Major Wendy’s Franchisee Significantly Cuts Footprint During Bankruptcy

Large Wendy’s franchisee Meritage Hospitality Group has closed 33 Wendy’s restaurants since filing for bankruptcy in September, with another 20–60 shutdowns required by November 13 under a court-approved agreement.

The company had already closed approximately 60 underperforming Wendy’s restaurants before bankruptcy, beginning in Q4 2025. Meritage estimated those earlier closures would improve annual EBITDA by $8 million.

According to Meritage, these locations were losing money, and shedding their leases and franchise agreements would eliminate unnecessary expenses.

The franchisee filed for bankruptcy on September 17. At filing, it operated 320 restaurants across 15 states, including 314 Wendy’s, and employed approximately 8,850 people.

Wendy’s moved to terminate Meritage’s franchise agreements one day before the bankruptcy filing and claims the operator owes roughly $146.9 million in royalties, fees, and other contractual charges. Meritage disputes the termination’s effectiveness and maintains its franchise agreements are still in place.

Meritage’s financial troubles intensified over the past two years. Same-store sales fell 7.2 percent in fiscal 2025 and another 8.3 percent during the first half of 2026. The company reported net losses of $31.5 million and $23.1 million during those periods, respectively.

The operator attributed its difficulties to weak sales, elevated beef costs, national discounting, disruptive weather, and what it described as less effective Wendy’s marketing under prior brand officials.

Before bankruptcy, Meritage pursued cost reductions, changes to breakfast service, and sale-leaseback transactions to improve profitability and reduce debt.