Wendy's Sells 70 Restaurants in Dallas, Continuing Refranchising Effort
Burger chain Wendy’s sold 70 restaurants in Dallas-Fort Worth to a franchisee, as a part of a refranchising effort that will span 415 restaurants.
Wendy’s announced their intention to reduce the number of corporate stores last July, stating plans to reduce total systems ownership from 22 percent to approximately 15 percent. At the time, Wendy’s hoped to complete these transactions by the end of the second quarter of 2014. However, the company recently announced that it expected to complete sales of 415 company-operated restaurants by the end of the first quarter.
Thus far, Wendy’s has sold 314 units. The company expects to earn $235 million from the sales of these restaurants.
"We expect to generate a higher operating margin and stronger free cash flow, along with further enhancing the quality of our earnings with a more predictable revenue stream from a higher percentage of royalty and rent income,” Wendy’s CEO Emil Brolick said in a statement about the refranchising efforts.
Refranchising is a common move for big franchises looking to increase profits through franchise fees and rent while cutting company costs. Burger King recently summed up a major refranchising initiative effort that put essentially 100 percent of restaurants under franchisee ownership and allowed the burger chain to increase net income 99 percent in 2013.
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.