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.

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.”

Wendy's shares were up 1% in afternoon trading Monday.

Michigan is Meritage’s largest market, with 54 Wendy’s locations there as well as five Morning Belle and Blue Porch Bar & Grill restaurants. The company also runs 44 Wendy’s in both Georgia and Florida; 29 Wendy’s in Connecticut; 24 Wendy’s in Tennessee; 23 Wendy’s in Oklahoma and less than 20 Wendy’s each in Arkansas, Indiana, Massachusetts, Mississippi, Missouri, North Carolina, Ohio, Texas and Virginia.

Dublin, Ohio-based Wendy’s has been struggling for several years with outdated stores, high beef prices and stiff competition. It closed 240 restaurants in 2024 and said earlier this year that it planned to shutter up to 358 locations this year.

Wendy's same-store U.S. sales fell 7% in its most recent quarter.

“Wendy's is an iconic brand with exceptional assets. Today we are clearly not performing at our potential,” Wendy's President and CEO Bob Wright said in a statement last month. Wright joined Wendy's in May after previously serving as the CEO of Potbelly.