Transactions with Related Parties

The following is a summary of ongoing transactions between the Companies and their related parties, which are included in continuing operations:



	2011			2010			2009
Wendy’s Co-op (a)	$	(2,033	)	$	(1,238	)	$	15,500
SSG agreement (b)	(2,275		)	5,145			—
Subleases with related parties (c)	(203		)	(137		)	—
Advisory fees (d)	—			2,465			5,368

(The Wendy’s Company)
Advisory fees (d)	$	500		$	1,000		$	500
Services Agreement (e)	—			—			3,500
Sublease income (f)	(1,631		)	(1,632		)	(1,886		)
Use of corporate aircraft (g)	(138		)	(120		)	(613		)
Withdrawal Agreement (h)	—			—			3,220
Liquidation services agreement (i)	220			441			239
Distributions to co-investment shareholders (j)	—			—			(795		)

___________________

Transactions with Purchasing Cooperatives

(a)

During the 2009 fourth quarter, Wendy’s entered into a purchasing co-op relationship agreement (the “Wendy’s Co-op”) with its franchisees to establish QSCC. QSCC manages food and related product purchases and distribution services for the Wendy’s system in the U.S. and Canada. Through QSCC, Wendy’s and Wendy’s franchisees purchase food, proprietary paper and operating supplies under national contracts with pricing based upon total system volume.

QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the U.S. and Canada. Prior to 2010, the system’s purchasing function was performed and paid for by Wendy’s. In order to facilitate the orderly transition of the 2010 purchasing function for operations in the U.S. and Canada, Wendy’s transferred certain contracts, assets and certain Wendy’s purchasing employees to QSCC in 2010. Pursuant to the terms of the Wendy’s Co-op, Wendy’s paid $15,500 to QSCC over an 18 month period through May 2011 in order to provide funding for start-up costs, operating expenses and cash reserves. The payments by Wendy’s under the Wendy’s Co-op were expensed in 2009 and included in “General and administrative.” Wendy’s made payments of $305 and $15,195 in 2011 and 2010, respectively. In connection with the ongoing operations of QSCC during 2010, QSCC reimbursed Wendy’s $913 for amounts Wendy’s had paid primarily for payroll-related expenses for certain Canadian QSCC purchasing employees.

Since the third quarter of 2010, all QSCC members (including Wendy’s) pay sourcing fees to third party vendors on products which are sourced through QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations. Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend. Wendy’s recorded the anticipated cash portion of its share of patronage dividends of $2,033 and $325 in 2011 and 2010, respectively, which are included as a reduction of “Cost of sales.”

(b)

On April 5, 2010, QSCC and the Arby’s independent purchasing cooperative (“ARCOP”) in consultation with Wendy’s Restaurants, established Strategic Sourcing Group Co-op, LLC (“SSG”). SSG was formed to manage and operate purchasing programs for certain non-perishable goods, equipment, and services. Wendy’s Restaurants had committed to pay approximately $5,145 of SSG expenses, which were expensed in 2010 and included in “General and administrative,” and were to be paid over a 24 month period through March 2012. However, in anticipation of the sale of Arby’s, effective April 2011, SSG was dissolved and its activities were transferred to QSCC and ARCOP and the remaining accrued commitment of $2,275 was reversed and credited to “General and administrative.”

(c)

Effective January 4, 2010, QSCC subleased approximately 9,333 square feet of office space from Wendy’s. Effective January 1, 2011, Wendy’s and QSCC entered into a sublease amendment which increased the office space subleased to QSCC to 14,333 square feet for a one year period for a revised annual base rental of $176 with five one-year renewal options. On July 5, 2011, QSCC renewed the lease for a one year period ending December 31, 2012. During the period from April 2010 to April 2011, SSG leased 2,300 square feet of office space from a subsidiary of Wendy’s Restaurants. The Companies received $180 and $113 of sublease income from QSCC and $23 and $24 of sublease income from SSG during 2011 and 2010, respectively.

Transactions with the Management Company

(d)

The Wendy’s Company and the Management Company entered into a new services agreement (the “New Services Agreement”), which commenced on July 1, 2009 and expired on June 30, 2011. Under the New Services Agreement, the Management Company assisted us with strategic merger and acquisition consultation, corporate finance and investment banking services and related legal matters. The Companies paid approximately $2,465 and $5,368 in 2010 and 2009, respectively, in fees for corporate finance advisory services under the New Service Agreement in connection with the negotiation and execution of the Credit Agreement in 2010 and the issuance of the Senior Notes in 2009.

In addition, The Wendy’s Company paid the Management Company a service fee of $250 per quarter, in connection with the New Services Agreement until it expired on June 30, 2011. The Wendy’s Company incurred service fees of $500, $1,000 and $500 in 2011, 2010 and 2009, respectively, which are included in “General and administrative.”

(e)

In connection with its 2007 restructuring, The Wendy’s Company entered into an agreement with the Management Company for the provision of services under a two-year transition services agreement (the “Services Agreement”), effective June 30, 2007, pursuant to which the Management Company provided The Wendy’s Company with a range of professional and strategic services. Under the Services Agreement, which expired on June 30, 2009 and was superseded by the New Services Agreement, The Wendy’s Company paid the Management Company $3,000 per quarter for the first year of services and $1,750 per quarter for the second year of services. The Wendy’s Company incurred $3,500 of such service fees for 2009 which are included in “General and administrative.”

(f)

In July 2008 and July 2007, The Wendy’s Company entered into agreements under which the Management Company is subleasing (the “Subleases”) office space on two of the floors of the Company’s former New York headquarters. Under the terms of the Subleases, the Management Company paid The Wendy’s Company approximately $157 per month in 2009, which included an amount equal to the rent The Wendy’s Company paid plus a fixed amount reflecting a portion of the increase in the then fair market value of The Wendy’s Company leasehold interest, as well as amounts for property taxes and the other costs related to the use of the space. During the second quarter of 2010, The Wendy’s Company and the Management Company entered into an amendment to the sublease, effective April 1, 2010, pursuant to which the Management Company’s early termination right was canceled in exchange for a reduction in rent. Under the terms of the amended sublease, which expires in May 2012, the sublease is not cancelable prior to the expiration of the prime lease in May 2012 and the Management Company pays rent to The Wendy’s Company in an amount that covers substantially all of the Company’s rent obligations under the prime lease for the subleased space. The Wendy’s Company recognized income of $1,631, $1,632, and $1,886 from the Management Company under such subleases in 2011, 2010 and 2009, respectively, which has been recorded as a reduction of “General and administrative.”

(g)

In August 2007, The Wendy’s Company entered into time share agreements under which the Former Executives and the Management Company used two of The Wendy’s Company’s corporate aircraft in exchange for payment of certain incremental flight and related costs of such aircraft. Those time share agreements expired during the second quarter of 2009 and, in the third quarter of 2009, one of the aircraft was sold to an unrelated third party. Such reimbursements for 2009 amounted to $553 and have been recognized as a reduction of “General and administrative.”

In June 2009, The Wendy’s Company and TASCO, LLC (an affiliate of the Management Company) (“TASCO”) entered into an aircraft lease agreement (the “Aircraft Lease Agreement”) for the other aircraft that was previously under the time share agreement mentioned above. The Aircraft Lease Agreement originally provided that The Wendy’s Company would lease such corporate aircraft to TASCO from July 1, 2009 until June 30, 2010. On June 24, 2010, The Wendy’s Company and TASCO renewed the Aircraft Lease Agreement for an additional one year period (expiring on June 30, 2011). Under the Aircraft Lease Agreement, TASCO paid $10 per month for such aircraft plus substantially all operating costs of the aircraft including all costs of fuel, inspection, servicing and certain storage, as well as operational and flight crew costs relating to the operation of the aircraft, and all transit maintenance costs and other maintenance costs required as a result of TASCO’s usage of the aircraft. The Wendy’s Company continued to be responsible for calendar-based maintenance and any extraordinary and unscheduled repairs and/or maintenance for the aircraft, as well as insurance and other costs.

On June 29, 2011, The Wendy’s Company and TASCO entered into an agreement to extend the Aircraft Lease Agreement for an additional one year period (expiring on June 30, 2012) and an increased monthly rent of $13. The Wendy’s Company received lease income of $138, $120 and $60 in the 2011, 2010 and 2009, respectively, under this agreement, which is included as an offset to “General and administrative.”

The Aircraft Lease Agreement may be terminated by The Wendy’s Company without penalty in the event it sells the aircraft to a third party, subject to a right of first refusal in favor of the Management Company with respect to such a sale. We intend to dispose of the Company-owned aircraft leased under the lease agreement discussed above as soon as practicable. As of January 1, 2012, the aircraft has a carrying value that approximates its fair value, is classified as held-for-sale, and is included in “Prepaid expenses and other current assets.”

(h)

On June 10, 2009, The Wendy’s Company and the Management Company entered into a withdrawal agreement (the “Withdrawal Agreement”) which provided that The Wendy’s Company would be permitted to withdraw all amounts in brokerage accounts (the “Equities Account”), which were managed by the Management Company, on an accelerated basis (the “Early Withdrawal”) effective no later than June 26, 2009. Prior to the Withdrawal Agreement and as a result of an investment management agreement with the Management Company, which was terminated on June 26, 2009, The Wendy’s Company had not been permitted to withdraw any amounts from the Equities Account until December 31, 2010, although $47,000 was released from the Equities Account in 2008 subject to an obligation to return that amount to the Equities Account by a specified date. In consideration for obtaining such Early Withdrawal right, The Wendy’s Company agreed to pay the Management Company $5,500 (the “Withdrawal Fee”), was not required to return the $47,000 referred to above and was no longer obligated to pay investment management and incentive fees to the Management Company. The Equities Account investments were liquidated in June 2009 for $37,401, of which $31,901 was received by The Wendy’s Company, net of the Withdrawal Fee, and for which The Wendy’s Company realized a gain of $2,280 in 2009. The Withdrawal Fee and the gain on the liquidation of the investments were included in “Investment income (expense), net.”

(i)

On June 10, 2009, The Wendy’s Company and the Management Company entered into a liquidation services agreement (the “Liquidation Services Agreement”) pursuant to which the Management Company assisted us in the sale, liquidation or other disposition of our cost investments and DFR Notes (the “Legacy Assets”), which were not related to the Equities Account. The Liquidation Services Agreement required The Wendy’s Company to pay the Management Company a fee of $900 in two installments in June 2009 and 2010, which was deferred and amortized through its June 30, 2011 expiration date. Related amortization of $220, $441 and $239 was recorded in “General and administrative” in 2011, 2010 and 2009, respectively.

Transactions with Other Related Parties

(j)

As part of its overall retention efforts, The Wendy’s Company provided certain of its Former Executives and current and former employees, the opportunity to co-invest with The Wendy’s Company in certain investments. The Wendy’s Company and certain of its former management have one remaining co-investment, 280 BT, which is a limited liability holding company principally owned by The Wendy’s Company and former company management that, among other things, invested in operating companies. During 2009, The Wendy’s Company received distributions of $795 from the liquidation of certain of the investments owned by 280 BT; distributions of $156 in 2009 were further distributed to 280 BT’s minority shareholders. No distributions were received in 2011 or 2010. The ownership percentages in 280 BT as of January 1, 2012 for The Wendy’s Company, the former officers of The Wendy’s Company and other investors were 80.1%, 11.2% and 8.7%, respectively.

From September 29, 2008 through his resignation effective December 30, 2011, J. David Karam, a minority shareholder, director and former president of Cedar Enterprises, Inc., which directly or through affiliates is a Wendy’s franchisee operator of 150 Wendy’s restaurants as of January 1, 2012, 146 Wendy’s restaurants as of January 2, 2011, and 133 Wendy’s restaurants as of January 3, 2010, was President of Wendy’s. In connection with Mr. Karam’s employment, Mr. Karam resigned as a director and president of Cedar Enterprises, Inc., but retained his minority ownership. The Companies recorded $7,565, $7,315 and $6,240 in royalties and $5,667, $5,471 and $4,633 in advertising fees in 2011, 2010, and 2009, respectively, from Cedar Enterprises and its affiliates as a franchisee of Wendy’s. Cedar Enterprises, Inc. and its affiliates also received $125 and $175 in remodeling incentives in 2010 and 2009, respectively, from Wendy’s pursuant to a program generally available to Wendy’s franchisees, and $186 and $774 in 2011 and 2010, respectively, related to funding for equipment for the systemwide core menu initiative and participation in the expanded testing of the breakfast daypart.

(Wendy’s Restaurants)

The following is a summary of continuing transactions between Wendy’s Restaurants and The Wendy’s Company:



	2011		2010		2009
Dividends paid (k)	$	—	$	443,700	$	115,000
Cost allocation to restaurant segments (l)	—		—		34,085
Other transactions:
Payments for Federal and state income tax (m)	13,078		—		10,417
Share-based compensation (n)	15,967		9,575		10,358
Expense under management service agreements (o)	2,521		5,017		5,017

_____________________


(k)	Wendy’s Restaurants paid cash dividends to The Wendy’s Company in 2010 and 2009 which were charged to “Invested equity.”

(l)

For the first quarter of 2009, The Wendy’s Company charged Wendy’s and Arby’s $34,085 for support services. Prior to that date, Wendy’s and Arby’s had directly incurred such costs. These costs are included in “General and administrative.” During 2009, Wendy’s Restaurants settled $20,526 of such support center costs in cash through the intercompany account with The Wendy’s Company.

On the first day of the second quarter of 2009, we established a shared service center in Atlanta, Georgia. As a result, support center costs from that date have been directly incurred by Wendy’s Restaurants and were allocated to Wendy’s and, prior to its sale, Arby’s, based on budgeted revenues.


(m)	Wendy’s Restaurants made cash payments to The Wendy’s Company under a tax sharing agreement, as discussed in Note 14.


(n)	Wendy’s Restaurants incurs share-based compensation costs for The Wendy’s Company common stock awards issued to certain employees under The Wendy’s Company various equity plans. Such compensation costs are allocated by The Wendy’s Company to Wendy’s Restaurants and is correspondingly recorded as capital contributions from The Wendy’s Company.

(o)

Wendy’s Restaurants incurred $2,521, $5,017 and $5,017 for management services by The Wendy’s Company during 2011, 2010, and 2009, respectively. Such fees were included in “General and administrative” and were settled through Wendy’s Restaurants’ intercompany account with The Wendy’s Company. Effective upon the sale of Arby’s, the agreement for such management services was terminated.

As a result of the sale of Arby’s, Arby’s and its affiliates are no longer considered related parties. Prior to the sale, the transactions between Arby’s and its non-consolidated affiliates were not material.