Wendy’s is fighting to keep some restaurants open as one of the largest franchisees seeks to close underperforming locations during bankruptcy proceedings.
The dispute highlights a growing rift between the fast-food chain and Meritage Hospitality Group, which is restructuring its finances while facing a claim from Wendy’s for more than $146 million in past-due royalties and fees.
At the center of the disagreement is a question with significant financial consequences for both sides: Which restaurants should stay open and which should close?
Wendy’s challenged some of Meritage Hospitality’s proposed closures, arguing that an alternative lineup of restaurants could improve the overall portfolio’s financial performance. Meritage Hospitality, however, says the proposal would force it to continue losing money at certain locations while shutting down others that are performing better.
The dispute is unfolding as Meritage Hospitality works through Chapter 11 bankruptcy. A court conference scheduled for Oct. 14 will consider Wendy’s request for relief from the automatic stay, adding another important development to the ongoing legal battle.
Wendy’s objects to proposed restaurant closures
Wendy’s (WEN) objected to the proposed closure of 10 stores across Oklahoma, California, Georgia, and Florida operated by the bankrupt franchisee, Meritage Hospitality Group.
The fast-food chain proposed an alternative that would replace seven of the 10 closing locations with seven different restaurants in other markets, according to the court filing. The remaining three proposed closures were not part of Wendy’s objection.
Wendy’s argued that the alternative locations generated lower sales but lost less money, producing approximately $11,000 more in monthly earnings before interest, taxes, depreciation, and amortization (EBITDA).
In the filing, the company argued that “the potential upside for the overall portfolio outweighs this nominal difference.”
Meritage Hospitality pushed back, saying Wendy’s submitted its proposal with only two days’ notice. The franchisee also argued that the payment Wendy’s offered was not secured and would not cover the costs of closing a different group of restaurants.
“Wendy’s proposal would require the Debtors to keep open stores that are losing more money and to close stores that are losing less,” Meritage Hospitality said in the filing.
“Every week the debtors keep a deeper-loss store open, the debtors’ estates bear that loss. That is the opposite of the purpose of the closure program.”
In its Sept. 29 filing, Meritage asked the court to rule that Wendy’s termination was ineffective and that the automatic stay prevents the chain from enforcing it.
The court is scheduled to consider Wendy’s request for relief from the automatic stay on Oct. 14.
Locations Wendy’s wants to save
According to the court filing, the seven locations Wendy’s wants to keep open are:
- Grosse Pointe Farms: 18800 Mack Ave., Grosse Pointe Farms, MI 48236
- Hudsonville: 4037 32nd Ave., Hudsonville, MI 49426
- Windy Hill: 2668 Windy Hill Rd. SE, Marietta, GA 30067
- Commonwealth: 7027 Commonwealth Ave., Jacksonville, FL 32220
- Heckscher: 10101 New Berlin Rd., Jacksonville, FL 32226
- Moore: 1300 N Moore Ave., Moore, OK 73160
- Choctaw: 14329 NE 23rd St., Choctaw, OK 73020
Locations Wendy’s wants to close
The seven locations Wendy’s proposes closing are:
- El Reno: 3101 Territory Ln., El Reno, OK 73036
- University & 2nd: 212 University Ave., Lubbock, TX 79415
- Roswell Rd: 8455 Roswell Rd. NE, Atlanta, GA 30350
- Clayton St: 200 S Clayton St. Lawrenceville, GA 30046
- Lilburn: 4029 Five Forks Trickum Rd. SW, Lilburn, GA 30047
- Bartram: 13928 Bartram Run Dr., Jacksonville, FL 32258
- King: 723 S Main St., King, NC 27021
Meritage Hospitality Group’s Chapter 11 bankruptcy
Meritage Hospitality Group filed for Chapter 11 bankruptcy on Sept. 17, 2026, in the U.S. Bankruptcy Court for the Western District of Michigan.
The company listed approximately $725.9 million in assets and $651.2 million in liabilities in its bankruptcy filing.
Here’s some of my previous coverage on more restaurant closures:
- Hooters closes dozens of restaurants after bankruptcy, and entire states are going dark
- Chick-fil-A closes several restaurants
- Major coffee chain is closing 250 stores across North America
As part of the restructuring, Meritage Hospitality is closing 41 of its 314 Wendy’s restaurants across 15 states. The company was scheduled to complete 20 of those closures by Oct. 9.
The planned closures are intended to improve the franchisee’s financial position by eliminating locations that collectively generated $4.2 million in negative EBITDA.
Meritage Hospitality had already been restructuring its restaurant footprint before filing for bankruptcy. Beginning in the fourth quarter of 2025, the company closed 60 underperforming Wendy’s restaurants.
The franchisee also pursued sale-and-leaseback transactions to raise cash and reduce debt. In 2025, Meritage Hospitality completed 18 such transactions, generating $41.1 million in proceeds and using $33.7 million to pay down debt.
The company completed five additional sale-and-leaseback transactions in the first half of fiscal 2026, generating another $11.3 million.
Together, the closures and asset sales reflect Meritage Hospitality’s efforts to reduce losses and strengthen its financial position during bankruptcy.
Wendy’s and Meritage Hospitality have been at odds for months
The dispute over restaurant closures is part of a broader disagreement that predates Meritage Hospitality’s bankruptcy filing.
Wendy’s has argued that Meritage Hospitality has no right to continue operating the affected restaurants because the chain terminated the franchise agreements before the Chapter 11 filing.
The fast-food company also claims Meritage Hospitality owes it more than $146 million in past-due royalties and fees.
Meritage Hospitality has challenged Wendy’s position, arguing that the chain’s actions are inconsistent with its stated goal of terminating the franchise agreements. The franchisee has pointed to a short-term lease agreement included with the termination that it says contemplated keeping the restaurants operating.
The dispute leaves the future of the affected restaurants uncertain as Meritage Hospitality works through bankruptcy. The court’s decisions on Wendy’s request and Meritage Hospitality’s objections could influence how the proposed closures proceed and how the franchisee restructures its business.
Related: Formerly bankrupt buffet chain comes back after 6-year shutdown