A wave of financially struggling fast-food franchisees has turned to bankruptcy protection in 2026 to restructure operations and manage debt burdens.
Court records show that Superior Star LLC, a Hardee's franchisee based in Phoenix, filed for Chapter 11 bankruptcy on July 9 due to a seller-financing dispute. In a separate case, a franchisee of the Checkers Drive-In chain, which operates two restaurants in Tampa, Florida, submitted a Chapter 11 petition on July 14 to proceed with business restructuring.
Another Hardee's operator, ARC Burger LLC, filed for Chapter 7 liquidation on April 20, 2026. This followed a lawsuit from brand owner Hardee's Food Systems LLC, which accused the operator of breaching franchise agreements and sought over $6.5 million in unpaid royalty fees and other obligations.
A major Wendy's franchisee, Meritage Hospitality Group, is the latest to pursue Chapter 11 protection. The company, which runs more than 350 locations across 15 states, faced a default notice for roughly 11 months before formally filing for bankruptcy to reorganize its business and rework its debt after missing required payments that violated its franchise pact.
Meritage Hospitality Group, together with 14 affiliated entities, submitted its petition to the U.S. Bankruptcy Court for the Western District of Michigan on September 17, 2026, reporting both assets and liabilities in the $10 million to $50 million range. The firm also operates six Morning Belle brunch cafés in Michigan and holds Bojangles' fried chicken franchise locations, though the website does not disclose the exact number of Bojangles' outlets. As of the end of 2024, the company employed approximately 12,000 people.
Before filing for bankruptcy, Meritage had already initiated an internal pre-reorganization process, led by Chief Restructuring Officer Kevin Cleely of Ford Dearborn Partners. According to the company's CEO report from May 2026, it had closed around 60 Wendy's restaurants and cut $7.3 million in operating expenses.
On October 24, 2025, Meritage received a default notice from Wendy's brand licensor Quality Is Our Recipe LLC, giving the company 30 to 90 days to cure the violations. The brand authority stated it held the right to cancel or terminate the franchise agreements if the issues were not resolved. At the time, Meritage announced: "The company is actively communicating and cooperating with the brand licensor and is confident in resolving this default event." No separate announcement was issued regarding the completion of the cure, but the company continued operating as a Wendy's franchisee, indicating the default matter had been remedied.
The company also received a debt default notice from its lending bank on September 29, 2025, with roughly $150 million outstanding under its credit facility, though Meritage contested that determination. The bank cited reasons including failure to maintain liquidity financial covenants, inability to repay maturing debts on schedule, and the closure of a Georgia restaurant. Subsequently, the company reached a forbearance agreement with its lenders.
Wendy's, the second-largest hamburger chain in the U.S., continues to advance its "Project Fresh" initiative launched in 2025, which centers on shuttering underperforming locations.
Based on Wendy's fourth-quarter earnings call transcripts, the chain closed 28 restaurants in 2025 through the plan and intends to close 5% to 6% of its U.S. locations in 2026, equating to roughly 292 to 350 low-efficiency stores. At the time of the February 13 fourth-quarter call, the company listed approximately 5,831 U.S. restaurants on its website. CEO Kirk Tanner said during the call: "Consistently closing chronically unprofitable stores allows our franchise partners to focus more energy on the locations with the greatest potential for profitable growth."
Founded by Dave Thomas in 1969 and headquartered in Columbus, Ohio, the Wendy's brand operates more than 7,000 restaurants worldwide.