Trustee, whose confidentiality obligations shall be governed in accordance with the Indenture) agrees to maintain the Confidential Information of the other party in the strictest of confidence and shall not, except as otherwise contemplated herein, at any time, use, disseminate or disclose any Confidential Information to any Person other than (i) its officers, directors, managers, employees, agents, advisors or representatives (including legal counsel and accountants) or (ii) in the case of the Manager and the Securitization Entities, Franchisees and prospective Franchisees, suppliers or other service providers under written confidentiality agreements that contain provisions at least as protective as those set forth in this Agreement. The Recipient shall be liable for any breach of this Section 7,1 by any of its officers, directors, managers, employees, agents, advisors, representatives, Franchisees and prospective Franchisees, suppliers or other services providers and shall immediately notify Discloser in the event of any loss or disclosure of any Confidential Information of the Discloser. Upon termination of this Agreement, Recipient shall return to the Discloser, or at Discloser’s request, destroy, all documents and records in its possession containing the Confidential Information of the Discloser. Confidential Information shall not include information that: (A) is already known to Recipient without restriction on use or disclosure prior to receipt of such information from the Discloser; (B) is or becomes part of the public domain other than by breach of this Agreement by, or other wrongful act of, the Recipient; (C) is developed by the Recipient independently of and without reference to any Confidential Information of the Discloser; (D) is received by the Recipient from a third party who is not under any obligation to maintain the confidentiality of such information; or (E) is required to be disclosed by applicable law, statute, rule, regulation, subpoena, court order or legal process, provided that the Recipient shall promptly inform the Discloser of any such requirement and cooperate with any attempt by the Discloser to obtain a protective order or other similar treatment. It shall be the obligation of Recipient to prove that such an exception to the definition of Confidential Information exists.
(b)Notwithstanding anything to the contrary contained in Section 7.1(a). the Securitization Entities, the Trustee, the Servicer, the Back-Up Manager or the Noteholders may use, disseminate or disclose Confidential Information (other than Trade Secrets) to any Person in connection with the enforcement of rights of the Trustee, Securitization Entities, the Servicer, the Back-Up Manager or the Noteholders under the Indenture or the Related Documents; provided, however, that prior to disclosing any such Confidential Information:
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(i)to any such Person other than in connection with any judicial or regulatory proceeding, such Person shall agree in writing to maintain such Confidential Information in a manner at least as protective of the Confidential Information as the terms of Section 7.1(a) and Recipient shall provide Discloser with the written opinion of counsel that such disclosure contains Confidential Information only to the extent necessary to facilitate the enforcement of such rights of the Trustee or the Noteholders; or
(ii)to any such Person or entity in connection with any judicial or regulatory proceeding, Recipient shall (x) promptly notify Discloser of each such requirement and identify the documents so required thereby so that Discloser may seek an appropriate protective order or similar treatment and/or waive compliance with the provisions of this Agreement; (y) use reasonable efforts to assist Discloser in obtaining such protective order or other similar treatment protecting such Confidential Information prior to any such disclosure; and (z) consult with Discloser on the advisability of taking legally available steps to resist or narrow the scope of such requirement. If, in the absence of such a protective order or similar treatment, the Recipient is nonetheless required by law to disclose any part of Discloser’s Confidential Information, then the Recipient may disclose such Confidential Information without liability under this Agreement, except that the Recipient shall furnish only that portion of the Confidential Information which is legally required.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Termination of Agreement. The respective duties and obligations of the Manager and the Securitization Entities created by this Agreement shall commence on the date hereof and shall, unless earlier terminated pursuant to Section 6 terminate upon the earlier to occur of (x) the final payment or other liquidation of the last Managed Asset included in the Securitized Assets or (y) satisfaction and discharge of the Indenture pursuant to Section 12.1 of the Base Indenture (the “Term”). Upon termination of this Agreement pursuant to this Section 8.1 the Manager shall pay over to the applicable Securitization Entity or any other Person entitled thereto all proceeds of the Managed Assets held by the Manager.
Section 8.2 Survival. The provisions of Section 2.1(c). Section 2.7, Section 2.8, Section 4.3(c), Section 8.4, Section 8.5, Section 8.9, Article VI, Article VII and this Section 8.2 shall survive termination of this Agreement.
Section 8.3 Amendment.
(a) This Agreement may only be amended, from time to time, in writing, upon the written consent of the Trustee (acting at the written direction of the Control Party), the Securitization Entities and the Manager; provided that any amendment that would materially adversely affect the interests of the Noteholders shall require the consent of the Control Party, which consent shall not be unreasonably withheld or delayed; provided, further, that no consent of the Trustee
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or the Control Party shall be required in connection with any amendment to accomplish any of the following:
(i)to correct or amplify the description of any required activities of
the Manager;
(ii)to add to the duties or covenants of the Manager for the benefit of any Noteholders or any other Secured Parties, or to add provisions to this Agreement so long as such action does not modify the Managing Standard, materially adversely affect the enforceability of the Securitization IP or materially adversely affect the interests of the Noteholders;
(iii) to correct any manifest error or to cure any ambiguity, defect or provision that may be inconsistent with the terms of the Base Indenture or any other Related Document, or to correct or supplement any provision in this Agreement that may be inconsistent with the terms of the Base Indenture or each offering memorandum for the Notes;
(iv) to evidence the succession of another Person to any party to this
Agreement;
(v) to comply with Requirements of Law;
(vi) to take any action necessary and appropriate to facilitate the origination of new Managed Documents, the acquisition and management of Real Estate Assets, or the management and preservation of the Managed Documents, in each case, in accordance with the Managing Standard; or
(vii) to provide for additional Services related to any Contributed Restaurants or New Contributed Restaurants.
(b)Promptly after the execution of any such amendment, the Manager shall send a conformed copy of such amendment to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency, but the failure to do so shall not impair or affect its validity.
(c)Any such amendment or modification effected contrary to the provisions of this Section 8,3 shall be null and void.
Section 8.4 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW RULES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Section 8.5 Notices. All notices, requests or other communications desired or required to be given under this Agreement shall be in writing and shall be sent by (a) certified or registered mail, return receipt requested, postage prepaid, (b) national prepaid overnight delivery service,
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(c) electronic mail transmission of a .pdf or similar file or (d) personal delivery with receipt acknowledged in writing, to the address set forth in Section 14.1 of the Base Indenture. If the Indenture or this Agreement permits reports to be posted to a password-protected website, such reports shall be deemed delivered when posted on such website. Any party hereto may change its address for notices hereunder by giving notice of such change to the other parties hereto, with a copy to the Control Party. Any change of address of a Noteholder shown on a Note Register shall, after the date of such change, be effective to change the address for such Noteholder hereunder. All notices and demands to any Person hereunder shall be deemed to have been given either at the time of the delivery thereof at the address of such Person for notices hereunder, or on the third day after the mailing thereof to such address, as the case may be.
Section 8.6 Acknowledgement. Without limiting the foregoing, the Manager hereby acknowledges that, on the date hereof, the Securitization Entities shall pledge to the Trustee under the Indenture and the Guarantee and Collateral Agreement, as applicable, all of such Securitization Entities’ right and title to, and interest in, this Agreement and the Collateral, and such pledge includes all of such Securitization Entities’ rights, remedies, powers and privileges, and all claims of such Securitization Entities’ against the Manager, under or with respect to this Agreement (whether arising pursuant to the terms of this Agreement or otherwise available at law or in equity), including (i) the rights of such Securitization Entities and the obligations of the Manager hereunder and (ii) the right, at any time, to give or withhold consents, requests, notices, directions, approvals, demands, extensions or waivers under or with respect to this Agreement or the obligations in respect of the Manager hereunder to the same extent as such Securitization Entities may do. The Manager hereby consents to such pledges described above, acknowledges and agrees that (x) the Control Party shall be third-party beneficiaries of the rights of such Securitization Entities arising hereunder and (y) the Trustee and the Control Party may, to the extent provided in the Indenture and the Guarantee and Collateral Agreement, enforce the provisions of this Agreement, exercise the rights of such Securitization Entities and enforce the obligations of the Manager hereunder without the consent of such Securitization Entities.
Section 8.7 Severability of Provisions. If one or more of the provisions of this Agreement shall be for any reason whatever held invalid or unenforceable, such provisions shall be deemed severable from the remaining covenants, agreements and provisions of this Agreement and such invalidity or unenforceability shall in no way affect the validity or enforceability of such remaining provisions, or the rights of any parties hereto. To the extent permitted by law, the parties hereto waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect.
Section 8.8 Delivery Dates. If the due date of any notice, certificate or report required to be delivered by the Manager hereunder falls on a day that is not a Business Day, the due date for such notice, certificate or report shall be automatically extended to the next succeeding day that is a Business Day.
Section 8.9 Limited Recourse. The obligations of the Securitization Entities under this Agreement are solely the limited liability company obligations of the Securitization Entities. The
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Manager agrees that the Securitization Entities shall be liable for any claims that it may have against the Securitization Entities only to the extent that funds or assets are available to pay such claims pursuant to the Indenture and that, to the extent that any such claims remain unpaid after the application of such funds and assets in accordance with the Indenture, such claims shall be extinguished.
Section 8.10 Binding Effect; Assignment; Third Party Beneficiaries. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. Any assignment of this Agreement without the written consent of the Control Party shall be null and void. Each of the Back-Up Manager and the Servicer (in its capacities as Control Party and Servicer) is an intended third party beneficiary of this Agreement and may enforce the Agreement as though a party hereto.
Section 8.11 Article and Section Headings. The Article and Section headings herein are for convenience of reference only, and shall not limit or otherwise affect the meaning hereof.
Section 8.12 Concerning the Trustee. In acting under this Agreement, the Trustee shall be afforded the rights, privileges, protections, immunities and indemnities set forth in the Indenture as if fully set forth herein.
Section 8.13 Counterparts. This Agreement may be executed by the parties hereto in several counterparts (including by facsimile or other electronic means of communication), each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same agreement.
Section 8.14 Entire Agreement. This Agreement, together with the Indenture and the other Related Documents and the Managed Documents constitute the entire agreement and understanding among the parties with respect to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement, the Indenture, the other Related Documents and the Managed Documents.
Section 8.15 Waiver of Jury Trial; Jurisdiction; Consent to Service of Process.
(a)The parties hereto each hereby waives any right to have a jury participate in resolving any dispute, whether in contract, tort or otherwise, arising out of, connected with, relating to or incidental to the transactions contemplated by this Agreement.
(b)The parties hereto each hereby irrevocably submits (to the fullest extent permitted by applicable law) to the non-exclusive jurisdiction of any New York state or federal court sitting in the borough of Manhattan, New York City, State of New York, over any action or proceeding arising out of or relating to this Agreement or any related documents, and the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding shall be heard and determined in such New York state or federal court. The parties hereto each hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection each may now
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or hereafter have, to remove any such action or proceeding, once commenced, to another court on the grounds of forum non conveniens or otherwise.
(c)Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.5. Nothing in this Agreement shall affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 8.16 Joinder of Additional Securitization Entities. In the event the Master Issuer forms an Additional Securitization Entity pursuant to Section 8.34 of the Base Indenture, such Additional Securitization Entity shall execute and deliver to the Manager and the Trustee (i) a Joinder Agreement substantially in the form of Exhibit B and (ii) a Power of Attorney in the form of Exhibit A-2 and such Additional Securitization Entity shall thereafter for all purposes be a party hereto and have the same rights, benefits and obligations as a Securitization Entity party hereto on the Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.
| WENDY'S INTERNATIONAL, LLC, as Manager | WENDY'S FUNDING, LLC, as Master Issuer | ||||
| WENDY'S SPV GUARANTOR, LLC, as a Securitization Entity | QUALITY IS OUR RECIPE, LLC, as a Securitization Entity | ||||
| WENDY'S PROPERTIES, LLC, as a Securitization Entity | |||||
CITIBANK, N.A., as Trustee
EXHIBIT A-l
POWER OF ATTORNEY OF FRANCHISE HOLDER
KNOW ALL PERSONS BY THESE PRESENTS, that in connection with the Management Agreement, dated as of the Closing Date (as amended, restated, supplemented or otherwise modified from time to time, the “Management Agreement”; all capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Management Agreement), among Wendy’s Funding, LLC, a Delaware limited liability company (the “Master Issuer”), Wendy’s SPV Guarantor, LLC, a Delaware limited liability company, Quality Is Our Recipe, LLC, a Delaware limited liability company, Wendy’s Properties, LLC, a Delaware limited liability company (collectively, the “Securitization Entities”), Wendy’s International, LLC, and Citibank, N.A., as Trustee, the undersigned Franchise Holder hereby appoints Wendy’s International, LLC (the “Manager”) and any and all officers thereof as its true and lawful attorney in fact, with full power of substitution, in connection with the IP Services described below being performed with respect to the Securitization IP, with full irrevocable power and authority in the place of the Franchise Holder, and in the name of the Franchise Holder or in its own name as agent of the Franchise Holder, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the foregoing, subject to the Management Agreement, including, without limitation, the full power to perform:
(a)searching, screening and clearing After-Acquired Securitization IP to assess patentability, registrability and the risk of potential infringement;
(b)filing, prosecuting and maintaining applications and registrations for the Securitization IP in the Franchise Holder’s name in the United States and in such international markets (including Canada) as the Franchise Holder or Wendy’s Canada operates or franchises (or plans to operate or franchise), including timely filing of evidence of use, applications for renewal and affidavits of use and/or incontestability, timely paying of all registration and maintenance fees, responding to third-party oppositions of applications or challenges to registrations, and responding to any office actions, reexaminations, interferences, inter partes reviews, post grant reviews, or other office or examiner requests, reviews or requirements;
(c)monitoring third-party use and registration of Securitization IP, as applicable, and taking actions the Manager deems appropriate to oppose or contest the use and any application or registration for Securitization IP, as applicable, that could reasonably be expected to infringe, dilute or otherwise violate the Securitization IP or the Franchise Holder’s rights therein;
(d)confirming the Franchise Holder’s legal title in and to any or all of the Securitization IP, including obtaining written assignments of Securitization IP to the Franchise Holder and recording transfers of title in the appropriate Intellectual Property registry in the United States, Canada and any Additional Perfection
A-1-1
Country, following such time that it becomes an Additional Perfection Country, and, in the Manager’s discretion, elsewhere;
(e)with respect to the Franchise Holder’s rights and obligations under the IP License Agreements and any Related Documents, monitoring the licensee’s use of each licensed Trademark and the quality of its goods and services offered in connection with such Trademarks, rendering any approvals (or disapprovals) that are required under the applicable license agreement(s), and employing reasonable means to ensure that any use of any such Trademarks by any such licensee satisfies the quality control standards and usage provisions of the applicable license agreement;
(f)protecting, policing, and, in the event that the Manager becomes aware of any unlicensed copying, imitation, infringement, dilution, misappropriation, unauthorized use or other violation of the Securitization IP, or any portion thereof, enforcing such Securitization IP, including (i) preparing and responding to cease- and-desist, demand and notice letters, and requests for a license; and (ii) commencing, prosecuting and/or resolving claims or suits involving imitation, infringement, dilution, misappropriation, the unauthorized use or other violation of the Securitization IP, and seeking monetary and equitable remedies as the Manager deems appropriate in connection therewith; provided that the Franchise Holder shall, and agrees to, join as a party to any such suits to the extent necessary to maintain standing;
(g)performing such functions and duties, and preparing and filing such documents, as are required under the Indenture or any other Related Document to be performed, prepared and/or filed by the Franchise Holder, including (i) executing and recording such financing statements (including continuation statements) or amendments thereof or supplements thereto or such other instruments as the Franchise Holder or the Control Party may, from time to time, reasonably request (consistent with the obligations of the Franchise Holder to perfect the Trustee’s Lien only in the United States, Canada and any Additional Perfection Country, following such time that it becomes an Additional Perfection Country) in connection with the security interests in the Securitization IP granted by the Franchise Holder to the Trustee under the Related Documents and (ii) preparing, executing and delivering grants of security interests or any similar instruments as the Securitization Entities or the Control Party may, from time to time, reasonably request (consistent with the obligations of the Franchise Holder to perfect the Trustee’s Lien only in the United States, Canada and any Additional Perfection Country, following such time that it becomes an Additional Perfection Country) that are intended to evidence such security interests in the Securitization IP and recording such grants or other instruments with the relevant Governmental Authority including the PTO and the United States Copyright Office;
(h)taking such actions as any licensee under an IP License Agreement may request that are required by the terms, provisions and purposes of such IP License Agreement (or by any other agreements pursuant to which the Franchise Holder licenses the use of any Securitization IP) to be taken by the Franchise Holder, and preparing (or causing to be
A-1-2
prepared) for execution by the Franchise Holder all documents, certificates and other filings as the Franchise Holder shall be required to prepare and/or file under the terms of such IP License Agreements (or such other agreements);
(i)paying or causing to be paid or discharged, from funds of the Securitization Entities, any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the Securitization IP or contesting the same in good faith;
(j)obtaining licenses of third-party Intellectual Property for use and sublicense in connection with the Contributed Franchised Restaurant Business, the Contributed Restaurant Business and the other assets of the Securitization Entities;
(k)sublicensing the Securitization IP to suppliers, manufacturers, advertisers and other service providers in connection with the provision of products and services for use in the Contributed Franchised Restaurant Business and the Contributed Restaurant Business; and
(l)with respect to Trade Secrets and other confidential information of the Franchise Holder, taking reasonable measures to maintain confidentiality and to prevent non-confidential disclosures.
THIS POWER OF ATTORNEY IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO POWERS OF ATTORNEY MADE AND TO BE EXERCISED WHOLLY WITHIN SUCH STATE.
Dated:
QUALITY IS OUR RECIPE, LLC
Name:
Title:
A-1-3
STATE OF l__________ 1 )
) ss.:
COUNTY OF l__________ 1 )
On the day of, before me the undersigned, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
Notary Public
A-1-4
EXHIBIT A-2
POWER OF ATTORNEY OF THE SECURITIZATION ENTITIES
KNOW ALL PERSONS BY THESE PRESENTS, that in connection with the Management Agreement, dated as of the Closing Date (as amended, restated, supplemented or otherwise modified from time to time, the “Management Agreement”; all capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Management Agreement), among Wendy’s Funding, LLC, a Delaware limited liability company (the “Master Issuer”), Wendy’s SPV Guarantor, LLC, a Delaware limited liability company, Quality Is Our Recipe, LLC, a Delaware limited liability company, Wendy’s Properties, LLC, a Delaware limited liability company (collectively, the “Securitization Entities”), Wendy’s International, LLC, and Citibank, N.A., as Trustee, each of the Securitization Entities hereby appoints Wendy’s International, LLC (the “Manager”) and any and all officers thereof as its true and lawful attorney in fact, with full power of substitution, in connection with the Services (as defined in the Management Agreement) being performed with respect to the Managed Assets, with full irrevocable power and authority in the place of each Securitization Entity and in the name of each Securitization Entity or in its own name as agent of each Securitization Entity, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the foregoing, subject to the Management Agreement, including, without limitation, the full power to:
(a)perform such functions and duties, and prepare and file such documents, as are required under the Indenture and the other Related Documents to be performed, prepared and/or filed by the Securitization Entities, including: (i) recording such financing statements (including continuation statements) or amendments thereof or supplements thereto or other instruments as the Trustee and the Securitization Entities may from time to time reasonably request in order to perfect and maintain the Lien in the Collateral granted by the Securitization Entities to the Trustee under the Related Documents in accordance with the UCC; and (ii) executing grants of security interests or any similar instruments required under the Related Documents to evidence such Lien in the Collateral; and
(b)take such actions on behalf of each Securitization Entity as such Securitization Entity or Manager may reasonably request that are expressly required by the terms, provisions and purposes of the Management Agreement; or cause the preparation by other appropriate Persons, of all documents, certificates and other filings as each Securitization Entity shall be required to prepare and/or file under the terms of the Related Documents.
This power of attorney is coupled with an interest.
THIS POWER OF ATTORNEY IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO POWERS OF ATTORNEY MADE AND TO BE EXERCISED WHOLLY WITHIN SUCH STATE.
A-2-1
Dated: | 1, 2015
WENDY’S FUNDING, LLC, as Master Issuer
| Name: | ||||||||
| Title: | ||||||||
WENDY’S SPV GUARANTOR, LLC, as a Securitization Entity
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
QUALITY IS OUR RECIPE, LLC, as a Securitization Entity
| Name: | ||||||||
| Title: | ||||||||
WENDY’S PROPERTIES, LLC, as a Securitization Entity
| Name: | ||||||||
| Title: | ||||||||
A-2-2
STATE OF l__________ 1 )
) ss.:
COUNTY OF l__________ 1 )
On the day of | 2015, before me the undersigned, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
Notary Public
A-2-3
EXHIBIT B
JOINDER AGREEMENT
JOINDER AGREEMENT, dated as of , 20_ (this "Joinder Agreement"), made by a (the "Additional Securitization Entity"), in favor of WENDY'S INTERNATIONAL, LLC, an Ohio limited liability company, as Manager (the “Manager”), and CITIBANK, N.A., as Trustee (in such capacity, together with its successors, the “Trustee”). All capitalized terms not defined herein shall have the meaning ascribed to them in the Management Agreement (as defined below).
WITNESSETH:
WHEREAS, Wendy’s Funding, LLC, a Delaware limited liability company (the “Master Issuer”), the Trustee and Citibank, N.A., as securities intermediary, have entered into a Base Indenture dated as of June 1, 2015 (as amended, restated, supplemented or otherwise modified from time to time, exclusive of any Series Supplements, the “Base Indenture” and, together with all Series Supplements, the “Indenture”), providing for the issuance from time to time of one or more Series of Notes thereunder; and
WHEREAS, in connection with the Base Indenture, the Master Issuer, the other Securitization Entities party thereto from time to time, the Manager and the Trustee have entered into the Management Agreement, dated as of June 1, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “Management Agreement”); and
WHEREAS, the Additional Securitization Entity has agreed to execute and deliver this Joinder Agreement in order to become a party to the Management Agreement;
NOW, THEREFORE, IT IS AGREED:
1.Management Agreement. By executing and delivering this Joinder Agreement, the Additional Securitization Entity, as provided in Section 8,16 of the Management Agreement, hereby becomes a party to the Management Agreement as a Securitization Entity thereunder with the same force and effect as if originally named therein as a Securitization Entity and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities thereunder of a Securitization Entity thereunder. Each reference to a “Securitization Entity” in the Management Agreement shall be deemed to include the Additional Securitization Entity. The Management Agreement is hereby incorporated herein by reference.
2.Counterparts; Binding Effect. This Joinder Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which taken together shall constitute a single contract. This Joinder Agreement shall become effective when each of the Additional Securitization Entity, the Manager and the Trustee has executed a counterpart hereof. Delivery of an executed counterpart
B-1
of a signature page of this Joinder Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Joinder Agreement.
3.Full Force and Effect. Except as expressly supplemented hereby, the Management Agreement shall remain in full force and effect.
4.Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW RULES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
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B-2
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL SECURITIZATION ENTITY]
Name:
Title:
AGREED TO AND ACCEPTED
WENDY’S INTERNATIONAL, LLC, as Manager
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
CITIBANK, N.A., in its capacity as Trustee
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
B-3
SCHEDULE 2.1(F)
MANAGER INSURANCE
2015-16 Insurance Program Overview
Policies
1.Primary Property Insurance - Lexington Insurance Company
2.Excess Property Insurance
a.Westport Insurance Corporation, a member of Swiss Re Corporate Solutions
b.US Fire Insurance Company
c.Starr Surplus Lines Insurance Company
3.Commercial General Liability Insurance - ACE American Insurance Company
4.Worker’s Compensation and Employer’s Liability Insurance - ACE American Insurance Company
5.Auto Liability Insurance - ACE American Insurance Company
6.Umbrella Excess Insurance
a.ACE Property & Casualty Insurance Company
b.Great American Insurance Company of New York
c.The Ohio Casualty Insurance Company
d.Fireman’s Fund Insurance Company
e.Liberty International Underwriters, Inc.
7.Primary Director’s & Officer’s Liability Insurance - Travelers Casualty and Surety Company of America
8.Excess Director’s & Officer’s Liability Insurance
a.Illinois National Insurance Company
b.Continental Casualty Insurance Company
c.Great American Insurance Co.
d.Axis Insurance Company
e.Endurance American Insurance Company
f.Allied World National Assurance Company
g.ACE American Insurance Company
h.Illinois National Insurance Company
9.Fiduciary Liability Insurance - Travelers Casualty and Surety Company of America
10.Employment Practices Liability Insurance - Illinois National Insurance Company
11.Crime Insurance - National Union Fire Insurance Company of Pittsburgh, Pa.
12.Franchisor’s E&O, Cyber Risk and Employed Lawyer’s Liability - Specialty Risk Protector Policy (Crisis Fund, Cyber Extortion, Employed Lawyers, Media Content, Network Interruption, Security Failure/Privacy Event Management, Security & Privacy
Liability, Specialty Professional Liability (Errors & Omissions)) - AIG Specialty Insurance Company
13. Excess Cyber Risk Insurance
a.Travelers Casualty and Surety Company of America
b.Steadfast Insurance Company
c.Beazley Insurance Company, Inc.
14. Contaminated Products Insurance - Tokio Marine Kiln Syndicates, Ltd.
EXHIBIT 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Robert D. Wright, certify that:
1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 5, 2026
/s/ Robert D. Wright
Robert D. Wright
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Steven W. Cirulis, certify that:
1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 5, 2026
/s/ Steven W. Cirulis
Steven W. Cirulis
Chief Financial Officer and Chief Strategy Officer
EXHIBIT 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of The Wendy’s Company, a Delaware corporation (the “Company”), does hereby certify, to the best of such officer’s knowledge, that in connection with the Quarterly Report on Form 10-Q of the Company for the quarter ended September 27, 2026 (the “Form 10-Q”):
1.the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 5, 2026
/s/ Robert D. Wright
Robert D. Wright
President and Chief Executive Officer
Date: November 5, 2026
/s/ Steven W. Cirulis
Steven W. Cirulis
Chief Financial Officer and Chief Strategy Officer