Disgruntled Wendy’s franchisee has contract not renewed

A disgruntled Wendy’s franchisee has been told he will not have his contract renewed with the ice cream chain.

Trevor Banks, who owns a store in South Australia, this morning received a letter – dated August 4 – from the chain that his agreement would not be renewed at its completion date next March.

This follows Banks sending a letter of dispute to the company asking for an early release and objecting to requests for capital expenditure when his contract was set to expire early next year.

“I’ve made my own bed, but somebody has to stand up for franchisees,” Banks says, speaking of his media criticisms of the company.

“And because of these non-disparagement orders, people have kept quiet.”

“What I’ll do in the future, I really have no idea.”

Wendy’s has told SmartCompany the decision was made as a last resort and follows an extensive mediation process and many attempts to engage with Banks about his future with the brand.

The company added that Banks had refused to fufil his obligations as set out in the franchise agreement, and had continued to disparage the brand publicly.

In the letter of dispute sent this week, Banks called for a “conclusive agreement on [an] exit strategy to allow [the] franchisee to make plans for the future” and “an agreement that no further product or promotion will be forced on [the] franchisee that is not deemed to be financially beneficial by [the] franchisee.”

Banks’ complaints centre on receiving a notice of non-compliance for not supporting a national promotion, when he says he had been told that there would be “no compulsory promotions”.

But Dale Eichner, member of Wendy’s Franchise Advisory Council, earlier told SmartCompany that Banks’ concerns do not represent the views of the majority, who are “contented” franchisees.

“Two years ago, I fought my butt off to improve things, and there has been a huge improvement: the cost of goods has gone down and we’re working with the franchisor. Our sales have actually improved over the past three months,” Eichner, who runs a store in South Australia, says.

“Wendy’s over the past 15 months have helped people get through tough situations, and the FAC has pushed very hard for assistance to people who are suffering.”

Eichner adds that many disputes between franchisees and franchisors are also related to the tough economic climate and rents, particularly in shopping centres. “A lot of franchisees around Australia are having massive problems with rent ratio compared with turnover,” he says.

Wendy’s, which was born in Adelaide in 1979 and has around 300 stores across Australia and New Zealand, is owned by Navis.

According to its website, new store costs are about $185,000 plus GST, which includes an initial franchise fee of $20,000, shop fit costs, equipment, and five weeks of training. The renewal fee is $12,000, and Wendy’s recommends $15,000 in start-up working capital. The royalty is 6%, plus a marketing levy of 3%.