{"id":1819593,"date":"2026-09-17T15:03:52","date_gmt":"2026-09-17T13:03:52","guid":{"rendered":"https:\/\/lexpress-franchise.com\/en-us\/news\/restaurant-franchise-bankruptcies-return-to-pre-pandemic-levels-in-2026\/"},"modified":"2026-09-17T14:40:24","modified_gmt":"2026-09-17T12:40:24","slug":"restaurant-franchise-bankruptcies-return-to-pre-pandemic-levels-in-2026","status":"publish","type":"post","link":"https:\/\/lexpress-franchise.com\/en-us\/news\/restaurant-franchise-bankruptcies-return-to-pre-pandemic-levels-in-2026\/","title":{"rendered":"Restaurant Franchise Bankruptcies Return to Pre-Pandemic Levels in 2026"},"content":{"rendered":"\n

At least 10 significant multi-unit restaurant franchisee<\/a> bankruptcy filings have been recorded in 2026, spanning several hundred locations across restaurant franchise chains<\/a> including Hardee’s, Subway, Popeyes, Carl’s Jr., Applebee’s, and Moe’s Southwest Grill. The pace is on track to match or exceed 2025’s total of more than 20 filings, restructuring attorneys told Restaurant Dive in an analysis published September 16.<\/strong><\/p>\n\n\n\n

\n\n\n\n

The surge tracks a broader business insolvency trend: overall U.S. bankruptcy filings rose 17%<\/strong> year over year through June 30, 2026, climbing from roughly 23,000<\/strong> to nearly 27,000<\/strong>, according to U.S. Courts data. <\/p>\n\n\n\n

But the restaurant franchise sector carries structural pressures that have amplified the problem. Food and labor costs have climbed 36%<\/strong> since 2019, according to industry data cited by restructuring attorneys, while franchisee pre-tax margins typically run between 3%<\/strong> and 5%<\/strong>.<\/p>\n\n\n\n

A Cross-Sector Pattern Spanning Multiple Formats<\/h2>\n\n\n\n

The 2026 filings run across QSR, fast casual, and casual dining formats. Sailormen<\/strong>, the 136<\/strong>-unit Popeyes operator in Florida and Georgia, filed in January. MTF Enterprises<\/strong>, a 43<\/strong>-store Subway franchisee operating across Maine, New Hampshire, Pennsylvania, and Virginia, filed the same month. In April, ARC Burger LLC<\/strong> filed for Chapter 7 after closing all 77<\/strong> of its Hardee’s locations across nine states; Friendly Franchisees Corporation<\/strong>, operator of 65<\/strong> Carl’s Jr. locations, also filed in April. <\/p>\n\n\n\n

At the casual and fast casual level, Neighborhood Restaurant Partners Florida<\/strong> sought protection in March covering 53<\/strong> Applebee’s, and Quality Fresca<\/strong>, a 38<\/strong>-location Moe’s Southwest Grill franchisee, followed later in the year. A separate Hardee’s franchisee, Superior Star Corp.<\/strong>, filed for Chapter 11 in July, citing tax levies, rent obligations, and sales problems at aging locations.<\/p>\n\n\n

<\/svg><\/div>
That variety and volume demonstrate that this is systemic, not cuisine or brand-specific.<\/blockquote><\/div>

A QUOTE FROM<\/p>

Bradford Sandler<\/p>

Partner, Pachulski Stang Ziehl & Jones<\/p><\/div><\/div><\/div><\/div>\n\n\n

The Cost-Debt Equation That Pushes Operators Into Court<\/h2>\n\n\n\n

Three factors converge on multi-unit operators simultaneously. First, cost inflation has raised food and labor expenses by 36%<\/strong> since 2019, while the menu price increases used to offset them have pushed lower-income customers toward eating at home, softening same-store traffic in value-dependent segments. <\/p>\n\n\n\n

Second, many franchise portfolios were assembled with high leverage during the 2019 to 2022 M&A boom when valuations were at a peak; deferred capital renovations are now due at a time of thin cash flow. <\/p>\n\n\n\n

Third, fixed obligations including royalties, advertising fund contributions, rent, and debt service do not adjust downward when sales soften. Some operators turned to merchant cash advance financing, a mechanism restructuring attorneys describe as carrying significant risk: one Subway franchisee cited daily MCA draws against its sales as the primary cause of its collapse. “Costs are up, demand is down. Not a great place to be,” noted Oren Bitan, co-chair of Buchalter’s fiduciaries, receivers and trustees practice group<\/strong>.<\/p>\n\n\n\n

How Franchisors Are Responding: Two Contrasting Approaches<\/h2>\n\n\n\n

Franchisor responses to distressed operators have differed sharply. Burger King<\/strong> committed more than $2 billion<\/strong> to improvement programs under its Reclaim the Flame and Royal Reset initiatives, combining remodel incentives with upfront cash support for franchisees. <\/p>\n\n\n\n

That approach is credited with improving unit-level profitability for participating operators. Hardee’s<\/strong> took a different path: it sued its largest franchisee, ARC Burger, for $6.5 million<\/strong> in unpaid royalties and fees, then moved to reclaim many of the locations after Chapter 7 was filed. A second Hardee’s franchisee, Superior Star Corp., filed for Chapter 11 months later, suggesting the network’s operator stress has not been contained.<\/p>\n\n\n

<\/svg><\/div>
Franchisors that treat the balance sheets of their franchisees as a shared problem will ultimately keep their best operators, while those who don’t will keep meeting them in bankruptcy court.<\/blockquote><\/div>

A QUOTE FROM<\/p>

Bradford Sandler<\/p>

Partner, Pachulski Stang Ziehl & Jones<\/p><\/div><\/div><\/div><\/div>\n\n\n

A Restructuring Wave With No Clear End Point Yet<\/h2>\n\n\n\n

Bankruptcy can function as a consolidation mechanism in franchising<\/a>: Chapter 11 allows operators to shed unprofitable leases and transfer viable units to better-capitalized buyers rather than triggering full liquidation. The restaurant segments most frequently represented in 2026 filings are those with lower price points and value-dependent customer bases, which face direct competition from higher-end fast casual concepts gaining share. <\/p>\n\n\n\n

Beyond the major filings that have drawn public attention, restructuring attorneys note that a “substantial number” of smaller single-unit and few-unit operators have also filed, with most of those cases receiving limited coverage. With at least 10 significant filings recorded through mid-year, the pace through the remainder of 2026 will determine whether the sector matches or exceeds the more than 20 filings recorded throughout all of 2025.<\/p>\n\n\n\n

This content is provided for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations vary by state and individual circumstances and may change over time. Readers should consult a qualified attorney, tax professional, or other licensed professional regarding their specific situation. Nothing herein creates an attorney-client relationship.<\/em><\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

At least 10 significant multi-unit restaurant franchisee bankruptcy filings have been recorded in 2026, spanning several hundred locations across restaurant franchise chains including Hardee’s, Subway, Popeyes, Carl’s Jr., Applebee’s, and Moe’s Southwest Grill. The pace is on track to match or exceed 2025’s total of more than 20 filings, restructuring attorneys told Restaurant Dive in […]<\/p>\n","protected":false},"author":788,"featured_media":1819603,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_titles_title":"Franchise Bankruptcies at Pre-Pandemic Levels in 2026","_seopress_titles_desc":"At least 10 multi-unit restaurant franchisees filed for bankruptcy in 2026, including Hardee\u2019s, Popeyes and Subway. Experts examine the causes.","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"","_seopress_redirections_param":"","_seopress_redirections_type":0,"_seopress_analysis_target_kw":"","_seopress_news_disabled":"","_seopress_video_disabled":"","_seopress_video":[],"_seopress_pro_schemas_manual":[],"_seopress_pro_rich_snippets_disable_all":"","_seopress_pro_rich_snippets_disable":[],"_seopress_pro_schemas":[],"content-type":"","_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1804778,1812754,1578396,1767670,1798251,1804572","_relevanssi_noindex_reason":"","footnotes":""},"categories":[3594],"tags":[],"type-de-post":[2066],"class_list":["post-1819593","post","type-post","status-publish","format-standard","has-post-thumbnail","category-franchise-networks","type-de-post-articles-actualite"],"acf":[],"permalink_manager":null,"_links":{"self":[{"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/posts\/1819593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/users\/788"}],"replies":[{"embeddable":true,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/comments?post=1819593"}],"version-history":[{"count":5,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/posts\/1819593\/revisions"}],"predecessor-version":[{"id":1819672,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/posts\/1819593\/revisions\/1819672"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/media\/1819603"}],"wp:attachment":[{"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/media?parent=1819593"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/categories?post=1819593"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/tags?post=1819593"},{"taxonomy":"type-de-post","embeddable":true,"href":"https:\/\/lexpress-franchise.com\/en-us\/wp-json\/wp\/v2\/type-de-post?post=1819593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}