Wendy's Franchisee Meritage Files Bankruptcy After Contract Dispute

Meritage Cos., a major Wendy's franchisee operating 314 restaurants, filed for Chapter 11 bankruptcy protection after Wendy's moved to terminate its franchise agreements over alleged unpaid fees. The Michigan-based operator listed the filing in federal court. Court documents show Wendy's notified Meritage on Sept. 16 of immediate contract termination, citing $27.4 million in unpaid royalties and fees plus $119.5 million in continuing operating defaults. Meritage closed 60 underperforming locations late last year as part of a restructuring. Meritage said it intends to keep all stores open and continue paying its roughly 9,000 employees during the bankruptcy proceedings. Wendy's said it worked with the franchisee and its creditors for over a year seeking a sustainable solution, calling termination the most appropriate step. The chain's U.S. same-store sales fell 7% in its latest quarter amid aging stores, high beef prices and stiff competition. CEO Bob Wright said the brand's performance has fallen short of its potential.