Exhibit 99.2


                                 January 2, 2007

Dear Fellow Shareholders:

On December 20, 2006, we offered two seats on the Friendly's  Board of Directors
to Sardar Biglari and his associate  Phillip Cooley.  Mr. Biglari and Mr. Cooley
would join the Friendly's board with a single condition - that they agree not to
seek additional seats in a hostile manner.  This condition would remain in place
for as long as they remain members of the Friendly's Board of Directors.  All of
the current Board members would agree to be subject to this same  condition.  If
Mr. Biglari and Mr. Cooley seek additional seats in a hostile manner, it defeats
our objective of promoting multiple viewpoints rather than a single viewpoint on
the Board.

Despite his demands and our mutual desire to avoid the  unnecessary  expense and
distraction of a proxy  contest,  Mr.  Biglari  rejected our offer.  This is the
second time Mr.  Biglari has rejected our  invitation to join the Board,  and he
continues  to  threaten  what  would  be an  expensive  proxy  contest  for  our
shareholders  while at the same time  expressing  his desire to add value to our
company.

Mr.  Biglari's  rejection  of our offer and his actions at the  publicly  traded
Western Sizzlin Corporation  ("WSC"),  cause us great concern regarding his true
intentions for Friendly's.  We don't think he is being  forthright with you, the
shareholders  of  Friendly's.  It  appears  clear to us that Mr.  Biglari  isn't
interested in just a voice on the Board - he wants to control the Board.

The  results at WSC  suggest  that it would not be in the best  interest  of our
shareholders  to allow Mr.  Biglari to control the Friendly's  Board.  After Mr.
Biglari took control of WSC, rather than reinvesting in the restaurant  business
of WSC, Mr.  Biglari used WSC's surplus cash,  its bank credit  facilities and a
brokerage  margin  account to purchase  Friendly's  stock.  It appears  that Mr.
Biglari  is  leveraging  the credit of WSC and his hedge  fund to  purchase  our
stock.

Under Mr. Biglari's leadership, WSC's operating cash has dwindled,  year-to-year
earnings from operations have declined,  franchised  restaurants  continue to be
closed, and its stock price has declined significantly.

While he continues to offer  criticisms  of our company,  he hasn't  offered any
plan,  vision or strategy for increasing  Friendly's  shareholder  value. If Mr.
Biglari  gains control of your Board,  he could change the  Company's  financial
agreements to allow him to invest  Friendly's cash in other  companies,  like he
has done at WSC. We believe that Mr.  Biglari wants to gain control of the Board
in order to redirect  corporate  assets for  purposes  other than the  continued
growth of Friendly's.  The Friendly's  Board will take all actions  necessary to
prevent this from happening. Friendly's is a restaurant company not a hedge fund
or investment company.

In his letter of December 11, 2006, Mr. Biglari states that he and his associate
"have  the  experience  to serve  knowledgeably  and  judiciously."  In fact Mr.
Biglari and Mr. Cooley have meager  restaurant  operating  experience.  If their
performance managing the assets of WSC is an indication of their experience, and
as Mr. Biglari has refused our condition for Board  representation,  we say, "No
Thank You."

We do agree  with Mr.  Biglari on one point.  The Board of  Friendly's  welcomes
those who offer  constructive  suggestions  which  challenge  and  question  our
strategies.  To that end we decided to increase  the Board with members who will
bring independence, experience, success and value to enhance the business of our
company.  We engaged the renowned search firm of Heidrick & Struggles ("H&S") to
assist us in this search.  H&S was  instrumental  in bringing  Perry Odak to the
Board,  and Perry has provided  great value in the retail  segment of Friendly's
business.  Through H&S, we have a number of  candidates  who will bring value to
our other business areas, and we look forward to making an announcement shortly.
In the meantime,  we greatly  appreciate  your support of the manner in which we
have been dealing with Mr. Biglari.

Sincerely,

/s/ Donald N. Smith
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Donald N. Smith
Chairman of the Board