Wendy's has agreed to buy up to 163 of its bankrupt franchisee's restaurants while the two sides fight over whether the franchise agreements were validly terminated
Meritage Hospitality Group filed for Chapter 11 on September 17 with about $651 million in liabilities. Wendy's had terminated the franchise agreements a day earlier and says Meritage owes roughly $147 million; Meritage disputes the termination and sued to keep the agreements in force. The two sides are still fighting in bankruptcy court, and Meritage has kept closing restaurants.
On November 5, Wendy's said it signed a letter of intent to buy up to 163 Meritage locations out of the bankruptcy, subject to a definitive agreement, higher offers and court approval. Meritage separately asked the court to sell 42 restaurants in four states to Divine Infinity Operations for $18.6 million. A final cash-collateral hearing is set for November 24.
Why it matters
The fight over who runs 314 Wendy's restaurants will decide thousands of jobs and signal how healthy the chain's franchise system really is.
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November 2026
Wendy's agrees to buy up to 163 Meritage restaurants
LatestBusiness
Wendy's signed a letter of intent to acquire up to 163 Meritage locations through the bankruptcy, subject to a definitive agreement, higher offers and court approval. CEO Bob Wright announced it on the Q3 earnings call.
Wendy's rejects buyout offer from former chairman
Business
Wendy's also said it rejected a buyout offer from its former chairman, the same day it disclosed the Meritage letter of intent.
October 2026
Court orders rejection of more Meritage leases
Legal
Judge Boyd ordered rejection of specified leases and executory contracts, while reserving the dispute over Quality Is Our Recipe's alleged franchise termination.
Meritage moves to sell 42 restaurants for $18.6M
Legal
Meritage asked a bankruptcy court to approve selling 42 Wendy's restaurants in Tennessee, Arkansas, Mississippi and Missouri to Divine Infinity Operations for $18.6 million.
Closures pass 33 as 13 more Wendy's shut
Business
Thirteen more locations closed on October 18, bringing closures since the September 17 filing past 33. Court filings project up to 60 more through mid-November.
Court enters interim cash-collateral orders
Legal
Judge James W. Boyd entered interim cash-collateral orders for Meritage's City National Bank debtor group and Uncommon Hospitality LLC. The orders recorded hearings from September 22 and October 14 and provide relief pending a final hearing.
Judge pauses Wendy's bid to lift stay on franchise fight
Legal
At a status conference, Judge James W. Boyd held Wendy's request to lift the automatic stay on the franchise agreements in abeyance until the adversary lawsuit is resolved.
Meritage rejects Wendy's store swap offer
Legal
Meritage opposed Wendy's request to replace seven restaurants in its ten-store closure tranche. Wendy's had offered to cover operating losses while evaluating locations for possible acquisition.
Two Michigan Wendy's stores close
Business
A store in Hudsonville and another Michigan location closed as part of the October 9 tranche.
Meritage files third omnibus rejection motion
Legal
Sought authority to reject leases and executory contracts for ten additional locations closing that day.
Court denies Wendy's emergency hearing request
Legal
Judge James W. Boyd denied Wendy's request for an emergency hearing on the closure schedule and set the final cash-collateral hearing for October 14.
September 2026
Meritage sues Wendy's over franchise termination
Legal
Meritage filed an adversary complaint against Wendy's and Quality Is Our Recipe LLC, asking the bankruptcy court to declare its franchise agreements remain in effect and to block Wendy's from enforcing the termination.
Meritage moves to reject leases and close more restaurants
Legal
Meritage filed a motion to reject leases and executory contracts. Several Wendy's locations, including stores in Virginia, Florida, Texas, and Oklahoma, were slated to close beginning September 25, with more closures planned through October 16.
U.S. Trustee objects to closure of up to 40 restaurants
Legal
The U.S. Bankruptcy Trustee opposes Meritage's plan to shut up to 40 more stores, saying the court and creditors need time to review which locations should close.
Meritage files Chapter 11 bankruptcy
Legal
Meritage Hospitality Group and 14 affiliates file in the US Bankruptcy Court for the Western District of Michigan (case 26-02947), citing Wendy's brand headwinds and their debt load. The petition lists assets and liabilities of $10 million to $50 million each.
Wendy's franchising unit is top unsecured creditor
Legal
Court records name Quality Is Our Recipe LLC, Wendy's franchising business, as Meritage's largest unsecured creditor with a $24.9 million claim for deferred franchise fees.
Meritage discloses cost cuts ahead of filing
Legal
The company says it closed about 60 restaurants, changed or ended breakfast service at more than 100 locations, and cut $7.3 million in expenses before seeking bankruptcy.
Wendy's terminates Meritage franchise agreements
Legal
Wendy's franchisor Quality Is Our Recipe sends termination notices for all 314 Meritage locations, one day before the Chapter 11 filing. Wendy's says Meritage owes $27.4 million in past-due royalties.
August 2026
Wendy's appoints Bob Wright as CEO
Leadership Change
Wright takes over amid a leadership shakeup and promises to address food, pricing, and marketing.
Wendy's same-store sales fall 7% in Q2, prompting a dividend cut and withdrawal of its full-year forecast.
Scenarios
1
Meritage emerges from Chapter 11 with restructured debt
Possible
Resolves by Q2 2027
Discussed by: Restaurant Business, industry analysts
Meritage negotiates a plan with City National Bank to reduce its $150 million debt, closes more underperforming stores, and exits bankruptcy with a leaner operation. The court confirms a plan, and the 314 restaurants remain open under Meritage's ownership.
2
Meritage liquidates, stores sold or closed
Uncertain
Resolves by Q1 2027
Discussed by: Restaurant Business, Reuters
If Meritage cannot reach a deal with creditors or find a buyer, it converts to Chapter 7 or winds down operations. The 314 Wendy's locations would be sold to other franchisees or closed, costing thousands of jobs.
3
Wendy's seizes the restaurants via franchise termination
Deadline passed (Oct 31, 2026)
Discussed by: Restaurant Business, NRN
If the bankruptcy court rules Wendy's properly terminated the franchise agreements before the filing, Meritage loses the right to operate the stores. Wendy's would transfer the restaurants to other franchisees or operate them itself.
4
Wendy's completes purchase of 163 Meritage restaurants
Possible
Resolves by Q2 2027
Discussed by: Wendy's, QSR Web
Wendy's letter of intent covers up to 163 Meritage locations in markets where the chain already operates. The deal needs a definitive agreement and court approval, and other approved franchisees can still submit higher offers.
Historical Context
2 moments from history that rhyme with this story — and how they unfolded.
1 of 2
July 2020
NPC International / Pizza Hut (2020)
NPC International, the largest Pizza Hut franchisee with 1,200 locations, filed Chapter 11 after debt taken on during a 2006 buyout became unmanageable. Sales fell and rent obligations crushed cash flow.
Then
NPC closed about 300 locations and sold the rest to creditors in 2021.
Now
The bankruptcy showed how a massive franchisee's debt load can amplify a brand's decline, forcing chain-wide closures.
Why this matters now
Meritage's situation mirrors NPC's: a franchisee with heavy debt and declining same-store sales. The outcome will shape how Wendy's handles franchisee failures.
2 of 2
2008-2009
Wendy's franchisee bankruptcies (2008-2009)
Dozens of Wendy's franchisees filed for bankruptcy during the financial crisis as consumer spending tightened and beef prices spiked.
Then
Wendy's repurchased many locations and tightened franchisee credit standards.
Now
The period forced Wendy's to restructure its franchise system and improve support for franchisees.
Why this matters now
Today's sales decline and cost inflation echo that earlier crisis, and the franchisee response may again force changes at the corporate level.
