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System Optimization Gains, Net
 12 Months Ended
Jan. 02, 2022
System optimization gains, net  
System Optimization Gains, Net Properties
Year End
January 2, 2022January 3, 2021
Land$370,742 $372,473 
Buildings and improvements504,462 504,504 
Leasehold improvements422,094 409,306 
Office, restaurant and transportation equipment282,770 255,469 
1,580,068 1,541,752 
Accumulated depreciation and amortization(673,201)(625,863)
$906,867 $915,889 

Depreciation and amortization expense related to properties was $68,298, $77,656 and $81,219 during 2021, 2020 and 2019, respectively.
System Optimization  
System optimization gains, net  
System Optimization Gains, Net System Optimization Gains, Net
The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating Franchise Flips. As of January 1, 2017, the Company achieved its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. While the Company has no plans to move its ownership away from approximately 5% of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages. During 2021, 2020 and 2019, the Company facilitated 34, 54 and 37 Franchise Flips, respectively. Additionally, during 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees and, during 2020, completed the sale of one Company-operated restaurant to a franchisee. No Company-operated restaurants were sold to franchisees during 2019.

Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 5. All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:
Year Ended
202120202019
Number of restaurants sold to franchisees47 1 — 
Proceeds from sales of restaurants (a)$50,518 $50 $— 
Net assets sold (b)(16,939)(34)— 
Goodwill related to sales of restaurants(4,847)— — 
Net unfavorable leases (c)(2,939)— — 
Gain on sales-type leases7,156 — — 
Other (d)(2,148)— — 
30,801 16 — 
Post-closing adjustments on sales of restaurants (e) (f)1,218 362 1,087 
Gain on sales of restaurants, net32,019 378 1,087 
Gain on sales of other assets, net (g)1,526 2,770 196 
System optimization gains, net$33,545 $3,148 $1,283 
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(a)In addition to the proceeds noted herein, the Company received cash proceeds of $39 during 2021 related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

(b)Net assets sold consisted primarily of equipment.

(c)During 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(d)2021 includes a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(e)2021 includes a gain on sales-type leases of $1,625 and the write-off of certain lease assets of $927 as a result of an amendment to lease terms in connection with a Manhattan Company-operated restaurant previously sold to a franchisee.
(f)2021, 2020 and 2019 include the recognition of deferred gains of $515, $368 and $911, respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(g)During 2021, 2020 and 2019, Wendy’s received cash proceeds of $4,561, $6,041 and $3,448, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale
Year End
January 2, 2022January 3, 2021
Number of restaurants classified as held for sale— 43 
Net restaurant assets held for sale (a)$— $20,587 
Other assets held for sale (b)$3,541 $1,732 
_______________

(a)Net restaurant assets held for sale as of January 3, 2021 included New York Company-operated restaurants (excluding Manhattan) and consisted primarily of cash, inventory, property and an estimate of allocable goodwill. During the three months ended April 4, 2021, the Company also classified its four Manhattan restaurants as held for sale.

(b)Other assets held for sale primarily consist of surplus properties.

Assets held for sale are included in “Prepaid expenses and other current assets.”