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Read MoreMeritage Hospitality Group Chapter 11: Investors in the Wendy’s Franchisee’s Preferred Stock Sold by Dougherty & Company Should Know Their Rights
Meritage Hospitality Group Inc., the Grand Rapids, Michigan operator of hundreds of Wendy’s restaurants and a long-time OTC-quoted public company, filed for Chapter 11 in the United States Bankruptcy Court for the Western District of Michigan on September 17, 2026 (Case No. 26-02947), listing assets and liabilities each in the $10 million to $50 million range.
Meritage was unusual among restaurant franchisees in one respect: it funded its growth in part by selling preferred stock to individual investors in private placements. The SEC filings for those placements name the broker-dealer that sold them.
Preferred-stock placements, 2017–2018
| Form D — February 7, 2017 | $10,500,000 preferred-stock offering; sales commissions budgeted at $630,000 |
| Form D — February 1, 2018 | $10,000,000 offering; $6,347,185 sold; sales commissions $42,300 |
| Form D/A — February 9, 2018 | Same offering; $7,397,185 sold; sales commissions $105,300 |
| Later Form Ds | Additional Rule 506(b) notices filed 2019–2023 |
| Placement agent named on 2018 filings | Dougherty & Company LLC — FINRA CRD No. 7477 |
Dougherty & Company LLC was a Minneapolis-based broker-dealer with a substantial retail wealth-management business before its brokerage operations were absorbed by another firm. Its registered representatives placed Meritage preferred shares with their own customers, many of whom were drawn to the stated dividend.
Why preferred stock in a franchisee is not a bond
Preferred stock sold with an attractive yield is frequently presented to income-oriented investors as if it were a fixed-income instrument. It is not. In a Chapter 11 case, preferred shareholders sit behind every lender, landlord, and trade creditor; recoveries are often zero. A broker-dealer recommending a privately placed preferred must evaluate the issuer’s leverage and the realistic prospect of the dividend being maintained, and must match the product to the customer (FINRA Rules 2111 and 3110; Regulation Best Interest; FINRA Regulatory Notice 10-22).
If you hold Meritage preferred stock
Claims against the firm that recommended the stock can proceed in FINRA arbitration regardless of the bankruptcy timeline. Carlson Law is reviewing such claims now. Consultations are free and confidential, and we work on contingency.
Carlson Law represents investors throughout the United States in claims against financial advisors and investment firms. If you or a loved one have suffered investment losses, please call us at 888-976-6111 or complete our contact form for a free and confidential consultation.
