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WEN » Topics » ARG may be unable to manage effectively its strategy of acquiring and disposing of Arbys restaurants, which could adversely affect ARGs business and financial results.

This excerpt taken from the WEN 10-K filed Mar 1, 2007.

ARG may be unable to manage effectively its strategy of acquiring and disposing of Arby’s restaurants, which could adversely affect ARG’s business and financial results.

ARG’s strategy of acquiring Arby’s restaurants from franchisees and eventually “re-franchising” these restaurants by selling them to new or existing franchisees is dependent upon the availability of sellers and buyers as well as ARG’s ability to negotiate transactions on terms that ARG deems acceptable. In addition, the operations of restaurants that ARG acquires may not be integrated successfully, and the intended benefits of such transactions may not be realized. Acquisitions of Arby’s restaurants pose various risks to ARG’s on-going operations, including:

 

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diversion of management attention to the integration of acquired restaurant operations;

 

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increased operating expenses and the inability to achieve expected cost savings and operating efficiencies;

 

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exposure to liabilities arising out of sellers’ prior operations of acquired restaurants; and

 

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incurrence or assumption of debt to finance acquisitions or improvements and/or the assumption of long-term, non-cancelable leases.

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In addition, engaging in acquisitions and dispositions places increased demands on ARG’s operational, financial and management resources and may require ARG to continue to expand these resources. If ARG is unable to manage the acquisition and disposition strategy effectively, its business and financial results could be adversely affected.

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