--- title: "In the Meritage bankruptcy, Wendy’s finds its control limited" url: https://burnaze.com/article/4cfdf565-581b-4461-b74b-07092aa0a373 source: "Restaurant Business" original_url: https://restaurantbusinessonline.com/financing/meritage-bankruptcy-wendys-finds-its-control-limited category: "Restaurants" industry: "Restaurants" topics: ["Finance & M&A"] published: 2026-10-13T14:39:35.000Z modified: 2026-10-31T14:43:38.903Z image: https://cdn.informaconnect.com/platform/files/public/2026-10/background/Wendy%27s%20shutterstock%206.jpg?VersionId=4Expyu3dt_Obf8NBRzch5mpcvQXqCIfZ --- # In the Meritage bankruptcy, Wendy’s finds its control limited **TL;DR:** Wendy's franchisee Meritage Hospitality Group declared Chapter 11 bankruptcy and plans to close 41 of its 314 locations, but Wendy's has limited control over the closures. The fast-food chain tried to protect certain locations that lose more money but generate more revenue, believing they have better long-term upside. *originally published in Restaurant Business on 2026-10-13. [Read the original](https://restaurantbusinessonline.com/financing/meritage-bankruptcy-wendys-finds-its-control-limited).* ## Story Last week, the giant Wendy’s franchisee Meritage Hospitality Group closed 10 locations, part of a plan to shutter 41 of the 314 locations it operated when it declared Chapter 11 bankruptcy last month. It did not do so before Wendy’s had its say. The fast-food chain balked at seven of the 10 closures and proposed swapping them out with seven different restaurants. The locations Wendy’s is trying to protect lose more money but generate more revenue. The company believes the locations have better long-term upside. ## Bankruptcy and brand control Meritage, on the other hand, cites the simple fact that the 10 locations it wants closed lose more money than those that Wendy’s wants closed. The franchisee ended up getting what it wanted. This is always a risk in franchising. When any franchisee declares bankruptcy, the stores that operator owns are at risk. Brands have only a limited ability to determine what happens with those locations, but the ultimate decision typically rests with the court, which is trying to ensure that creditors get as much of what they’re owed as possible. When these bankruptcy filings are big like this, the result can have significant consequences for the brand overall. One of the more infamous bankruptcies we recall involved a KFC franchisee in California and Minnesota whose stores were sold to Popeyes 15 years ago, even though KFC was willing to buy them. The court at the time was concerned enough about whether KFC would actually follow through that it opted for the sure-thing Popeyes sale. That deal was a key mile marker on Popeyes’ way to overtaking its longtime rival. In the Wendy’s situation, the brand wants to avoid closing restaurants in some key markets. The locations Wendy’s is trying to protect are in larger markets, mostly in suburbs such as Grosse Pointe Farms, Michigan, a suburb of Detroit, and Windy Hill, Georgia, a suburb of Atlanta. Wendy’s clearly wants to protect its presence in some metro areas, believing that is better for the long term. But in the bankruptcy process, its ability to determine that is limited. ## System sales challenges The state of the restaurants also reveals one of the bigger challenges in the Wendy’s system. Collectively, the 17 restaurants, including the seven Wendy’s prefers to be closed, generated $1.2 million in per-unit sales on average over the past 12 months. Their unit sales generated between $846,000 and $1.44 million. By comparison, Wendy’s in 2025 averaged $2 million in sales per unit. So the restaurants in question generate just over half of the system average. Unsurprisingly, none of these locations make money. The 17 restaurants lost between $65,000 and $197,000 over the past 12 months. The locations are in places like Michigan, Georgia, and Oklahoma, all very different markets. Meritage’s weakness wasn’t just limited to low-population markets in low-income areas. Some of them are in more urban or suburban markets. That speaks to Wendy’s problems in general. The brand’s same-store sales have fallen precipitously over the past two years. When its closure program is over, in fact, Meritage will have closed more than 100 locations overall, including 60 earlier this year. In addition, there are another seven locations not slated for closure that both lose money and generate lower overall revenues. In short, Wendy’s as a brand is struggling, and that has exposed a lot of restaurants, many of them in key markets that the franchisor would rather not see closed. ## Entities - QSR (sector) - Wendy's (company) - Restaurant Business (publication) - KFC (company) - Georgia (location) - Atlanta (location) - Popeyes (company) - michigan (location) - Oklahoma (location) - Detroit (location) - bankruptcy (topic) - brand performance (topic) --- Originally reported by Restaurant Business (https://restaurantbusinessonline.com/financing/meritage-bankruptcy-wendys-finds-its-control-limited). Summarized by Burnaze (https://burnaze.com/article/4cfdf565-581b-4461-b74b-07092aa0a373).