Wendy’s is working to keep some restaurants open as one of the largest franchisees attempts to close underperforming restaurants during bankruptcy proceedings.
The dispute highlights a growing rift between the fast-food chain and Meritage Hospitality Group. Meritage Hospitality Group is restructuring its finances while facing claims from Wendy’s for more than $146 million in past due royalties and fees.
At the heart of the disagreement is an issue with major financial consequences for both sides: Which restaurants should remain open and which should close?
Wendy’s questioned Meritage Hospitality’s proposed partial closure plan, arguing that other restaurant lineups could improve the overall portfolio’s financial performance. However, Meritage Hospitality said the proposal would force it to continue losing money at some locations while closing other better-performing locations.
The dispute is unfolding as Meritage Hospitality files for Chapter 11 bankruptcy. A court meeting scheduled for Oct. 14 will consider Wendy’s request to lift the automatic stay, adding another important development to the ongoing legal battle.
Wendy’s opposes restaurant closure proposal
Wendy’s (WEN) opposes a proposal to close 10 locations operated by bankrupt franchisee Meritage Hospitality Group in Oklahoma, California, Georgia and Florida.
According to court documents, the fast-food chain proposed an alternative that would replace seven of the 10 closed locations with seven different restaurants in other markets. Wendy’s objections do not include the remaining three proposed closures.
Wendy’s argued that sales at other locations were lower but losses were smaller, increasing earnings before interest, taxes, depreciation and amortization (EBITDA) by about $11,000 per month.
The company argued in the filing that “the potential upside to the overall portfolio exceeds this nominal difference.”
Meritage Hospitality countered that Wendy’s submitted the proposal with only two days’ notice. Franchisees also argued that the payments Wendy’s offered were not guaranteed and would not cover the costs of closing another restaurant.
“Wendy’s proposal would require the Debtors to continue operating stores with higher losses and close stores with lower losses,” Meritage Hospitality said in the filing.
“Every week the Debtors open a store that suffers greater losses, the Debtors’ estate will absorb that loss. This defeats the purpose of the closure plan.”
In a Sept. 29 filing, Meritage asked the court to rule that Wendy’s termination was invalid and that the automatic stay would prevent the chain from enforcing it.
The court is scheduled to consider Wendy’s request to lift the automatic stay on Oct. 14.
The location Wendy’s wants to save
According to court documents, the seven locations Wendy’s hopes to remain open are:
- Grosse Pointe Farm: 18800 Mack Avenue, Grosse Pointe Farms, MI 48236
- Hudsonville: 4037 32nd Avenue, Hudsonville, MI 49426
- Fengshan: 2668 Windhill Road SE, Marietta, GA 30067
- federal: 7027 Federal Avenue, Jacksonville, Florida 32220
- Heckscher: 10101 New Berlin Road, Jacksonville, FL 32226
- Moore: 1300 N Moore Ave., Moore, OK 73160
- Choctaw: 14329 NE 23rd St., Choctaw, OK 73020
Locations Wendy’s wants to close
The seven locations Wendy’s is proposing to close are:
- reindeer: 3101 Territory Ln., El Reno, OK 73036
- University and second: 212 University Avenue, Lubbock, TX 79415
- Roswell Road: 8455 Roswell Road. Northeast, Atlanta, GA 30350
- Clayton Street: 200 S Clayton St. Lawrenceville, GA 30046
- Lilburn: 4029 Five Forks Tricum Road SW, Lilburn, GA 30047
- Bartram: 13928 Bartram Run Dr., Jacksonville, FL 32258
- king: 723 S Main St., King, NC 27021
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Meritage Hospitality Group files for Chapter 11 bankruptcy
Meritage Hospitality Group filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Michigan on September 17, 2026.
The company listed approximately $725.9 million in assets and $651.2 million in liabilities in its bankruptcy filing.
Here are some of my previous reports on more restaurant closings:
- Hooters bankruptcy shutters dozens of restaurants, plunging entire state into darkness
- Chick-fil-A closing multiple restaurants
- Major coffee chain to close 250 stores in North America
As part of the restructuring, Meritage Hospitality will close 41 of its 314 Wendy’s restaurants in 15 states. The company plans to close 20 of them by October 9.
The planned closures are intended to improve the franchisee’s financial position by eliminating locations that collectively generated $4.2 million in negative EBITDA.
Meritage Hospitality was already restructuring its restaurant footprint even before it filed for bankruptcy. Starting in the fourth quarter of 2025, the company will close 60 underperforming Wendy’s restaurants.
Franchisees also engage in sale-leaseback transactions to raise cash and reduce debt. In 2025, Meritage Hospitality completed 18 such transactions, generated $41.1 million in proceeds, and used $33.7 million to pay down debt.
The company completed five additional sale-leaseback transactions during the first half of fiscal 2026, generating an additional $11.3 million in revenue.
Together, the closures and asset sales reflect Meritage Hospitality’s efforts to reduce losses and strengthen its financial position during bankruptcy.
Wendy’s and Meritage Hospitality have been at odds for months
The dispute over the restaurant closings was part of a broader divide that preceded Meritage Hospitality’s bankruptcy filing.
Wendy’s argued that Meritage Hospitality did not have the right to continue operating the affected restaurants because the chain terminated the franchise agreement before filing its Chapter 11 filing.
The fast-food company also claims Meritage Hospitality owes it $146 million in overdue royalties and fees.
Meritage Hospitality challenged Wendy’s position, arguing that the chain’s actions were inconsistent with its stated goal of terminating the franchise agreement. The franchisee noted that the termination agreement included a short-term lease agreement and said it was considering keeping the restaurant open.
The dispute leaves the future of the affected restaurants uncertain as Meritage Hospitality faces bankruptcy. The court’s decision on Wendy’s request and Meritage Hospitality’s objection could affect how the proposed closures proceed and how franchisees restructure their operations.
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