Wendy's Franchisee Files for Bankruptcy Amid Termination Dispute

Meritage Hospitality Group, a major U.S. franchisee operating 314 Wendy's locations across 15 states, has filed for Chapter 11 bankruptcy protection. The filing, made on September 17 in federal court in western Michigan, follows Wendy's move to terminate the company's franchise agreement, which it declared effective immediately on September 16.

Wendy's alleges that Meritage owes $27.4 million in royalties and fees, along with $119.5 million in continuous operations fees. These fees are charged to franchisees when locations are closed. Meritage had previously closed 60 underperforming Wendy's restaurants late last year as part of a restructuring effort.

Despite the bankruptcy filing, Meritage stated its intention to continue operating its restaurants and to pay its approximately 9,000 employees throughout the bankruptcy process. The company's largest market is Michigan, where it runs 54 Wendy's locations, in addition to other restaurant concepts. Meritage also operates significant numbers of Wendy's in Georgia and Florida, with smaller presences in Connecticut, Tennessee, Oklahoma, and several other states.

Wendy's, based in Dublin, Ohio, has been contending with various challenges in recent years, including outdated store infrastructure, rising beef costs, and intense competition. The company had already closed 240 restaurants in 2024 and had announced plans to close up to 358 locations this year. Wendy's reported a 7% decrease in same-store U.S. sales in its most recent quarter. Bob Wright, Wendy's President and CEO, acknowledged in a statement last month that the company "is clearly not performing at our potential."