Wendy’s Is Making a Move in the Meritage Hospitality Bankruptcy Fallout

Restaurant franchisors often play an outsized role in bankruptcy because they control the brand, the franchise agreement, and who is allowed to keep operating under the name. That is now the central issue in Wendy’s dispute with Meritage Hospitality Group, a major franchisee whose Chapter 11 filing has triggered a fight over hundreds of Wendy’s restaurants in the Midwest and South.

Wendy’s formally objected to Meritage’s continued operations

Wendy’s has asked the bankruptcy court to block Meritage Hospitality Group from continuing to operate its Wendy’s restaurants under terminated franchise agreements. Nation’s Restaurant News reported on September 22 that Wendy’s said in court filings Meritage had defaulted on its franchise agreements, failed to cure unpaid royalty obligations, and no longer had the right to run the stores. The franchisor said Meritage owes $27.4 million in unpaid royalties, and the filing sets up a direct challenge to the debtor’s control of a large Wendy’s portfolio.

The scale is significant. Meritage operates 314 Wendy’s restaurants, along with one Bojangles location and five Morning Belle restaurants, according to Nation’s Restaurant News reporting published after the Chapter 11 filing on September 18. Wendy’s said the franchisee had received an extension on royalty payments, but that extension expired in August. After Meritage did not pay, Wendy’s terminated the franchise agreements earlier in September, according to the report.

Wendy’s is not just objecting to Meritage’s legal position. The company is also signaling what it wants next. According to the filing described by Nation’s Restaurant News, Wendy’s is effectively arguing that the restaurants should be transitioned either back to the franchisor or to other approved franchisees, with a short-term operating arrangement possible during any handoff.

The local footprint is broad, but specific store outcomes remain unclear

For customers and workers in Meritage markets, the immediate issue is continuity. Nation’s Restaurant News reported that Meritage’s Wendy’s restaurants are concentrated mostly in the Midwest and South, which means the bankruptcy dispute has consequences across a large regional footprint rather than in a single city or state. What is confirmed is the size of the Wendy’s estate in bankruptcy and Wendy’s effort to limit Meritage’s ability to keep operating those units under the old agreements.

What is not yet public is a comprehensive store-by-store list tied to Wendy’s latest court move. The company has not released a full list of affected state, city, or local restaurant locations connected to the franchise-termination dispute. That means readers in specific markets may know a Meritage-operated Wendy’s is in their area, but the current public reporting does not identify every restaurant that could be sold, relicensed, temporarily operated, or closed.

There is also a second operational question hanging over the case. The U.S. Trustee has objected to Meritage’s request to close up to 40 restaurants in the coming weeks, calling that proposal outside the ordinary course of business, according to Nation’s Restaurant News. The first of those closures could begin quickly, but public reporting has not identified a complete city-level list of those locations.

Debt, royalties, and weak performance are at the center of the dispute

The underlying causes described so far are financial, operational, and brand-specific. Nation’s Restaurant News reported that Meritage entered Chapter 11 with about $155 million in secured debt, much of it owed to City National Bank. In a bankruptcy case, secured lenders typically have first-priority claims on assets, but franchisors still retain leverage because franchise agreements determine who may legally operate branded restaurants.

Meritage’s filing also followed earlier retrenchment. Nation’s Restaurant News reported on September 18 that the company had already closed 60 locations earlier in 2026, and that those closures were linked to Wendy’s weak overall performance. That earlier report also said Meritage believed the bankruptcy process would help it strengthen its balance sheet and create financial flexibility, while Wendy’s said its focus remained on customers, the franchise system, and the long-term health of the brand.

For customers, the practical takeaway is that most restaurants may continue operating during the early stages of the case, but ownership or operating control could change if Wendy’s prevails. Wendy’s has said it would consider a temporary license to keep restaurants running during a transition, according to Nation’s Restaurant News. The next phase of the case is likely to determine whether these restaurants stay with Meritage for now, move to Wendy’s control, or are transferred to other franchisees.