U.S. Operator of 314 Wendy’s Locations Files for Bankruptcy Protection

One of the largest U.S. franchisees of Wendy’s has filed for bankruptcy protection after the restaurant chain moved to terminate its franchise agreement, Dee-Ann Durbin reported for The Associated Press (AP).

Meritage Hospitality Group operates 314 Wendy’s restaurants across 15 U.S. states and has filed for Chapter 11 bankruptcy protection. [Photo: Mike Mozart Flickr]

Meritage Hospitality Group, which operates 314 Wendy’s restaurants across 15 states, said it intends to continue operating its restaurants and paying its approximately 9,000 employees during the bankruptcy process.

The Grand Rapids, Michigan-based company filed for Chapter 11 bankruptcy protection in federal court in the Western District of Michigan on Sept. 17.

Meritage said the restructuring is intended to strengthen its balance sheet and establish a more sustainable capital structure.

According to court documents, Wendy’s filed a notice terminating Meritage’s franchise agreement effective Sept. 16.

Wendy’s alleges that Meritage owes $27.4 million in royalties and fees and $119.5 million in continuous-operations fees related to locations the franchisee closed. Meritage closed 60 underperforming Wendy’s restaurants late last year as part of a restructuring.

The company has said it expects to maintain restaurant-level operations during the bankruptcy proceedings and continue paying employees, subject to court approval of its initial bankruptcy motions.

Wendy’s said it had worked with Meritage and its lenders for more than a year to find a sustainable solution before determining that terminating the franchise agreement was appropriate.

Meritage is one of Wendy’s largest franchise operators in the United States. In addition to its Wendy’s restaurants, the company operates other restaurant concepts.