A bankrupt Wendy’s franchise operator wants to sell 42 restaurants across Tennessee, Arkansas, Mississippi and Missouri for $18.6 million. The proposed deal offers a possible way to keep those locations running while their current owner restructures its debts.
It is a new turn in the Wendy’s franchisee bankruptcy that has already brought closure plans to Oklahoma. The latest sale request was filed October 21, but the restaurants have not changed hands.
A buyer emerges across four states
Grand Rapids, Michigan-based Meritage Hospitality Group is asking a bankruptcy judge to authorize the sale to a buyer group associated with Hiren Patel, whose Divine Investors operates Dunkin’ and KFC franchises. The proposed buying entities include Divine Infinity Operations, according to restaurant industry reporting.
The October 21 motion was filed by WEN Tennessee, LLC, one of the companies in the Meritage bankruptcy. The sale includes restaurants in four states, not just Tennessee, and involves transferring business assets along with certain leases and contracts, subject to court approval.
There is history behind the regional footprint. In 2017, Meritage announced it had acquired 57 Wendy’s restaurants in those same four states. Now it is trying to sell a sizable group of restaurants in that region as part of a much broader financial reset.
A hearing on the proposed sale is scheduled for November 10 in the U.S. Bankruptcy Court for the Western District of Michigan. The court has authorized notice of the hearing and possible contract transfers, but has not approved the transaction itself.
Why the Wendy’s operator is in bankruptcy
Meritage Hospitality Group Inc. and 14 affiliated debtors filed for Chapter 11 protection on September 17. The company said at the time that it operated 314 Wendy’s restaurants and several other food businesses across 15 states, with approximately 9,000 employees.
A day before the filing, Wendy’s franchising arm sent a termination notice, alleging more than $27 million in unpaid royalties and fees. Meritage is contesting the effectiveness of that termination in court. Wendy’s corporate parent has not filed for bankruptcy.
The operator is also pursuing restaurant closures elsewhere. It asked to reject leases for 13 locations in a separate October filing, while other court documents outline a larger program of possible shutdowns. The 42 restaurants in the new sale proposal are instead being offered as operating businesses.
What the deal could mean for workers
Christopher Kelleher of Auspex Capital, which marketed the restaurants, told the court that a prompt sale could preserve hundreds of jobs and keep the restaurants’ franchise relationships intact. He described protecting those jobs as a reason to move quickly. Staffing plans after any handover have not been announced.
Sale proceeds could also give Meritage cash to address obligations as it continues negotiating with creditors and Wendy’s. The proposed transfer would not, by itself, resolve the rest of the company’s Chapter 11 case.
For customers in Tennessee, Arkansas, Mississippi and Missouri, the hoped-for outcome is familiar restaurants remaining open under a different franchise operator. Whether that happens depends on the judge’s decision, franchise approvals and the deal actually closing.
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