Meritage Hospitality Files Chapter 11 as Wendy's Franchise Dispute Hits $147 Million

Meritage Hospitality Group filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Michigan, citing beef cost inflation and weak Wendy's brand marketing under prior leadership. The Grand Rapids, Michigan-based operator runs 314 Wendy's locations across 15 states. The company reported approximately $651 million in liabilities against $725.9 million in assets. Wendy's Co. claims it is owed about $147 million — $27.3 million in unpaid royalties and fees plus $119 million in operations fees — amid an active franchise termination dispute. Meritage closed 60 underperforming Wendy's locations late last year and plans further closures or sales. Its roughly 8,850 employees will continue receiving wages and benefits, and restaurants will remain open. Beef prices rose nearly 19% year-over-year in the April-June quarter, which Meritage attributed to import tariffs and depleted cattle supply. Store-level EBITDA fell 48% in 2025, CEO Bob Schermer Jr. told investors in June. The filing follows six consecutive quarters of same-store sales declines at Wendy's U.S. system, down 7.8% in Q1 2026 and 7.0% in Q2.