A Major Wendy's Franchisee Filed For Bankruptcy. Here's What It Means For 314 Locations

Despite its recognizable square burger patties and cheerful red-haired mascot, Wendy's has run into financial difficulties in the 2020s with the company even announcing 140 store closures in 2024. To add to this, one of its major franchisees, Meritage Hospitality Group Inc. — whose operations include 314 Wendy's locations across 15 states – filed for bankruptcy on September 17, 2026 in Michigan. As of September 24, no store closures or layoffs have been announced, but things get interesting when you realize that Wendy's previously tried to terminate Meritage's franchise rights. As a Wendy's representative explained to Inc., Meritage owes the company some $146.9 million. In fact, Wendy's attempted to find a solution for over a year, even agreeing to pause its contract termination through August 2026.

With that said, court documents show that Wendy's gave notice of terminating its franchise agreement with Meritage on September 16, 2026 — just one day before Meritage's bankruptcy filing. However, none of this was mentioned in a Meritage press release about its bankruptcy. The company did say it plans to continue paying all 9,000 of its employees and operating its locations as usual as it progresses through the bankruptcy process and explores restructuring. In other words, Meritage appears to be acting as though its franchise rights were not terminated, and that things are essentially business as usual.

Some companies have come roaring back from bankruptcy, but the circumstances surrounding Meritage might not make that possible. In a court declaration by Meritage's chief restructuring officer Kevin Cleary, the company acknowledged receipt of Wendy's termination of its franchise agreement but did not recognize it as valid. Cleary also stated that negotiations with Wendy's were supposed to continue, with the expectation that the fast food company would hold off on its franchise termination through October 2026. 

Cleary also blamed external factors as reasons for Meritage's bankruptcy, including soaring beef prices, weather events, and poor marketing decisions by Wendy's that led to diminished brand reputation. Nevertheless, he also said that retaining its franchising rights was vital to Meritage's pending company restructuring, leaving the future of Meritage's Wendy's locations unclear. If Wendy's gets its way, all of Meritage's Wendy's locations will automatically transfer to either corporate management or other franchisees. In the meantime, motions filed by Meritage to continue paying its employees and continue its usual customer programs were both granted on September 23.