# Wendy's Franchisee Challenges Bankruptcy Closures

> Bankrupt Wendy's franchisee fights store closures and termination claims.
- Title: Wendy's Franchisee Challenges Bankruptcy Closures | Shortify
- Summary: Bankrupt Wendy's franchisee fights store closures and termination claims. Meritage Hospitality Group, a bankrupt Wendy's franchisee, rejects Wendy's proposal…
- Keywords: meritage hospitality group, wendy's, bankruptcy, chapter 11, franchisee, store closures, liquidated damages, franchise agreements, food, business, Challenges, Closures
- Source: Nation's Restaurant News — https://nrn.com/restaurant-franchising/a-bankrupt-wendy-s-franchisee-pushes-back-against-the-brand
- Read time: 2 min
- Topics: meritage hospitality group, wendy's, bankruptcy, chapter 11, franchisee, store closures, liquidated damages, franchise agreements, food, business
## Bankrupt Wendy's Franchisee Pushes Back
Meritage Hospitality Group, a bankrupt Wendy's franchisee, is fighting the company's termination while the brand seeks more say in which stores close.
## Wendy's Objects to 10 Store Closures
Wendy's last week objected to the proposed closure of 10 locations in Oklahoma, Michigan, Georgia, and Florida, offering to replace seven with different stores.
## Meritage Closes 41 Restaurants
Meritage is closing 41 of its 314 restaurants in five different groups and was set to have completed 20 closures by Friday.
## Negative EBITDA Impact
The restaurants generated $4.2 million in negative EBITDA, or earnings before interest, taxes, depreciation, and amortization.
## Wendy's Proposes Store Substitution
Wendy's offered to substitute seven other stores that generated less sales but lost less money, claiming the potential upside for the portfolio outweighs the nominal difference.
## Meritage Rejects Proposal
Meritage rejected Wendy's proposal, saying the offer came with just two days' notice and the payment is not secured to cover closure costs.
## Franchise Termination Dispute
Wendy's argues Meritage has no right to operate its restaurants because franchise agreements were terminated before the Chapter 11 filing.
## Wendy's Claims $147 Million
Wendy's is asserting $147 million worth of claims, including more than $27 million in unpaid royalties and liquidated damages.
## Meritage Calls It Non-Termination
Meritage called Wendy's termination a 'non-termination termination' because the notice lacked physical copies and lender notifications.
## Store Financial Performance
The stores Meritage closes average $1.15 million in sales and lose $127,000 per store annually, while Wendy's list averages $1.07 million in sales and $114,000 in losses.
## Wendy's Financial Argument
Wendy's claims the potential upside for the overall portfolio outweighs the nominal difference in losses between the stores.
## Meritage's Stance on Closures
Meritage argues keeping deeper-loss stores open increases debtors' estate losses, contradicting the purpose of the closure program.
## Key takeaway

Meritage Hospitality Group, a bankrupt Wendy's franchisee, rejects Wendy's proposal to close 10 stores and argues the brand terminated its franchise agreements without proper notice.