Wendy's Co

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

Our predominantly franchised business model presents a number of risks.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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 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 …

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Current report

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.

Current report

We have a significant amount of debt outstanding, and such indebtedness could adversely affect our business, results of operations and financial condition.

Current report

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.

Current report

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 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 …

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Current report

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.