Wendy's International (WEN)

17. Related Party Transactions

As of May 29, 2005, the Group is affiliated through common ownership with Winners, Lee’s Famous Recipe, Inc. and subsidiaries (“Lee’s”), Marketing Events Partners, Inc. (“MVP”), RTM Future Associates (“RTMFA”), RTM Foundation and Crown Restaurants, Inc.

As of May 30, 2004 and May 29, 2005, receivables from and cash advances to Winners aggregated $54,036 and $59,809, respectively. These receivables are classified in Net capital deficiency in the accompanying Combined Balance Sheets. The Group recognized interest income related to such receivables and cash advances of $48 and $58 in 2004 and 2005, respectively. The Group received $12 in each of the years 2004 and 2005 from Winners for management fees. The Group paid $115 and $99 in 2004 and 2005, respectively, to Winners for royalties and advertising. As of May 29, 2005, the Group has guaranteed $19,455 of Winners’ debt and $16,621 of Winners’ leases.

On October 14, 2004, RTM Family Restaurants, LLC (“RTMFR”) merged into the Group. Since RTMFR was under common control with the Group, the merger was accounted for on a basis equivalent to a pooling of interests, and the carrying values of RTMFR’s assets and liabilities and the results of its operations were combined with those of the Group for all periods presented. This merger did not have a significant impact on the Group’s Combined Financial Statements.

As of May 30, 2004, the Group had an unsecured advance due from Lee’s of $4,230. During 2005, $3,435 of such advances were forgiven, and the remainder was repaid with a note receivable from Winners International. This advance is classified in net capital deficiency in the accompanying Combined Balance Sheets. Interest income of $265 related to cash advances to Lee’s was recognized in 2003 and reversed during 2004 because it was determined that the interest would not be collected. As of May 29, 2005, the Group had guaranteed restaurant leases totaling $9,530 previously operated by Lee’s.

The Group has transactions with non-combined affiliates on a daily basis that are typically settled monthly and are included in other receivables and accounts payable. As of May 30, 2004 and May 29, 2005, the total of non-combined affiliate balances included in other receivables was $1,020 and $17, respectively, and the total of non-combined affiliate balances included in accounts payable was $6 and $1,097, respectively.

26

RTM Restaurant Group
May 29, 2005
Notes to Combined Financial Statements (continued)
(In Thousands, Except Share and Per Share Amounts)

17. Related Party Transactions (continued)

The Group shares certain common management and employees with Marketing Event Partners (“MVP”). MVP manages golf tournaments and related charitable events and provides special event and meeting planning services. As of May 30, 2004 and May 29, 2005, the Group advanced $390 and $640, respectively, to MVP, and recognized interest on these advances of $11 and $18 in 2004 and 2005, respectively. In addition, employees of MVP are paid by, and have their benefits administered by, the Group which in turn is reimbursed by MVP for these expenses quarterly. The Group paid MVP consulting fees for planning services of $440 and $240 in 2004 and 2005, respectively.

The Group contributed $560 and $440 in 2004 and 2005, respectively, to the RTM Foundation. The RTM Foundation was created to provide aid and support to other nonprofit organizations.

The Group advanced $723 to certain shareholders as of May 30, 2004. As of May 29, 2005, such advances totaled $761 and were classified as reductions to notes payable due from these same shareholders.

RTMFA is an affiliated entity established to purchase the stock controlled by the largest shareholder and certain of his family members (“the family members”) in the event of his death. This redemption agreement is collateralized by a group of life insurance policies owned by RTMFA. In the event the life insurance proceeds are less than the appraised value of the shares, RTMRG will acquire the remaining shares in exchange for promissory notes. At May 29, 2005, the redemption value of such shareholder’s stock was $154,383, and the face amount of the policies totaled $71,000.

While the largest shareholder is not subject to the RTMRG stock repurchase agreements discussed in Note 11, the family members are. Therefore, the redemption value of the family members’ shares is included in the redemption value of common stock subject to repurchase agreements, as disclosed in Note 11, as well as the disclosure in this Note. The family members’ shares would be repurchased under either, but not both, of these stock repurchase agreements.

The premiums on the policies held by RTMFA are paid by RTMRG on behalf of RTMFA. The premiums are to be reimbursed from future death benefits. At termination of the agreement prior to the death of the shareholder, the premiums would be repaid to the extent of cash surrender value plus loans against cash surrender value. The agreement is terminated if RTMRG becomes a public company or a subsidiary of a public company. Since RTMFA is under common control with the Group, the premiums paid in excess of cash surrender value of ($79) in 2004 and $47 in 2005, have been accounted for as an equity transaction in the accompanying Combined Financial Statements. The accumulated balances of premiums paid in excess of cash surrender value on RTMFA policies were $5,114 and $5,161 at May 30, 2004 and May 29, 2005, respectively, and have been classified in Net capital deficiency in the accompanying Combined Balance Sheets.

As of May 30, 2004 and May 29, 2005, the Group had advances to RTMFA totaling $1,615 and $1,984, respectively. Such advances are classified in Net capital deficiency in the accompanying Combined Balance Sheets.

The Group had receivables from split-dollar life insurance contract policy owners, who are shareholders, in excess of cash surrender value of $1,375 and $2,024 at May 30, 2004 and May 29, 2005, respectively. Such advances are classified in Net capital deficiency in the accompanying Combined Balance Sheets.

17. Related Party Transactions

      The Group is affiliated through common ownership with Winners, Lee's Famous Recipe, Inc. and subsidiaries (“Lee's”), Marketing Events Partners, Inc. (“MVP”), RTM Family Restaurants, L.L.C. (“RTMFR”), RTM Future Associates (“RTMFA”), RTM Foundation and Crown Restaurants, Inc.

      As of May 30, 2004 and March 6, 2005, receivables from and cash advances to Winners aggregated $54,036 and $58,804, respectively. These receivables have been classified in net capital deficiency in the accompanying balance sheets. The Group received $9 during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively, from Winners for management fees. The Group paid $40 and $32 during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively, to Winners for royalties and advertising. As of March 6, 2005, the Group has guaranteed $20,043 of Winners' debt and $17,277 of Winners' leases. RTM has committed to provide liquidity support for Winners, as needed, during the 2005 fiscal year.

      On October 14, 2004, RTMFR was merged into Group. Since RTMFR was under common control with the Group, the merger has been accounted for on a basis equivalent to a pooling of interests and the carrying values of RTMFR's assets and liabilities and the results of its operations have been combined with those of the Group for all periods presented. Such merger did not have a significant impact on the Group's combined financial statements.

      As of May 30, 2004, the Group had an unsecured advance due from Lee's of $4,230. During the 40 weeks ended March 6, 2005, $3,435 of such advances was forgiven and the remainder was repaid with a note receivable from Winners International. This advance has been classified in net capital deficiency in the accompanying May 30, 2004 balance sheet. Interest income of $265, related to cash advances to Lees', was reversed during the 40 weeks ended February 29, 2004, because it was determined that the interest would not be collected. As of March 6, 2005, the Group had guaranteed $9,738 of leases of restaurants previously operated by Lee's.

      The Group has transactions with non-combined affiliates on a daily basis that are typically settled monthly, and are included in other receivables and accounts payable. As of May 30, 2004 and March 6, 2005, the total of non-combined affiliate balances included in other receivables was $1,020 and $765, respectively, and the total of non-combined affiliate balances included in accounts payable was $6 and $2,364, respectively.

      The Group shares certain common management and employees with Marketing Event Partners (“MVP”). MVP manages golf tournaments and related charitable events and provides special event and meeting planning services. As of May 30, 2004 and March 6, 2005, the Group has advanced $390 and $240, respectively, to MVP, and has recognized interest on these advances of $8 and $14 during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively. Employees of MVP are paid by, and have their benefits administered by the Group, which in turn is reimbursed by MVP for these expenses quarterly. The Group paid MVP consulting fees for planning services of $320 and $240 during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively.

      The Group contributed $410 and $225 during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively, to the RTM Foundation. The RTM Foundation was created to provide aid and support to other nonprofit organizations.

      The Group has advanced $723 and $229 to certain shareholders as of May 30, 2004 and March 6, 2005, respectively.

      RTM Future Associates (“RTMFA”) is an affiliated entity established to purchase the stock controlled by the largest shareholder in the event of his death. This redemption agreement is collateralized by a group of life insurance policies owned by RTMFA. In the event the life insurance proceeds are less than the appraised value of the shares, RTMRG will acquire the remaining shares in exchange for

49

RTM RESTAURANT GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)

17. Related Party Transactions—(Continued)

promissory notes. At March 6, 2005, the redemption value of such shareholder's stock was $98,102. As of March 6, 2005, the face amount of the policies totals $71,000.

      The premiums on the policies held by RTMFA are paid by RTMRG on behalf of RTMFA. The premiums are to be reimbursed from future death benefits. At termination of the agreement prior to the death of the shareholder, the premiums would be repaid to the extent of cash surrender value plus loans against cash surrender value plus loans from RTMRG to RTMFA. The agreement is terminated if RTMRG becomes a public company or a subsidiary of a public company. Since RTMFA is under common control with the Group, the changes in premiums paid in excess of cash surrender value of $88 and $(84) during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively, have been accounted for as an equity transaction in the accompanying financial statements. The accumulated balances of premiums paid in excess of cash surrender value on RTMFA policies was $5,114 and $5,030 at May 30, 2004 and March 6, 2005, respectively, and have been classified in net capital deficiency in the accompanying balance sheets.

      As of May 30, 2004 and March 6, 2005, the Group had advances to RTMFA of $1,615 and $1,770, respectively. Such advances have been classified in net capital deficiency in the accompanying balance sheets.

      The Group had receivables from split-dollar life insurance contract policy owners, who are shareholders, in excess of cash surrender value of $1,358 and $1,322 at May 30, 2004 and March 6, 2005, respectively. Such advances have been classified in net capital deficiency in the accompanying balance sheets.