Wendy’s Franchise Fight Raises a Bigger Question: Why Aren’t Franchisees Fighting Harder to Make the Brand Relevant Again?

 

A franchise agreement should be more than a license to display a familiar logo. It should be an investment in a brand that continually earns consumer attention, delivers compelling food, justifies its price, and gives customers a reason to return according to Steven Johnson, Grocerant Guru® Founder, at Tacoma, WA based Foodservice Solutions®.

Yet the Chapter 11 battle involving Wendy’s and one of its largest franchisees, Meritage Hospitality Group, raises a question that reaches well beyond bankruptcy court: Why are franchisees spending so much energy fighting over which restaurants to close when the industry needs an equally serious fight over how to make the restaurants worth visiting in the first place?

According to the supplied report, Meritage entered Chapter 11 after a difficult financial period, with additional restaurant closures under consideration and a dispute with Wendy’s over franchise terminations, potential damages, and which underperforming locations should shut down. Meritage’s restructuring team argues that keeping deeper-loss restaurants open undermines the purpose of its closure program. Wendy’s, meanwhile, argues that its preferred closures would better serve the overall restaurant portfolio.

Both parties have financial arguments to make. But from the perspective of the Grocerant Guru®, the larger strategic issue is what happens when a legacy brand’s consumer proposition fails to generate enough sales to support the economics of the franchise system.

Closing restaurants can reduce losses. It does not, by itself, rebuild consumer relevance.

The real question is whether franchisors and franchisees are working together aggressively enough to create more reasons for consumers to choose the brand, more often, at a price they believe is worth paying.

The numbers tell a story beyond bankruptcy

The figures in the supplied report illustrate the challenge facing Meritage and the broader strategic question facing Wendy’s.

The report states that Meritage was closing 41 additional restaurants across five groups, following 60 earlier closures. The 41 locations in the current closure process reportedly averaged $1.15 million in annual sales while losing approximately $127,000 per restaurant over the preceding 12 months.

Wendy’s proposed alternative list reportedly averaged $1.07 million in annual sales and lost approximately $114,000 per restaurant over the same period. The report also puts Wendy’s national average annual restaurant sales at approximately $2 million through 2025.

Those figures are reported numbers, not independently audited conclusions presented here. Nevertheless, the gap deserves attention.

If the figures are comparable, the restaurants under discussion are generating substantially less revenue than the reported systemwide average. That is a signal to investigate location economics, local competition, operating execution, consumer demand, and the strength of the brand proposition in each market.

The figures alone do not prove that Wendy’s brand messaging, food, pricing, or service caused those restaurants to underperform. Restaurant-level results can also reflect occupancy costs, labor expenses, traffic patterns, management, competition, and other market-specific factors.

But the strategic question remains: When a restaurant generates substantially less sales than the system average, what is the plan to make it more relevant to the consumer before the only remaining plan is to close it?

That question deserves just as much attention as the closure schedule.

1. Brand messaging: Familiarity is not the same as relevance

Wendy’s has a recognizable brand, a distinctive square hamburger, a long-standing fresh-beef message, and a history of irreverent advertising. Those are assets. But legacy brand equity is not a permanent guarantee of consumer preference.

Consumers do not buy a brand’s history. They buy what the brand delivers today.

Wendy’s own management acknowledged the need for change when it introduced Project Fresh on October 9, 2025. The plan called for strengthening brand positioning, improving marketing effectiveness, assessing the U.S. restaurant system, elevating the customer experience, and prioritizing average unit volume growth. The company specifically identified a need to connect more effectively with the next generation of customers..

That announcement is significant. It demonstrates that brand relevance and restaurant productivity are not simply complaints raised by struggling franchisees; they are issues Wendy’s corporate leadership has publicly identified as priorities.

The performance numbers add urgency. Wendy’s reported U.S. same-restaurant sales declined 5.6% for full-year 2025, following growth of 1.4% in 2024 and 3.7% in 2023. U.S. franchised restaurant average unit volume also declined, from approximately $2.086 million in 2024 to $1.984 million in 2025..

These results do not establish that advertising or messaging alone caused the decline. They do establish that a recognized national brand experienced a meaningful reversal in sales momentum.

The question for franchisees is straightforward: Are they getting the brand-building, marketing, menu innovation, and customer traffic support they need to compete effectively in their own markets?

Franchisees should demand measurable answers, not simply more promotional calendars.

They should ask corporate leadership to demonstrate which campaigns generate incremental visits, which messages convert younger customers, which promotions bring in new customers rather than discount existing purchases, and which marketing investments produce sustainable increases in restaurant-level sales.

A franchisee paying royalties and contributing to marketing funds should expect more than brand awareness. The objective is to generate profitable transactions.

2. Product: Does the menu fit the way consumers eat today?

The burger business has changed. Consumers still buy burgers, but they also compare chicken, snacks, beverages, breakfast, customizable meals, delivery options, and food that fits a particular occasion.

That is where the Grocerant Guru® perspective becomes important. Consumers increasingly construct meals across multiple channels and formats. A restaurant is not competing only with the burger restaurant across the street. It competes with convenience stores, supermarket prepared foods, delivery platforms, and other destinations offering quick, portable meal solutions.

The National Restaurant Association's 2025 off-premises research reported that nearly 75% of restaurant traffic occurred off-premises, including takeout, delivery, and drive-thru occasions. Its research also identified convenience, quality, and price as important considerations when customers choose off-premises meals..

That is a major consumer behavior signal. A brand must deliver more than a recognizable product. It must make the product easy to purchase, transport, eat, and justify economically.

Wendy’s has taken steps in this direction. In February 2025, the company outlined plans to expand chicken and beverage offerings, strengthen its Biggie Bag value platform, improve loyalty engagement, and continue breakfast innovation. Restaurant Dive reported that Wendy’s SpongeBob-themed Krabby Patty promotion produced a 20% same-store sales lift at its peak, according to company commentary.

That promotion offers an important lesson: a distinctive product-and-marketing combination can generate a measurable traffic response. It does not prove that every promotion will work or that the effect will persist after the promotion ends. It does show why franchisees should insist on a pipeline of relevant products and compelling reasons to visit.

Three product questions franchisees should push corporate leadership to answer:

·       Which menu innovations produce repeat purchases and incremental traffic, rather than a brief promotional spike?

·       How quickly can local operators test products that respond to regional tastes, emerging meal occasions, and competitive gaps?

·       Does the menu offer enough flexibility for consumers seeking affordable combinations, portable snacks, chicken, breakfast, and beverages throughout the day?

A franchisee should not have to accept a stagnant consumer proposition simply because the brand has a famous hamburger.

3. Price: Value is what customers receive, not just what they pay

Price competition is unavoidable. But discounting without a clear value proposition can weaken margins while failing to build loyalty.

The National Restaurant Association's 2025 industry outlook found that 47% of limited-service customers said their dining experience mattered more than price. The same report said 47% of restaurant operators planned to introduce new discounts, deals, or value promotions to attract traffic.

These findings point to a tension: affordability matters, but price is not the entire experience.

For Wendy’s, the challenge is to communicate why its food deserves the customer's money while offering price points that make sense for different budgets and occasions. A value meal must feel like a genuine solution, not a complicated calculation involving add-ons, app restrictions, or an offer that disappears before the customer can use it.

This is where franchisees should demand a better balance between national promotional strategy and local restaurant economics.

A corporate offer can produce more transactions and still leave the franchisee with insufficient incremental profit if food costs, labor, discounts, and transaction mix are not properly accounted for. Conversely, a well-designed combination can improve perceived value, increase attachment rates, and encourage customers to purchase more than a single item.

Franchisees should insist that promotional evaluations include:

·       Incremental transactions and repeat visits.

·       Average check and food-cost impact.

·       Profit contribution after discounts and labor.

·       New-customer acquisition versus subsidizing existing purchases.

·       Performance by daypart, market, and customer segment.

The objective should be to grow profitable unit sales, not simply to advertise a low price or defend market share.

4. Service: The promise is made at the drive-thru window

Brand messaging creates an expectation. Product delivers the promise. Price frames the value. Service determines whether the customer wants to repeat the experience.

A national advertising campaign cannot compensate indefinitely for inaccurate orders, inconsistent food, long waits, or an unfriendly interaction.

Wendy’s itself placed customer experience and operational execution among the priorities in its Project Fresh plan. Its investor-day strategy also emphasized more consistent execution, digital convenience, and improved hospitality..

That matters because service is not merely an expense to manage. It is part of the product the customer buys.

Franchisees should push for store-level reporting that connects speed, order accuracy, food quality, customer complaints, digital ordering, and repeat visits. They should also have a voice in determining whether corporate initiatives make operations easier or add complexity during already difficult service periods.

Three practical tests should be applied to every major operating change:

1.       Does it make ordering easier for the customer?

2.       Does it help employees deliver a more consistent experience?

3.       Does it increase repeat business or profitable transactions enough to justify the cost?

If the answer is no, the system should reconsider the change.

The important point is not to demand fewer standards. It is to demand standards that improve the customer experience and the economics of the restaurant together.

5. Why don't more franchisees demand a growth strategy?

The Meritage dispute illustrates a fundamental imbalance in franchising. Operators may invest their capital, hire employees, manage local execution, pay occupancy and operating costs, and absorb the consequences when customer traffic weakens. The franchisor controls important parts of the brand identity, national advertising, menu direction, franchise standards, and systemwide strategy.

That division of responsibility can create tension when results deteriorate.

In Meritage's case, the supplied report describes a legal fight over termination, approximately $147 million in asserted claims, and competing views about which restaurants should close. Those claims and the parties' legal positions remain disputed; they should not be mistaken for final judicial findings.

But the broader lesson is clear: Franchisees need a stronger voice in the strategic decisions that determine whether their restaurants can succeed.

Why should operators settle for defending their share of a shrinking or stagnant market when they could demand a credible plan to expand consumer demand?

Market share is not the same as market growth. A brand can maintain its share while the category weakens. It can also gain share while individual restaurants struggle with unprofitable sales, excessive costs, or poor local execution.

The better measure is whether the brand is winning more relevant occasions, increasing repeat visits, and generating sustainable average unit volume and restaurant-level profitability.

Franchisees should organize around common business objectives rather than waiting until financial distress forces them into individual disputes. Within their contractual and legal rights, they can press for transparent performance reporting, franchisee advisory participation, evidence-based marketing tests, product-development input, and clear accountability for systemwide growth initiatives.

They should also ask corporate leadership to report progress against measurable goals, including:

·       Same-store sales and transaction growth.

·       Average unit volume by comparable market and restaurant cohort.

·       Customer satisfaction, order accuracy, and service speed.

·       New-product trial and repeat-purchase performance.

·       Promotional return on investment and franchisee profitability.

·       Digital engagement that converts into profitable visits and orders.

Not every weak restaurant can be saved. Some locations have structural disadvantages that no campaign can overcome. Nor should a franchisor be expected to preserve every unit regardless of its economics.

But closing restaurants should be part of a comprehensive strategy, not a substitute for one.

The goal should be to distinguish restaurants that need operational improvement, restaurants that need a stronger consumer proposition, restaurants that need local market repositioning, and restaurants that genuinely need to close.

That is a much more useful conversation than arguing only over which locations disappear first.

The Grocerant Guru® bottom line: Fight for relevance, not just survival

Wendy’s has publicly acknowledged the need to strengthen brand positioning, improve the customer experience, and increase average unit volume. Its reported 2025 U.S. same-store sales decline demonstrates why those priorities matter.

For franchisees, the Meritage situation is a reminder that contractual rights and financial restructuring are important, but they cannot replace consumer demand.

The brand they bought must continue to earn its place in the consumer's consideration set. It must communicate a relevant promise, deliver compelling food, provide credible value, and make the experience worth repeating.

Franchisees should not accept market share as the ultimate measure of success. They should push for a brand that grows transactions, strengthens customer loyalty, and improves unit economics.

Three Grocerant Guru® Insights

1. Relevance drives the visit; value helps close the sale.

Consumers do not owe a legacy brand their loyalty. They reward brands that meet current needs with the right food, price, convenience, and experience. Franchisees should demand evidence that marketing investments turn relevance into repeat purchases and profitable sales.

2. A closure plan is not a consumer-growth plan.

Closing money-losing restaurants may be necessary, but it does not answer why consumers are choosing competitors. Every turnaround should distinguish between a bad location, poor execution, an outdated offer, and a brand that is losing relevance in a particular market.

3. Franchisees bought a business opportunity, not a museum piece.

A legacy brand's history is an asset only when it helps attract today's customers. Franchisees should push harder for better products, sharper messaging, credible pricing, stronger service, and measurable unit-sales growth. The objective is not merely to defend a share of the market. It is to make the brand more relevant to an evolving consumer and grow the business profitably.

Steven Johnson is the Grocerant Guru® and founder of Tacoma, Washington-based Foodservice Solutions®. His perspective focuses on the convergence of restaurants, grocery prepared foods, convenience retail, and evolving consumer meal occasions.

Papa Murphy’s Adds Pinkberry: Why Fixing the Pizza Business Should Come Before Adding Frozen Yogurt

 

If Papa Murphy’s is closing underperforming pizza restaurants, why should anyone believe adding frozen yogurt will fix the underlying problem asks Steven Johnson, Grocerant Guru®
Founder, Foodservice Solutions®, Tacoma, Washington.

That is the consumer test Papa Murphy’s and parent company MTY Food Group need to answer before celebrating their latest co-branding strategy.

Three franchise agreements to combine Papa Murphy’s Take ’n’ Bake pizza with Pinkberry frozen yogurt represent a business development announcement. They do not prove stronger consumer demand, more frequent visits, improved profitability, or a successful turnaround.

My challenge to Papa Murphy’s and MTY is simple: Prove that consumers want the combination before treating co-branding as a growth strategy.

Are consumers rejecting Papa Murphy’s because the brand is not meeting their needs? Or is management betting that adding a second brand will make the existing business more attractive?

That distinction matters.

From the perspective of the Grocerant Guru®, consumers do not organize their lives around corporate portfolios, franchise agreements, or shared real estate. They organize food purchases around eating occasions, convenience, taste, price, portability, and perceived value.

A family looking for dinner does not automatically want frozen yogurt. A consumer craving dessert does not automatically want take-and-bake pizza. Putting both brands under one roof may create operating efficiencies, but efficiencies alone do not guarantee incremental customers, repeat visits, or stronger profits.

If the combination generates new customers, more frequent visits, stronger transactions, and sustainable incremental profits, it deserves consideration. If it simply adds another operation to manage while the core pizza business struggles, this is not innovation solving a consumer problem. It is management adding complexity without yet proving the payoff.

That is the test every foodservice growth strategy should face: Does it make the brand more relevant to the consumer—or merely make the corporate portfolio look bigger?

What the Announcement Actually Says

On October 7, 2026, Papa Murphy’s announced three franchise agreements for its co-branded concept with Pinkberry. The locations are:

·       Sunriver, Oregon: Joshua and Samantha Kimzey plan to open their first location in both systems in early November 2026.

·       Santa Fe, New Mexico: Longtime Papa Murphy’s franchisee John Perea will add Pinkberry to his existing restaurant, which he has operated since 2010.

·       West Haven, Utah: Casey Kauer, who operates five Papa Murphy’s restaurants in Utah, plans to open a new co-branded location in summer 2027.

The company identifies shared real estate, labor, and operational resources as potential benefits. The concept also offers franchisees an opportunity to serve different eating occasions and develop additional revenue streams. MTY has identified other possible co-branding opportunities, including sweetFrog.

The important distinction: Three franchise agreements demonstrate interest in testing the model. They do not establish that consumers want the combination, that the economics will outperform a standalone restaurant, or that the concept can reverse Papa Murphy’s broader business challenges.

Those are separate questions, and the industry should not confuse them.

Problem No. 1: Papa Murphy’s Has a Core-Business Challenge

The facts: In July 2026, MTY said it expected to close between 45 and 50 underperforming Papa Murphy’s locations as part of a broader plan to close 68 corporate-owned restaurants across its portfolio. Industry reporting also indicated that Papa Murphy’s U.S. footprint had fallen more than 20% from its 2020 level.

MTY’s third-quarter fiscal 2026 results showed same-store sales declining 1.9% across its system, with the U.S. segment down 2.7%. Those figures cover MTY’s broader business, not Papa Murphy’s alone.

The Grocerant Guru® perspective: These figures make the consumer question more urgent. Before celebrating a new concept, management must establish whether the existing pizza business is attracting customers, retaining them, and generating attractive returns.

Adding another brand might help. It could also introduce additional inventory requirements, equipment needs, staffing demands, and marketing complexity.

The essential question is whether Pinkberry improves the economics of the pizza operation—or simply adds another business to manage.

A new revenue stream is not automatically a profitable one. Management needs to demonstrate that the combined concept produces incremental sales and profits after accounting for all associated costs.

Problem No. 2: More Menu Options Do Not Automatically Create More Demand

The facts: Papa Murphy’s and Pinkberry offer different but potentially complementary propositions. Papa Murphy’s sells take-home pizza that customers bake themselves. Pinkberry specializes in frozen yogurt and toppings.

Pizza can address a family dinner, while frozen yogurt can serve a dessert or snack occasion.

The Grocerant Guru® perspective: Complementary products do not necessarily produce complementary purchasing behavior.

A customer who buys pizza for dinner may not want frozen yogurt. Someone looking for an afternoon dessert may have no reason to visit a take-and-bake pizza store.

The concept must demonstrate that the combined offer creates incremental purchases rather than simply shifting existing Pinkberry or Papa Murphy’s transactions into a shared location.

That distinction matters because incremental sales are not the same as incremental profit.

Management should measure how many customers purchase from both brands, how many are new to each brand, how often customers return, and whether average transaction values and contribution margins improve.

Without that evidence, co-branding remains a hypothesis—not a proven growth strategy.

Problem No. 3: Operational Efficiency Is Not the Same as Customer Value

The facts: MTY promotes shared real estate, labor, and operational efficiencies as benefits of the co-branding model. In Santa Fe, franchisee John Perea has cited seasonality as one reason the combination appealed to him, including the potential to support year-round employment.

These are legitimate business considerations.

The Grocerant Guru® perspective: A lower-cost operating model does not automatically deliver a better customer experience.

Consumers continue to evaluate food quality, price, convenience, service, and whether a purchase fits the occasion. If the combined operation creates confusing ordering, slower service, inconsistent product quality, or an unconvincing value proposition, the projected efficiencies may not translate into customer loyalty.

The brands must also protect their individual identities. Papa Murphy’s must remain relevant to customers seeking a convenient take-home meal, while Pinkberry must offer a compelling frozen-dessert experience.

The winning formula is not simply two signs on one building. It is two distinct customer needs served effectively through a coordinated operation.

The Consumer Test: Five Measures That Matter

Before expanding the concept, Papa Murphy’s and MTY should evaluate five measurable outcomes.

1. Incremental customers. Are new customers entering because of the combined concept, or are existing customers simply switching locations?

2. Cross-brand purchasing. What percentage of pizza transactions also include Pinkberry, and vice versa? Are customers genuinely buying across both brands?

3. Visit frequency. Does the combination give customers a reason to visit more often throughout the week?

4. Profitability. After labor, food costs, equipment, marketing, and occupancy expenses, does the combined operation generate stronger returns than the alternatives?

5. Brand preference. When customers choose between competing pizza, take-home meal, and dessert options, does the combined offer improve the likelihood that they choose these brands?

These measures would help distinguish a promising franchise development story from a genuinely successful consumer strategy.

e Grocerant Guru® Recommendations

1. Build around eating occasions, not just co-branding.

Map the customer journey from dinner planning to dessert. Test family meal bundles, pizza-and-dessert offers, and promotions that give customers a clear reason to purchase from both brands. Measure incremental sales rather than relying on bundle redemptions alone.

2. Make value visible to the consumer.

The combined concept must deliver a compelling reason to choose it over buying pizza and dessert elsewhere. Test price points, portions, family offers, and promotional combinations. Track repeat purchases and contribution margins so discounting does not create the illusion of growth.

3. Prove the model before scaling it.

Use the three locations as a disciplined learning opportunity. Establish baseline performance, measure cross-brand purchases, compare results with appropriate standalone locations, and evaluate the findings before committing to a broader rollout.

Three Grocerant Guru® Insights

Insight No. 1: Fix the Core Before Adding Another Concept.

Co-branding is not a substitute for consumer relevance. Papa Murphy’s must demonstrate that it can attract customers, earn repeat visits, and deliver a compelling Price Value Service Equilibrium. Adding Pinkberry may create another revenue opportunity, but the real measure is whether it strengthens the underlying business.

Insight No. 2: Sell More Eating Occasions, Not Just More Menu Items.

Consumers think in terms of breakfast, lunch, dinner, snacks, and dessert—not corporate brand portfolios. Papa Murphy’s and Pinkberry must prove that their combination creates incremental purchases across those occasions. Shared real estate is an operating strategy; winning more consumer occasions is a growth strategy.

Insight No. 3: Measure Consumer Behavior Before Expanding the Footprint.

Three co-branded locations offer an opportunity to test the concept, not declare victory. Measure new customer acquisition, cross-brand purchases, repeat visits, average transaction value, and incremental profitability. If the numbers demonstrate sustained consumer demand, expand. If they do not, management should resist confusing franchise development with brand growth.

The Bottom Line: Follow the Consumer, Not the Logo

Papa Murphy’s and Pinkberry may have found a workable way to share space, labor, and customer occasions. That possibility deserves a fair test.

But Papa Murphy’s store closures and MTY’s declining U.S. same-store sales make it especially important to distinguish franchise expansion from consumer-led growth. Three signed agreements are a starting point, not a verdict.

The Grocerant Guru® perspective is straightforward: A new concept is only as good as the consumer behavior it changes.

If the combination attracts new customers, increases visit frequency, strengthens brand preference, and generates sustainable incremental profit, it deserves consideration for expansion. If it merely adds operational complexity while the core business continues to struggle, it risks becoming a distraction dressed up as innovation.

Foodservice brands do not grow simply by combining logos. They grow by earning more consumer occasions, delivering meaningful value, and giving people a reason to come back.

Prove the consumer demand first. Celebrate the expansion second.

Steven Johnson, Grocerant Guru®
Founder, Foodservice Solutions®
Tacoma, Washington