Pizza Hut's Largest Franchisee Buys 140 Wendy's

Wendy’s

The world’s largest Pizza Hut franchisee purchased another major stake in Wendy’s Thursday, and put to rest a lengthy litigation issue for the fast food chain in the process.

Overland Park, Kansas-based NPC International Inc. announced it acquired 140 Wendy’s in the Washington, D.C., Virginia, and Maryland area. This follows a March acquisition of 62 locations from Valenti Mid-Atlantic Management LLC for $52.6 million.

Wednesday’s purchase from DavCo Restaurants LLC gives NPC International 386 Wendy’s in seven states, making it the largest franchisee in the system. The company operates 1,136 Pizza Hut restaurants and delivery units in 28 states.

The move is notable since it ends a three-year lawsuit between Wendy’s and DavCo Restaurants LLC, which Wendy’s sued in 2014 when the franchisee wouldn’t comply with the chain’s remodeling and point-of-sale upgrade programs. Franklin County Common Pleas Court records show that the lawsuit closed in December, and spokeswoman Heidi Schauer told Columbus Business First that Thursday’s transaction resolves the case since “DavCo is no longer a franchisee.”

Wendy’s acquired the units from DavCo before selling them to NPC.

“As we continue to transform the system by facilitating restaurant sales to franchisees who have demonstrated operations excellence, brand and organizational leadership, and reinvestment in the business, we’re excited about NPC’s commitment to help Wendy’s reach its full potential in these important growth markets,” said Todd Penegor, president and CEO of The Wendy's Company, in a statement.

With the purchase, NPC agreed to remodel 90 of the 140 restaurants in the Image Activation format by the end of 2021 and build 15 new Wendy’s by the end of 2022. NPC said that the acquired units generated around $215 million in net product sales during the 52 weeks ended February 2017. Seven restaurants closed before the deal was completed as well.

A Securities and Exchange Commission filing showed that Wendy’s received $6.4 million in franchise fees upon the deal’s closing.

“We look forward to capitalizing upon the terrific opportunity in this market by delivering upon the Wendy’s brand promise each and every day,” said Jim Schwartz, chairman and CEO of NPC International, Inc., in a statement. “In addition to delighting every customer through superior restaurant operations, we plan to make significant investments in the market through Image Activation and the implementation of a new Aloha point of sale system at every location. This acquisition will be our seventh acquisition in the Wendy’s system since 2013 and will increase our holdings to 386 restaurants with revenues exceeding $590 million, or approximately 40 percent of our total consolidated revenues, positioning NPC as the largest Wendy’s franchisee.”