Wendy's Terminates Major Franchisee After Bankruptcy Filing

The Meritage Hospitality Group, one of the largest Wendy's franchisees in the United States, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Michigan on September 17, 2026. The filing followed a September 16 notice from Wendy's to terminate the franchise agreement and lease occupancy effective immediately. Wendy's claims Meritage owes $146.9 million, consisting of $27.4 million in royalties and fees and $119.5 million in continuous operations fees related to the closure of 60 locations.

Based in Grand Rapids, Michigan, Meritage operates 314 Wendy's restaurants across 15 states. The company attributed its financial collapse to soaring beef costs—which rose nearly 19% in the second quarter due to tariffs and low cattle supplies—and an 11.3% drop in same-store sales during the final quarter of 2025. Meritage also cited ineffective brand marketing and sales disruptions caused by La Niña winter weather in southern markets. In 2025, the operator reported a $31.5 million net loss and a 48% decline in store-level EBITDA.

Despite the termination notice and bankruptcy, Meritage intends to keep its restaurants operational and continue paying its approximately 9,000 employees while seeking debtor-in-possession financing. Wendy's stated that termination was the appropriate course of action after more than a year of attempting to find a sustainable path forward with the franchisee and its lenders. Shares of Wendy's fell nearly 4% following the news, reflecting broader challenges for the brand including declining financials and intense industry discounting.