Overview
- Meritage Hospitality Group filed for Chapter 11 bankruptcy protection after it says a Wendy’s unit tried to terminate its franchise and lease rights; the petition was submitted in the U.S. Bankruptcy Court for the Western District of Michigan.
- Wendy’s subsidiary Quality Is Our Recipe LLC sent a notice on September 16 purporting to end Meritage’s franchise agreements and occupancy rights, and Meritage disputes that the notice took effect.
- Wendy’s is asserting roughly $146.9 million in claims for unpaid royalties and operations fees, while Meritage reported about $651 million in liabilities and $725.9 million in assets in its filing.
- Meritage said it will keep its roughly 314 Wendy’s restaurants open, continue paying about 8,850 employees, and seek debtor-in-possession financing and court approval of first-day motions to preserve operations.
- The company plans to use the Chapter 11 process to consider closures, sales, market exits and recapitalization, a move that could alter Wendy’s franchise footprint and tests the chain’s ability to support large franchisees during a multi-quarter sales decline.