Wendy’s Sues Franchisees, Unveils Prototype
As the newly independent Wendy’s prepares to report earnings Thursday for the first time since parting ways with Arby’s Restaurant Group, the quick-service brand is finding itself locked in a legal wrangle with a group of its own franchisees.
The 5,877-unit Wendy’s Co. has filed a lawsuit against franchisees who have yet to install specialized equipment required to prepare the brand’s new Dave’s Hot ’n Juicy cheeseburger.
Wendy’s said Dave’s Hot ’n Juicy — an upgrade of Wendy’s existing line of burgers that feature larger patties, premium ingredients and a butter-toasted bun — is part of an overall menu innovation plan that the chain hopes will spur renewed growth in the United States. As part of the menu strategy, the chain also relaunched its French fries last year, switching to a skin-on variety sprinkled with sea salt.
In addition, the Dublin, Ohio-based chain is hoping that a new unit prototype will help to drive U.S. expansion.
Going for the ‘Gold’ in October
Dave’s Hot ’n Juicy cheeseburger is the result of Project Gold Hamburger, which Wendy’s began more than a year ago. But WendPartners Franchise Group, led by franchisees Lewis Topper and Jeffrey Coghlan and several of their affiliated companies, is balking at installing the equipment required to prepare the new product line, Wendy’s said in a complaint it filed in the U.S. District Court for the Southern District of Ohio.
Coghlan, a Cortland, N.Y.-based franchisee of Wendy's restaurants in four states and a defendant in the suit, was not available for comment at press time.
Arguing that going to market with the new burgers missing from a sizeable chunk of its system would undermine the rollout, Wendy’s is suing WendPartners for trademark infringement and breach of contract and seeking a declaratory judgment that would compel the franchisees to install the equipment.
Wendy’s said in its complaint that Topper, Coghlan and their affiliated companies own or control 329 Wendy’s units in 20 states. The company noted that Topper and his companies make up the largest franchisee in the Wendy’s system, accounting for more than 5 percent of the 4,609 franchised locations in the United States.
Vertical contact toaster ovens would have to be in place at all Wendy’s restaurants by Oct. 3, when the company plans to launch a multimillion-dollar advertising campaign for Dave’s Hot ’n Juicy Cheeseburger, the company said in court filings.
Wendy’s charged that the WendPartners franchisees willfully missed the early July deadline with “a clear intention to confuse, mislead, and deceive” customers, according to the court documents.
“The launch of the new Wendy’s products is a very significant event for the Wendy’s chain of restaurants … and it is important that every restaurant in the system participates in the launch and offers the new products in accordance with Wendy’s specifications,” the company wrote in its filing.