Wendy's franchisee Meritage Hospitality, operator of 314 restaurants, files for Chapter 11

Meritage Hospitality Group, a Michigan company that runs 314 Wendy's restaurants across 15 states, has filed for Chapter 11 bankruptcy protection. The voluntary petition was filed Thursday, September 17, in the U.S. Bankruptcy Court for the Western District of Michigan, according to CNBC and Fox Business. The company says its restaurants will stay open during the case.

Besides its Wendy's units, Meritage also operates one Bojangles and five independently branded restaurants, CNBC reported. Court filings put its workforce at roughly 8,850 people, and the company has asked the court for permission to keep paying them without interruption, according to Fox Business.

A fight with the franchisor came first

The timing was not accidental. Fox Business, citing court documents, reported that Wendy's franchising unit sent Meritage a notice on September 16 seeking to terminate its franchise rights and lease occupancy "effective immediately." Meritage filed the next day, which puts that termination effort on hold while the case moves forward. Meritage disputes that Wendy's can end the agreements and says its franchise rights are still in force.

The two outlets report different figures for what Meritage owes Wendy's. CNBC said the initial petition lists Wendy's franchise business as the top unsecured creditor with a $24.9 million claim for deferred franchise fees. Fox Business reported that the franchising unit is asserting claims totaling $146.9 million, a figure that includes past-due royalties and fees plus what it calls continuous operations fees. Those numbers will be sorted out in court.

What squeezed the business

Meritage's problems are the same ones hitting much of fast food. CEO Bob Schermer Jr. told investors this year that store-level earnings before interest, taxes, depreciation and amortization fell 48% in 2025, pressured by higher beef costs and deeper discounting, according to CNBC and Restaurant Dive. Restaurant Dive reported that store-level margins hit a 30-year low.

The company had already been cutting. It closed about 60 underperforming restaurants and dropped or changed breakfast service at roughly 120 locations, Restaurant Dive reported, and it asked its lenders for forbearance earlier this year before resuming full interest payments in the second quarter.

In its press release, Meritage said that because most of its restaurants carry the Wendy's name, pressures across the Wendy's system "have had a significant impact" on its finances. Wendy's has reported six straight quarters of same-store sales declines, CNBC noted.

What it means

For Wendy's shareholders, the filing adds to a difficult stretch. Wendy's stock (WEN) closed Monday at $6.70, down 0.6% on the day, according to Nasdaq data. CNBC reported the shares have lost about two-thirds of their value over the past three years.

For other restaurant owners, the case is a clear picture of how thin the math has become. Meritage is one of the largest Wendy's franchisees to file since NPC International in 2020, Restaurant Dive noted, and franchisees of Hardee's, Carl's Jr. and Popeyes have also filed this year. The common thread is food costs rising faster than menu prices while chains lean on value deals to keep diners coming in, which leaves operators paying for the promotions out of their own margins.

For customers and workers in Meritage's markets, nothing changes right away: the company plans to keep dining rooms open and operations normal while it restructures. More small-business news is on our small-business page.

Sources: CNBC, Fox Business, Restaurant Dive, Nasdaq quote data. This is market information, not investment advice.