Please ensure Javascript is enabled for purposes of website accessibility

Wendy’s Grants Longer Royalty Payment Time, 50% Rent Deferment to Franchisees

By Rhian Hunt - Mar 26, 2020 at 7:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company looks for ways to help its lessees stay afloat through COVID-19.

With its franchisees contending with a 20% sales plunge since COVID-19 began spreading rapidly across the U.S., Wendy's (WEN -1.55%) is extending the time available for restaurant operators to pay their fees and rent to the company. It currently intends to offer the extensions during the next three months in an effort to give franchisees some breathing room while the pandemic disrupts the economy.

A Wendy's restaurant.

Image source: Wendy's.

Royalties and marketing funds, today's announcement said, will have their payment terms extended by 45 days during the three-month COVID-19 response period. Those franchisees who are leasing restaurant space owned directly by Wendy's will have rental payments deferred by 50% over the same interval. The company is currently negotiating on behalf of its franchisees to get extra support from regular franchise lenders.

According to CEO Todd Penegor, the measures are part of the company's commitment to "supporting our franchise partners as we navigate through this very challenging and historic time together."

At the same time it initiated these steps, Wendy's announced it's withdrawing several items of guidance, not just the most recent. These include the 2020 fiscal-year guidance it issued in January at the same time as its earnings conference call, and the October 2019 Investor Day long-term outlook for 2021 through 2024. It will provide an updated outlook once it has enough data on the coronavirus' effects to make reasonable estimates. An update on general financial results will be provided during its Q1 2020 earnings call, but will likely not offer any new guidance information.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Wendy's Company Stock Quote
The Wendy's Company
$19.69 (-1.55%) $0.31

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.