Guarantees and Other Commitments and Contingencies

Except as related to the sale of Arby’s as discussed in Note 2 and as described below, the Companies did not have any significant changes to their guarantees, other commitments and contingencies as disclosed in the combined notes to our consolidated financial statements included in the Form 10-K.

Equipment for Systemwide Core Menu Initiative

In order to facilitate the purchase and related installation of equipment by franchisees required to implement a systemwide core menu initiative, Wendy’s has initiated the following programs:


•	Wendy’s agreed with two lenders to partially subsidize interest rates for loans to qualified franchisees. Wendy’s will be required to pay the full interest subsidy amount in the fourth quarter of 2011. As of July 3, 2011, there is an accrued liability of $356 for the interest subsidy. Wendy’s has no other obligations related to these programs.

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For franchisees that will otherwise not be able to take advantage of the subsidized interest programs described above, Wendy’s will provide up to an aggregate of $3,000 of loan guarantees under an additional lender program. Wendy’s will have full recourse to its franchisees for any payments Wendy’s may be required to make under this program. As of July 3, 2011, Wendy’s had no guarantees outstanding under this program.

Loan funding to franchisees under the programs described above must be completed by September 30, 2011. Wendy’s maximum liability under these programs, including the full interest subsidy and the aggregate guaranteed loans which is dependent on the final amounts borrowed by franchisees, is not expected to exceed $5,000.

Breakfast Test Expansion

In order to encourage franchisees to participate in expanded testing of the breakfast daypart, Wendy’s has established the following programs:

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Wendy’s will continue to lease equipment to franchisees that are testing the breakfast program. At the time breakfast becomes a required program, the franchisees will be required to purchase the equipment from Wendy’s based on its then book value plus installation costs. The total amount of expenditures for equipment (including installation) leased to franchisees is expected to be no more than $7,000.

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Additionally, Wendy’s will provide loans to certain franchisees for the purchase and installation of equipment required to implement the breakfast program. The loans are expected to not exceed $25 per restaurant, carry no interest charge and be repayable in full 24 months after the installation is completed. Wendy’s will fund a maximum of $20,000 of these loans for early adopters of the breakfast program.

As of July 3, 2011, no loans have been made under the above breakfast program. We have purchased equipment with a current net book value of approximately $1,900 that has been leased to franchisees. The above programs also have the following additional features:

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For the first three years of an early adopting franchisee’s participation in the breakfast program, a portion of franchise royalties (on a sliding scale) will not be payable to Wendy’s but will be required to be reinvested in local advertising and promotions for the breakfast program. Based on franchisee participation in the breakfast program, Wendy’s estimates the royalties not to be received under this program will approximate $6,000 over the three year period.

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Contributions otherwise due to Wendy’s National Advertising Program, Inc. (“Wendy’s National Advertising Program”) based on breakfast sales will not be payable to Wendy’s National Advertising Program but will be required to be reinvested in local advertising and promotions for the breakfast program until Wendy’s National Advertising Program begins to purchase national advertising for the breakfast programs.

North America Incentive Program

In order to promote new unit development, Wendy’s has established a franchisee assistance program for its North American franchisees that provides for reduced technical assistance fees and a sliding scale of royalties for the first two years of operation for qualifying locations opened between April 1, 2011 and December 31, 2013. While we are unable to project the number of locations to be opened under this program, we do not expect the effect on current or future franchise revenues to be material.

Canadian Lease Guarantee Program

Wendy’s Canadian subsidiary has established a lease guarantee program, which is to promote new unit development, for its Canadian franchisees for up to an aggregate of C$5,000 for periods of up to five years. Franchisees pay the Canadian subsidiary a nominal fee for the guarantee. As of July 3, 2011, the Canadian subsidiary had guaranteed C$249 under this program.