Acquisitions

12 Months Ended

Jan. 02, 2022

(3) Acquisitions

During 2021 and 2019, the Company acquired 93 restaurants and five restaurants from franchisees, respectively. No restaurants were acquired from franchisees during 2020. The Company did not incur any material acquisition-related costs associated with the acquisitions and such transactions were not significant to our consolidated financial statements. The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from franchisees:


	Year Ended
	2021 (a)		2019
Restaurants acquired from franchisees (b)	93		5

Total consideration paid, net of cash received	$	127,948	$	5,052
Identifiable assets acquired and liabilities assumed:
Properties	21,984		666
Acquired franchise rights	81,239		1,354
Finance lease assets	25,547		5,350
Operating lease assets	44,282		—
Finance lease liabilities	(25,059)		(4,084)
Operating lease liabilities	(43,478)		—
Other	(9)		(2,316)
Total identifiable net assets	104,506		970
Goodwill	$	23,442	$	4,082

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(a)The fair value of the assets acquired are provisional amounts as of January 2, 2022, pending final purchase accounting adjustments. The Company utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process.

(b)2021 includes two restaurants under construction and not operating as of January 2, 2022.

NPC Quality Burgers, Inc. (“NPC”)

As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and commenced a process to sell all or substantially all of its assets, including its interest in approximately 393 Wendy’s restaurants across eight different markets, pursuant to a court-approved auction process. On November 18, 2020, the Company submitted a consortium bid together with a group of pre-qualified franchisees to acquire NPC’s Wendy’s restaurants. Under the terms of the consortium bid, several existing and new franchisees would have been the ultimate purchasers of seven of the NPC markets, while the Company would have acquired one market. As part of the consortium bid, the Company submitted a deposit of $43,240, which was included in “Prepaid expenses and other current assets” as of January 3, 2021. The deposit included $38,361 received from the group of prequalified franchisees, which was payable to the franchisees and included in “Accrued expenses and other current liabilities” as of January 3, 2021 pending resolution of the bankruptcy sale process.

During the three months ended April 4, 2021, following a court-approved mediation process, NPC and certain affiliates of Flynn Restaurant Group (“FRG”) and the Company entered into separate asset purchase agreements under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees. Under the transaction, FRG acquired approximately half of NPC’s Wendy’s restaurants in four markets, while several existing Wendy’s franchisees that were part of the Company’s consortium bid acquired the other half of NPC’s Wendy’s restaurants in the other four markets. The Company did not acquire any restaurants as part of this transaction. In addition, the deposits outstanding as of January 3, 2021 were settled during the three months ended April 4, 2021 upon resolution of the bankruptcy sale process. The net settlement of deposits of $4,879 is included in “Acquisitions” in the consolidated statements of cash flows.