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Wendy’s Heats Up Legal Battle against 40-Year Franchisee

Wendy's is turning up the heat on its fourth largest franchisee, DavCo, in a lawsuit it filed last December. The 152-unit owner in Maryland refuses to remodel its stores and purchase a new point-of-sale system, and the franchisor vows to terminate its contracts.

Columbus, Ohio Dispatch.com reported that DavCo is accusing the hamburger chain of trying to grab its restaurants through its litigation. It said,

DavCo also says Wendy's wants to terminate its franchise agreements and take over its restaurants on the cheap. The franchisee says in the filing that it has rebuffed purchase offers from Wendy's since 2010, and Wendy's would not agree to DavCo merging with another franchisee in 2011.

In the lawsuit, DavCo claims Wendy's Image Activation remodeling program is economically unviable for franchisees and the point-of-sale system is inoperable. The franchisee entity is asking the Franklin County Common Pleas Court to toss out Wendy's case and award DavCo at least $25,000 in damages.

Wendy's states that the franchisee's contracts require it to comply with the remodeling and point-of-sale system, or it can lose its franchise agreements. DavCo counters stating it entered into a separate agreement with Wendy's that focused the company's effort on building new locations instead of remodeling older ones. The franchisee states,

Wendy's is pursuing this litigation against one of its largest franchisees for the ulterior purpose of setting an example to other franchisees," DavCo said in its response, "to force them into compliance with Wendy's unreasonable demands."

Wendy's says DavCo has gone rogue and is alone in its opposition to comply.

Article: Franchisee Says Wendy's Using Lawsuit to Grab Its Restaurants

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About Janet Sparks

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Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.