Wendy's Yanks Franchise Rights From Meritage's 314 Restaurants After Fee Dispute

What happened

Wendy's told a Michigan bankruptcy court it has ended Meritage Hospitality Group Inc.'s right to run 314 Wendy's locations, a step the chain says it took after prolonged nonpayment. The filing included a Sept. 16 letter laying out the termination.

Wendy's says Meritage fell behind on royalty, advertising and other payments totaling roughly $147 million, even after what it called "good faith efforts to work with you to resolve the payment default and additional amounts owed." The company says it notified Meritage of the termination one day before the franchisee filed for Chapter 11 last week and argues the bankruptcy filing does not put that decision on hold.

The legal fight and timing

In court papers, Wendy's said Meritage "must immediately and permanently cease operation of their Wendy's-branded restaurants" and stop using related trademarks, registrations or systems. The company also said it would allow a temporary license for a short window so restaurants can keep running while being shifted to Wendy's corporate or to other franchisees.

Meritage disputes the notice, telling the court its franchise contracts "remain in effect and are property of the bankruptcy estate." Chief Restructuring Officer Kevin Cleary wrote that after Meritage defaulted under its franchise agreements, the parties struck a series of deals beginning in November, and that Wendy's sent a default notice in October 2025. Lawyers for Meritage did not immediately respond to a request for comment.

Judge James W. Boyd is overseeing the case, with a first hearing scheduled for Tuesday. Bankruptcy typically stops creditors from acting on unpaid debts, so when Wendy's sent its termination letter could become a central issue.

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What Meritage and the industry are up against

Meritage operates across 15 states and says it intends to keep running normally in Chapter 11. According to its paperwork, liabilities total about $651 million, while assets come to $726 million. Wendy's has roughly 5,700 U.S. locations and said Meritage's restaurants could move to corporate management or to other franchise operators.

The stress is not isolated. According to the filings, large franchisees for Arby's and Pizza Hut went into Chapter 11 in 2024, while a franchisee operating 57 Burger King locations asked the bankruptcy court for protection in April 2025. In 2023, Starboard Group - operator of roughly 70 Wendy's restaurants spanning Florida, Alabama, Illinois, Missouri, and Wisconsin - entered Chapter 11, later shuttering some stores and selling additional sites.

The bigger picture for your wallet

Industry consultants say franchisors sometimes let unpaid royalties stack up to gain leverage. As Aaron Allen of Aaron Allen & Associates put it, "Eventually, you have to go nuclear."

For customers and crews, day to day might not change much while ownership is sorted out. For savers tracking the fallout, watch how quickly these restaurants get reassigned and whether sales hold steady. The case is Meritage Hospitality Group Inc., No. 26-02947, in the U.S. Bankruptcy Court for the Western District of Michigan.

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