44-year-old burger chain’s franchisee files Chapter 11 bankruptcy

The "burger wars" of the 1980s, which featured fierce marketing campaigns by McDonald's, Burger King, and Wendy's, have a new appearance today with some different players.Burger chains are battling economic challenges today, closing underperforming locations and, in some cases, filing for bankruptcy protection.Wendy's to close up to 350 locationsWendy’s said it planned to close 5%-6% of its 5,831 U.S. restaurant locations listed on its website, or about 292 to 350 underperforming units, in 2026, according to its Feb. 13 fourth-quarter earnings call.“By closing consistently underperforming restaurants, we are enabling our franchisee partners to increase focus on locations with the greatest potential for profitable growth,” Wendy’s CEO Ken Cook said in the earnings call.Burger chain franchisees have also filed for bankruptcy protection as they battle financial distress. Farmer Boys burger chain franchisee Geddo Corp. files for Chapter 11 protection. Farmer Boys franchisee files bankruptcyGeddo Corp., operator of 12 Farmer Boys burger chain franchises in California and Arizona, filed for Chapter 11 bankruptcy protection after merchant cash advance lender withdrawals from its accounts hindered its cash flow, preventing it from paying vendors, according to Restaurant Business.The Riverside, Calif.-based fast-casual chain filed its petition in the U.S. Bankruptcy Court for the Central District of California in Santa Ana on March 31, listing $1 million to $10 million in assets and liabilities, according to Bankruptcy Observer.Geddo's largest unsecured creditors include franchisor Farmer Boys Franchising Co., owed $500,000 on a note, $300,000 in back rent and royalties, and $250,000 from a loan, according to Bondoro.Other top unsecured creditors include Marlin Leasing, owed $139,000; Havadji Holdings, owed $39,000; and The Michaels Family Trust, owed $21,000.40 loans cause financial distressGeddo's most significant liabilities that caused it financial distress consist of 40 merchant cash advance loans, totaling $5.2 million, from which the lenders had begun collecting payments from its accounts, according to Restaurant Business.Geddo Corp. planned to develop two locations in Goodyear and Phoenix, Ariz., and used the merchant cash advance loans as part of that effort. The lenders' collection process for the short-term, high-interest loans, reportedly called for withdrawals directly from the franchisee's bank accounts, which caused capital shortfalls.Franchisee defaults on debt paymentsThe shortage of capital in its accounts led the franchisee to default on payments to its Farmer Boys franchisor, vendors, and other clients. The debtor said most of the merchant cash advance lenders refused to negotiate manageable terms, and since it could not operate with those debt obligations in place, it filed for bankruptcy, the company reportedly said in court papers.Farmer Boys, which was founded in 1981, operates over 100 locations in California, Nevada, and Arizona. The restaurant chain's menu features a variety of cheeseburgers, bacon burgers, a veggie burger, chicken sandwiches, a bacon turkey melt, BLT, club sandwich, pastrami sandwich, chicken strips, fried fish, salads, wraps, and breakfast items.Carl's Jr. franchisee files for bankruptcyGeddo Corp.'s bankruptcy filing follows on the heels of another major burger chain operator's Chapter 11 filing, as Carl's Jr. franchisee Sun Gir Inc., and five affiliates filed their petition in the U.S. Bankruptcy Court for the Central District of California on April 2.Sun Gir, which operates 65 Carl's Jr. franchises in California, is the lead Chapter 11 case among the affiliates.Carl's Jr. issued a statement, asserting that the Sun Gir bankruptcy was an isolated situation involving the individual franchisee and not a broader problem within the Carl's Jr. chain."This situation is specific to this individual franchisee's financial and business circumstances," a company spokesperson told Restaurant Dive. "This has no impact on the operations of any other Carl's Jr. locations, and we remain committed to delivering quality experiences for our guests, while driving profitable, sustainable growth for our franchises and brand." Related: Award-winning winery brand files for Chapter 11 bankruptcy