Update: A Failed $2.5 Million Popeyes Deal, a Wendy’s Termination Fight, and What Moved in Eleven Days
This is a follow-up to our September 19 post, When a Franchise System Goes Into Chapter 11, There Are Three Different Problems. Most Owners Only Worry About One.
The short answer
The September 19 post argued that when another operator in your system files Chapter 11, the risk to you is not their debt. It is who takes their stores, which leases get rejected, and whether corporate or a discount buyer lands next door.
Eleven days later, that is playing out on the docket. The Popeyes estate in Miami has asked for summary judgment in its suit over the $2.5 million escrow from a failed purchase of 23 Orlando stores. The Moe’s case in West Palm Beach has moved past its first-day phase. And the Wendy’s franchisee case in Michigan, one day old when we last wrote, has become a fight over whether Wendy’s terminated 314 restaurants’ franchise agreements before the bankruptcy was filed.
Nothing in Parts I or III of the original post has changed. Mission Product is still the trademark holding. Section 365(n) still does not reach the marks. A franchisee still cannot keep its franchise agreements over the franchisor’s objection. What moved is Part II, and the Wendy’s case now shows the Part III problem in real time.
What did not change
FAT Brands is still the franchisor-side example. The plan was confirmed July 27, 2026 and went effective July 31, 2026 (Bankr. S.D. Tex. No. 26-90126). If your franchisor is in that position, the steps from the original post still apply: a written 365(n) election for the manuals, recipes and other covered intellectual property; your Mission Product position on the marks in writing; objections to the cure figure and to adequate assurance on any 363 assignment; and no prepaying royalties into an entity you cannot trace.
Sailormen: the fight over the failed Orlando deal is moving fast
In re Sailormen, Inc., No. 26-10451 (Bankr. S.D. Fla., Judge Robert A. Mark). The five June 23 sale orders still stand, including the sale of sixteen Miami restaurants to Popeyes Louisiana Kitchen, Inc. itself for $9,600,000.
We covered the failed Orlando sale in detail on September 12, in A $250,000 Deposit, a $2.5 Million Escrow, and Why a Sale Order Could Not Settle the Difference. In short: RFI Ventures, LLC agreed to buy the 23-store Orlando package for $2,500,000. The purchase agreement defined the deposit as $250,000, but by the extended July 12 closing date the escrow held the full $2,500,000. The buyer terminated instead of closing. The estate resold the same 23 stores under an order entered July 22, to a buyer trade press identifies as SBH Foods PLK at roughly $2.7 million. On September 11, the court denied the buyer’s motion to enforce the sale order and compel turnover of the escrow, and directed that the dispute proceed as an adversary proceeding. The stores are no longer in play; the only question is who keeps the $2.5 million.
Since then, Sailormen, Inc. v. RFI Ventures, LLC, Adv. No. 26-01315, has moved quickly:
• September 17: the estate filed a statement of material facts and a motion for summary judgment, before any defendant had answered.
• September 18: the estate filed an amended complaint.
• September 25, 28 and 30: answers were filed, well ahead of the October 13 deadline.
• September 29: the court entered an order setting a hearing.
Nothing has been decided on the merits. No court has found that the buyer breached or that the estate may keep the escrow, and no court has found the opposite. If the estate wins, it will have sold the Orlando stores twice and kept the first buyer’s money as well.
If you are ever the buyer or seller in a distressed store sale. The September 12 post covers the drafting lessons in full. The short version: the agreement should say in one sentence whether money paid to buy a closing extension is a deposit at risk or prepaid purchase price, and every remedy clause should point at the amount the parties actually intend to put at risk. The estate asking for summary judgment within eight days of filing shows it believes the written record settles the question. The buyer’s answer is that the only signed amendment says nothing of the kind.
Quality Fresca: out of the first-day phase
In re Quality Fresca I, LLC, No. 26-20345 (Bankr. S.D. Fla., West Palm Beach Division, Judge Erik P. Kimball). On September 4 the court entered a round of orders on the first-day matters, including cash collateral, procedures, contract rejection and professional employment. On September 18 it entered an order on a further motion to assume or reject contracts and an order approving an employment application. The debtor’s monthly operating report was filed September 22, and a notice of appearance was filed September 28. No plan has been filed.
The chief restructuring officer’s declaration has not changed. The debtor grew to 69 Moe’s restaurants and had 38 at filing. Fiscal 2025 net sales were $58,941,831 against negative EBITDA of $111,204. Roughly $16 million of secured debt is owed to GR Loanco 1 LLC, an affiliate of the debtor’s ultimate parent that bought the loan from PNC in May 2026, and roughly $2.1 million in trade payables sit behind it. The default letter from Moe’s Franchisor SPV LLC is still dated August 5, 2025.
If you are a remaining Moe’s operator. The lesson from the original post holds. A deferral agreement that expires on its own terms is not a cure. Anyone buying locations out of this estate is underwriting two counterparties, the debtor and the franchisor.
Meritage: Wendy’s says it terminated the franchise agreements before the filing
When the original post went up, In re Meritage Hospitality Group Inc., No. 26-02947 (Bankr. W.D. Mich., Judge James W. Boyd), was one day old. There had been no first-day hearing, and joint administration had been requested but not ordered. Both have now happened, and the case has turned into a franchise fight.
What the record shows:
• The franchisor, Quality Is Our Recipe, LLC, the Wendy’s franchising entity, entered an appearance the day the fifteen debtors filed, September 17, 2026.
• On September 21, Wendy’s objected to most of the first-day motions and filed a motion for relief from the automatic stay regarding the franchise agreements.
• The first-day hearing was held September 22. On September 23 the court ordered joint administration and entered interim cash collateral orders, including one for the lender group led by City National Bank, with a final hearing set for October 14, 2026. No debtor in possession financing motion has been filed. The case is running on cash collateral alone.
• On September 25 the debtors moved to reject the leases and franchise agreements for five more closing stores. They told the court that City National Bank “has required such closures as additional adequate protection.”
What trade coverage reports, but we have not yet confirmed from the filings: Wendy’s sent a termination notice on September 16, the day before the petition, and says it was effective immediately. Wendy’s takes the position that it properly terminated the franchise agreements before the filing and that Meritage has no continuing franchise rights. Meritage disputes that the notice was effective and says the agreements are property of its estates. Coverage puts Wendy’s claim at about $146.9 million: about $27.4 million in past-due royalties and fees, and about $119.5 million in “continuous operations” fees tied to closures.
Why this matters to a Florida operator. This is the Part III problem from the original post, from the other side of the table. As reported, Wendy’s position is that the agreements ended before the petition, so there is nothing left for the estate to keep or assume, and Meritage’s position is that the termination never took effect. The difference between a completed termination and a default notice is the whole case. If a brand has sent only a default notice, and the cure period has not run by the petition date, section 108(b) gives the debtor at least 60 days after the order for relief to cure. Which of those happened here is what the stay-relief motion puts in front of the court. The answer determines whether 314 restaurants are an estate asset or a brand take-back.
Three practical points:
• Payment extensions end. Trade coverage reports that a Wendy’s payment extension expired in August. It is the same pattern as the Moe’s addendum in Quality Fresca and the Burger King forbearance in the original post. When a forbearance is running, plan for its end date.
• Closure fees can dwarf the arrears. If the reported figures hold up, the fees tied to closing stores are more than four times the past-due royalties. Read your continuous operation clause before you close a location, not after.
• The lender can drive closures. In a case funded by cash collateral, the secured lender can make store closures a condition of letting the debtor keep operating. Those decisions are made in the cash collateral order, not by the brand and not by you.
The brand uses the Southern District of Florida the ordinary way
These are not insolvency cases. They are form franchise agreements doing what they are drafted to do: bring disputes to Miami and Fort Lauderdale regardless of where the stores are.
• Burger King Company, LLC v. All American Crown, LLC and Ketan Pandya, No. 1:26-cv-25821 (S.D. Fla., Judge Darrin P. Gayles), filed August 25, 2026. The defendants are a Texas company and a Texas resident operating ten restaurants in Louisiana. According to the complaint, the franchise agreements were deemed terminated in August 2025 and a limited license to keep operating was deemed terminated in April 2026. Burger King sued on the license agreement, a franchise agreement, a lease, a guaranty and a profit sharing agreement. Jurisdiction rests on diversity, and venue rests on a forum selection clause naming the Southern District of Florida. A later docket entry is captioned “Change Venue” (ECF 11).
• The Learning Experience Systems LLC v. SVSSH Group LLC, No. 0:26-cv-62437 (S.D. Fla., Fort Lauderdale), filed September 2, 2026. The plaintiff filed the trademark case report form, and a preliminary injunction filing followed the next day.
• Popeyes Louisiana Kitchen, Inc. v. Glendale Heights Chicken, Inc., No. 1:26-cv-26687 (S.D. Fla., Miami), filed September 24, 2026. The complaint is not yet publicly available.
Read these captions as enforcement, not as a sign that the system is failing. The Burger King complaint is also a reminder that “terminated” and “licensed to keep operating for now” can coexist for months, and that the end of that license is its own trigger.
The line that still matters
Most owners still collapse three problems into one fear.
1. You file. You do not keep the franchise over the franchisor’s “no,” and if the brand says it terminated before you filed, expect that to be the first fight. Meritage is now the example.
2. The brand files. You keep operating only if you act. Rely on Mission Product for the marks, and make a written 365(n) election for everything that is actually intellectual property under section 101(35A).
3. The operator next door files. Watch the sale orders, the rejected lease lists, the corporate take-backs, and now the lawsuits over failed purchases. Sailormen is the example.
The third problem is the one that produces dark boxes and a new neighbor with a different cost basis. That is what moved between September 19 and September 30.
Sources
In re Sailormen, Inc., No. 26-10451 (Bankr. S.D. Fla.), including the order denying the buyer’s motion to enforce the sale order and directing commencement of an adversary proceeding (ECF 929, Sept. 11, 2026), the declaration in support of the sales (ECF 679, June 18, 2026), the bidding procedures order (ECF 378, Mar. 20, 2026), and the sale orders (ECF 715 to 719, June 23, 2026). Docket.
Sailormen, Inc. v. RFI Ventures, LLC, Adv. No. 26-01315 (Bankr. S.D. Fla., filed Sept. 9, 2026). Docket.
In re Quality Fresca I, LLC, No. 26-20345 (Bankr. S.D. Fla.), including the Declaration of G. Michael Verdisco (ECF 17, Aug. 4, 2026). Docket.
In re Meritage Hospitality Group Inc., No. 26-02947 (Bankr. W.D. Mich.), including the joint administration order (ECF 96), the interim cash collateral orders (ECF 103 to 105), and the debtors’ motion to reject (ECF 121). Docket.
Burger King Company, LLC v. All American Crown, LLC, No. 1:26-cv-25821 (S.D. Fla. filed Aug. 25, 2026). Complaint.
The Learning Experience Systems LLC v. SVSSH Group LLC, No. 0:26-cv-62437 (S.D. Fla. filed Sept. 2, 2026). Docket.
Popeyes Louisiana Kitchen, Inc. v. Glendale Heights Chicken, Inc., No. 1:26-cv-26687 (S.D. Fla. filed Sept. 24, 2026). Docket.
11 U.S.C. sections 108(b), 362 and 365.
Trade coverage (not court records): QSR Web, “Inside Meritage Hospitality’s bankruptcy” (Sept. 29, 2026); QSR Magazine, “Major Wendy’s franchisee files for bankruptcy” (Sept. 21, 2026); Nation’s Restaurant News, “Wendy’s stakes its claim in the Meritage Hospitality bankruptcy” (Sept. 22, 2026).
Disclaimer
This post discusses publicly reported legal developments for general informational purposes. It is not legal advice, it does not create an attorney client relationship, and it does not reflect the firm’s position in any pending matter. Outcomes depend on the specific facts and the governing law of the relevant jurisdiction.