Wendy's Largest Franchisee Files for Bankruptcy Protection

Meritage Hospitality Group, a major franchisee of Wendy's, filed for Chapter 11 bankruptcy protection last week in Michigan. The company cited two years of shrinking margins as the reason for the filing.

The bankruptcy filing followed an attempt by a Wendy's subsidiary to terminate Meritage's rights to operate its 314 Wendy's restaurants. Meritage contends that the termination did not take effect, leaving its franchise agreements intact as the bankruptcy case proceeds.

Wendy's stated that Meritage owes approximately $146.9 million, including over $25 million in overdue royalties and fees. A previous agreement where Wendy's agreed not to terminate the franchise agreements expired in August.

Meritage operates restaurants across 15 states. In addition to its Wendy's locations, the company runs one Bojangles and five independently branded restaurants in Michigan. Meritage employs nearly 9,000 people and intends to continue paying its workforce during the restructuring, subject to court approval.