Wendy’s Seeks Control of 314 Meritage Restaurants in Bankruptcy

Wendy’s is asking a bankruptcy court to block Meritage Hospitality Group from operating its 314 Wendy’s restaurants, saying it terminated the franchise agreements before Meritage filed for Chapter 11 protection. The dispute puts control of a large restaurant network at the center of the restructuring.

Wendy’s subsidiary Quality Is Our Recipe says Meritage owes $27.4 million in overdue royalties and other fees. It also claims $119.5 million in fees tied to continuous-operation requirements, bringing its total demand to about $146.9 million, according to court filings.

The franchisor says it sent a termination notice on September 16, a day before Meritage filed for bankruptcy. Meritage disputes Wendy’s position and argues that its franchise agreements remain in effect and are part of the bankruptcy estate.

Wendy’s wants the locations transferred to the chain or other franchisees. It says it may consider a temporary license so the restaurants can keep operating during a transition, but the court has not resolved the rights dispute.

Meritage operates Wendy’s restaurants across 15 states. It said it plans to keep its restaurants open and continue paying employees during the Chapter 11 case, while it seeks to reorganize its finances.

The case follows a difficult stretch for the Grand Rapids-based operator. Meritage had already closed 60 Wendy’s locations, and its bankruptcy filing listed about $651 million in liabilities against $725.9 million in assets.

The court fight may shape whether Meritage can preserve its restaurant business or whether Wendy’s can move the stores to new operators. Creditors and employees also face uncertainty while the court weighs the franchise rights and the company’s restructuring plans.