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One of the largest U.S. franchisees for Wendy's has filed for bankruptcy protection after the restaurant chain tried to terminate its franchise agreement.
Meritage Hospitality Group, which operates 314 Wendy's restaurants in 15 states, said in a statement last week it intends to keep operating its restaurants and paying its 9,000 employees during the bankruptcy process.
Grand Rapids, Michigan-based Meritage filed its bankruptcy petition in federal court in western Michigan on Sept. 17. According to court documents, Wendy's filed a notice of termination of the company's franchise agreement "effective immediately" on Sept. 16.
The action does not affect the eight Wendy's locations in Trumbull and Mahoning counties, which are under the ownership of Thomas 22 Limited. The franchisee is based in Dublin, Ohio, where Wendy's corporate headquarters are located.
In March, a Wendy's in Columbiana ended operations. It was owned by Delight Restaurant Group of Norfolk, Virginia.
Wendy's claims Meritage owes $27.4 million in royalties and fees and $119.5 million in continuous operations fees, which companies charge to franchisees when they close locations, according to court filings. Meritage closed 60 underperforming Wendy's locations late last year as part of a restructuring.
Asked for comment Monday on Meritage, Wendy's said its focus is "strengthening the long-term health of the brand.
"We worked with this franchise organization and its lenders for more than a year to find a sustainable path forward," the company said. "Ultimately, based on these circumstances, we determined that termination was the appropriate course of action."