MICHIGAN, TheKabarNews.com—Meritage Hospitality Group, one of Wendy’s largest franchise operators in the United States, has filed for Chapter 11 bankruptcy protection. The burger chain confronts declining domestic sales and a shrinking restaurant network.

The Grand Rapids, Michigan-based company submitted voluntary petitions to the US Bankruptcy Court for the Western District of Michigan on September 17. Meritage operates 314 Wendy’s restaurants across 15 states. It employs approximately 9,000 people.

Chapter 11 allows a company to reorganize its finances under court supervision while continuing to operate.

Meritage said it expects its restaurants to remain open and intends to keep paying employees, suppliers and vendors, subject to court approval.

The company said it filed for protection to “strengthen its balance sheet and establish a sustainable capital structure.”

It is also seeking debtor-in-possession financing to provide liquidity during the restructuring, according to its official announcement.

The filing followed a dispute with Wendy’s. Court documents cited by the AP News show that the restaurant chain issued a notice on September 16. Wendy’s sought to terminate Meritage’s franchise agreement immediately.

Wendy’s alleges that Meritage owes $27.4 million in royalties and other fees. It also claims $119.5 million in charges connected with closed restaurants.

These remain claims in a bankruptcy proceeding and should not be treated as court-confirmed liabilities. Meritage closed 60 underperforming Wendy’s locations in late 2025 as part of an earlier restructuring.

“We worked with this franchise organization and its lenders for more than a year to find a sustainable path forward,” Wendy’s said, adding that it ultimately considered termination appropriate.

Meritage’s bankruptcy comes as Wendy’s reports weaker performance in its core US market. The chain’s US same-restaurant sales fell 7 percent year-on-year in the second quarter of 2026. Meanwhile, US systemwide sales declined 8.2 percent.

During the first half of 2026, Wendy’s recorded 44 US restaurant openings and a net reduction of 245 locations. A net decline of 245 means closures exceeded openings by that amount, rather than indicating that exactly 245 restaurants closed.

Wendy’s attributed weaker performance partly to lower customer traffic. The company also faced higher commodity and labor costs, according to its sec.gov.

The company cut its quarterly dividend from 14 cents to 7 cents per share, a 50 percent reduction, to preserve funds for its turnaround. It also withdrew its full-year 2026 outlook.

Meritage’s filing does not mean Wendy’s itself has entered bankruptcy, nor does it automatically require the franchisee’s restaurants to close.

The court-supervised process will determine whether Meritage can reduce its financial burden and maintain stable operations.

The case nevertheless highlights a broader challenge for US fast-food companies. Cost controls alone may offer limited protection when customer traffic declines.

Now Wendy’s and its franchisees are working to balance competitive pricing with investing in stores. Additionally, they are changing up menus to keep up with consumer demand.