What a 314-store Wendy's franchisee's bankruptcy actually means for its repair crews, suppliers and landlords

Meritage Hospitality Group, which runs 314 Wendy's restaurants in 15 states, filed for Chapter 11 bankruptcy protection on September 17 in federal court in western Michigan, the Associated Press reported. The filing came a day after Wendy's sent a notice terminating Meritage's franchise agreement "effective immediately." Wendy's says it is owed $27.4 million in past-due royalties and fees plus $119.5 million in fees tied to closing locations.

Fox Business, citing court filings, reported that Meritage lost $31.5 million in 2025 on revenue of $617.7 million, down 7.6%, and listed about $651.2 million of liabilities against about $725.9 million of assets. Meritage says it will keep its restaurants open and has asked the court for permission to keep paying its roughly 9,000 workers. It disputes the termination.

The national story is Wendy's versus its franchisee. The Main Street story is the local businesses that fix the fryers, clean the floors, plow the lots, supply the stores and own the land under them. A bankruptcy sorts those creditors into different lines, and the line decides what they recover.

Where the stores are

According to the AP, Michigan is Meritage's biggest market with 54 Wendy's, followed by Georgia and Florida with 44 each, Connecticut with 29, Tennessee with 24 and Oklahoma with 23, plus smaller counts in nine more states. In just two of those states, Florida and Georgia, the CheckThisBiz directory lists 4,880 independent HVAC companies, and Michigan and Florida together have 5,056 landscaping and lawn care firms. Those are the kinds of businesses that end up on a restaurant operator's creditor list.

The repair company: services get no head start

Take a refrigeration and HVAC contractor that services a dozen Meritage stores and bills about $9,600 a month on net-30 terms. On the filing date it is likely owed about a month of work, roughly $9,600.

Under the Bankruptcy Code, work done before the filing is generally an unsecured claim. It is paid, if at all, from whatever is left after secured debt and priority claims, and it may be paid only in part. Fox Business reported about $137 million outstanding on Meritage's main credit facility, and Wendy's is asserting $146.9 million of claims of its own. Those are the numbers a small vendor's balance is competing with. Work done after September 17 is different: Section 503(b)(1) treats the actual, necessary costs of keeping the business running after the filing as administrative expenses, which are paid ahead of the old unsecured debt.

The supplier: the 20-day rule

Now take a vendor that sold the same $9,600 a month in goods instead, such as cleaning supplies or small equipment. Section 503(b)(9) gives priority to the value of goods the debtor received within 20 days before the case began, sold in the ordinary course of business. For a September 17 filing that window starts around August 28.

• Goods delivered in the last 20 days: about $9,600 x 20/30 = about $6,400, eligible to be claimed as an administrative expense.
• The remaining roughly $3,200, delivered earlier: a general unsecured claim, the same line as the repair company.

Same invoice total, same customer. The goods seller has about two thirds of it in a much better position than the service company, but only if it files the claim properly.

The payments you already received: the 90-day look-back

This is the part that surprises owners. Under Section 547, a debtor can try to claw back payments made to creditors within 90 days before the filing, which here reaches back to about June 19, if the business was insolvent and the payment let the creditor do better than it would in a liquidation. For our $9,600-a-month vendor, three months of payments is about $28,800.

The law gives defenses. A payment is protected to the extent it covered a debt incurred in the ordinary course of business and was made in the ordinary course or on ordinary business terms, and a substantially contemporaneous exchange for new value is also protected. A vendor paid on the same schedule it always was is in a far better spot than one that pressed for a large catch-up check in July.

The landlord: rent after the filing is due on time

Fox Business reported that Wendy's notice sought to end Meritage's lease occupancy as well as its franchise rights, so some sites may involve Wendy's as the landlord. For stores leased from independent owners, Section 365(d)(3) requires a debtor to keep up with obligations under a nonresidential lease that arise after the filing until the lease is assumed or rejected. The court can extend that for up to 60 days for cause. Rent owed from before the filing is a claim like any other. The real risk for a landlord is a rejected lease: an empty drive-through pad and a claim for damages in the bankruptcy.

What to actually do

1. Pull every Meritage invoice and sort it by date: before about August 28, August 28 to September 16, and September 17 onward. Mark each as goods or services. That tells you which line each dollar is in.
2. Watch the case docket for the claims deadline in the U.S. Bankruptcy Court for the Western District of Michigan, and file a proof of claim before it. A 503(b)(9) claim has to be asserted; it is not automatic.
3. Keep working only on terms you can live with. New work after the filing sits in a better position, but it still has to be collected. Shorter terms or payment on delivery are reasonable requests.
4. Keep your payment history for the past year. If a clawback letter arrives, showing that you were paid the way you always were is the core of the ordinary-course defense.
5. Plan cash as if the old balance is not coming. For a small contractor, $9,600 can be a whole payroll. Budget without it and treat any recovery as a bonus.

This is general information about how the Bankruptcy Code works, not legal advice. A vendor with a meaningful balance should talk to a bankruptcy attorney before signing anything the debtor sends.

Sources: Associated Press; Fox Business; 11 U.S.C. 503, 547 and 365; business counts from CheckThisBiz. Vendor billing amounts are illustrative examples.