Wendy's Franchisee Meritage Hospitality Group Files for Chapter 11 Bankruptcy and Closes 41 Stores

Wendy's franchisee Meritage Hospitality Group has filed for Chapter 11 bankruptcy and is shutting 41 underperforming restaurants across the United States, according to court records.

The Michigan-based operator, which runs 314 Wendy's restaurants in 15 states, filed in the US Bankruptcy Court for the Western District of Michigan on 17 September.

Court filings state that Meritage had already been cutting back before it sought bankruptcy protection. The documents show the company closed about 60 underperforming Wendy's restaurants from late 2024, while also reducing costs and changing or removing breakfast service at some sites.

Under a cash collateral agreement with lenders owed more than $135m (€115m and £101m), Meritage agreed to close at least 30 restaurants that were not meeting profit targets, court documents show. That represents roughly 10% of its Wendy's portfolio.

Where the Wendy's Closures Began

The first five closures were spread across Virginia, Florida, Texas and Oklahoma. They included restaurants in Gordonsville, Jacksonville, Levelland, Tallahassee and Durant, all of which were scheduled to close during the weekend of 25 September, according to court documents.

Meritage has scheduled 41 shutdowns, with at least 30 required by 16 October and additional North Carolina locations expected to close later. The company has not published a complete list of every affected restaurant, leaving customers to rely on local notices and Wendy's store listings.

Some locations continued to appear in Google listings and on Wendy's own locator around their scheduled closure dates.

Meritage said it intended to keep paying its roughly 9,000 employees while the bankruptcy process continued. It has not said how many roles could disappear as the closures proceed, so the employment impact remains unclear.

Why Meritage Went Bankrupt

The company pointed to a combination of pressures in its bankruptcy filings. It cited record beef prices, weaker sales and what it described as the 'reduced frequency and effectiveness of Wendy's brand marketing' under the chain's previous leadership.

There is also a dispute with Wendy's itself. The franchising business, Quality Is Our Recipe LLC, notified Meritage on 16 September that its franchise agreements had terminated with immediate effect, according to court filings. Meritage filed for Chapter 11 the following day.

Wendy's has claimed in court records that Meritage owes it about $147m (€125m and £110m), including unpaid royalties, advertising and other fees. Meritage disputes the termination of its franchise agreements and is contesting the matter through the bankruptcy case.

Court filings list approximately $725.9m in assets against $651.2m in liabilities, while reporting on the case has identified $155m (€132m and £116m) in secured debt.

Wendy's Own Cuts Add Pressure

Meritage's situation follows wider changes at Wendy's. The company said in November 2024 that it planned to close about 300 locations nationwide that 'do not elevate the brand', according to interim chief executive Ken Cook.

The chain had already signalled a smaller round of closures the year before, when it said 140 restaurants would shut. That plan was paired with openings of newer locations expected to perform better, so it was not simply a retreat from the US market.

Wendy's shares have fallen about 24% in 2026 and roughly 27% over the past year, while the market reacted to Meritage's bankruptcy with a near-4% drop in the stock.

What Happens Next for Meritage's Restaurants

A potential sale could determine the future of part of Meritage's estate. Hiren Patel, owner of Divine Investors, has proposed buying 42 Wendy's restaurants for $18.6m (€15.8m and £14m), subject to court approval, according to court documents reported by Nation's Restaurant News.

For now, the closures amount to a franchisee restructuring rather than a collapse of Wendy's as a chain. The outcome of the court process will determine how much of Meritage's Wendy's business is preserved.