Wendy’s is going through a period of massive expansion.
The fast-food chain is planning to open 1,000 new restaurants over the next five years, after more than a decade of stagnant growth. Wendy’s currently operates about 6,500 locations globally.
Most of the new restaurants will be built and owned by franchisees, according to Nation’s Restaurant News.
In order to open a Wendy’s, potential franchisee groups need a net worth of at least $US5 million and liquid assets of at least $US2 million.
The financial requirements are so high because Wendy’s startup costs are pretty hefty compared to other fast-food chains.
Construction costs — which include real estate, equipment, and building supplies — typically range between $US2 million and $US3.5 million, according to the company.
By comparison, startup costs for a Subway restaurant, for example, range between $US116,200 and $US262,850.
But Wendy’s restaurants generate more revenue than Subway units.
A Wendy’s restaurant, on average, generates $US1.5 million, 490,000 in sales annually, compared to $US490,000 in average annual revenue for Subway restaurants, according to QSR magazine.
In addition to startup costs, Wendy’s operators are responsible for a $US40,000 franchise fee for every new restaurant, as well as a $US5,000 application fee.
Franchisees also have to pay an ongoing royalty fee equal to 4% of gross sales and advertising fees equal to 4% of gross sales.
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