One of the largest franchise operators of Wendy’s, the American fast-food chain, Meritage Hospitality Group, has filed for Chapter 11 bankruptcy protection after a major dispute with the parent company of this fast-food chain.
Headquartered in Michigan, the operator runs 314 Wendy’s restaurants in 15 states.
According to court documents, Meritage filed for voluntary bankruptcy on September 17th (last Thursday) with the United States Bankruptcy Court for the Western District of Michigan.
Meritage is facing significant financial pressure, mainly due to the soaring beef costs and weak foot traffic. Meritage accuses the parent company of aggressive promotional discounts squeezing profit margins.
Court documents show that on September 16th, the Wendy’s franchise department issued a notice seeking “immediate” termination of Meritage’s franchise and lease rights. The next day, Meritage filed for bankruptcy protection, temporarily halting the termination action during the case review. Meritage objected to Wendy’s termination request and stated that its franchise rights remain valid.
According to a recent report submitted to investors by Meritage CEO Bob Schermer, store-level revenues dropped by 48% in 2025. The financial records show that the company incurred a net loss of $31.5 million in the year, compared to a net profit of $8 million in 2024, with a 7.6% decrease in revenue to $617.7 million.
To cut losses, the franchisee began closing around 60 underperforming Wendy’s stores by the end of 2025 and canceled or adjusted breakfast services in multiple stores. The company estimates that these measures will bring in approximately $11.2 million in annual EBITDA.
As of the summer of 2026, Meritage reportedly has approximately $725.9 million in assets and $651.2 million in total liabilities. The Wendy’s franchising department has filed claims totaling $146.9 million against the company, including $27.4 million in overdue franchise usage fees and costs, as well as $119.5 million in ongoing operational fees.
At the time of the bankruptcy filing, Meritage still owes approximately $137 million under its main credit arrangements.
In a press release, the Meritage board stated that the court-supervised reorganization is “the most effective and proactive way to strengthen Meritage’s financial condition, directly address these adverse factors, and protect the long-term interests of stakeholders, team members, customers, and the community.”
Despite filing for bankruptcy, Meritage intends to keep its restaurant dining rooms open and maintain normal restaurant operations. The company has applied to the court for permission to continue paying wages to approximately 9,000 employees to prevent disruptions. Court documents indicate that at the time of the bankruptcy filing, the company had around 8,850 employees.
Wendy’s is a well-known fast-food chain that mainly sells hamburgers, fried chicken, fries, salads, shakes, and Frosty chocolate and ice cream beverages, founded in 1969 by Dave Thomas in Columbus, Ohio. Most of the restaurants are operated by franchisees. As of the 2024 fiscal year, Wendy’s has approximately 7,240 restaurants globally, with 6,846 operated by franchisees and only 394 owned by the company, generating around $14.5 billion in system-wide sales.
(Reference: FOX BUSINESS)