Fast-food burger franchisees are rejecting underperforming leases in bankruptcy cases as part of reorganizations, which they hope will shed unprofitable restaurants.
Among the burger chains that are restructuring debt and closing restaurants are Wendy’s and Checkers and Rally’s.
Checkers and Rally’s franchisee files for Chapter 11 bankruptcy to prevent a foreclosure auction to move forward.
Checkers and Rally’s franchisee bankrupt
Checkers and Rally’s fast-food burger chain franchisee Global Midsouth Holding Corp. filed for Chapter 11 bankruptcy to reorganize its business, facing a foreclosure notice on its Jackson, Tenn., restaurant property.
The Memphis-based debtor filed its petition in the U.S. Bankruptcy Court for the Western District of Tennessee on Oct. 28, 2026, a day before a foreclosure auction was scheduled at the Madison County Courthouse in Jackson, Tenn.
The bankruptcy filing imposed an automatic stay on all legal actions against the debtor while the case proceeds.
Global Midsouth listed $1.9 million in assets and $1.3 million in liabilities in its petition. It only listed two unsecured creditors on its petition, $3,400 owed to the State of Tennessee Department of Revenue and $2,500 owed to Madison County Waste Disposal.
Revenue declines over 2 years
The debtor’s revenue has also declined over the last two years from $860,000 in total revenue in 2024 to $800,000 in revenue in 2025. The company reported only $582,000 in revenue in 2026 for the year through the filing date.
Global Midsouth’s owner Sedrick Turner, who has been a Checkers and Rally’s franchisee for about 30 years, grew his restaurant portfolio to 16 locations in Alabama, Missouri, Mississippi, and Tennessee by July 2025, according to a statement.
“With every restaurant we operate, we aim to elevate the guest experience, strengthen our team, and serve the surrounding community,” Turner said in the statement. “I’ve spent over three decades building and leading franchise operations, and I believe success comes from staying hands on, empowering your people, and delivering consistent quality,” Turner said.
“Sedrick is the kind of franchisee every brand hopes to attract — experienced, driven, and deeply committed to both people and performance,” said Robert Bhagwandat, Checkers Drive-In Restaurants senior director of franchise development.
“He understands what it takes to run great restaurants and grow with purpose,” Bhagwandat said.
Checkers and Rally’s operate on a franchise model with potential operators developing locations on less than half of an acre, which is half the size of competing drive-thru restaurants.
Chain targets 8 markets
The restaurant chain is targeting select markets throughout the U.S. for franchises, including South and Central Wisconsin, New Jersey, Pennsylvania, Southern California, Las Vegas, Florida, and South Carolina.
Checkers Drive-In Restaurants, which was established in 1986 as a drive-thru chain, operates over 700 locations across the East, Midwest, Southeast, and Western states.
Another franchisee files bankruptcy
Global Midsouth is not the only Checkers to suffer from financial issues, as Checkers Drive-In franchisee C.S. Holdings of Tampa LLC, which operates two locations in Tampa, Fla., filed for Chapter 11 bankruptcy protection on July 14 to reorganize its business.
The Checkers locations are independently owned and operated, and Checkers Drive-In Restaurants Inc. licenses its brand to franchisees.
Franchisor Checkers Drive-In Restaurants did not file for bankruptcy. Checkers and Rally’s were not immediately available for comment.
Global Midsouth’s bankruptcy filing comes on the heels of a petition filed by a Wendy’s franchisee Meritage Hospitality Group, which filed for Chapter 11 protection in September 2026.
Meritage, which operated over 350 Wendy’s franchises in 15 states, filed for bankruptcy protection to reorganize its business, reject leases of underperforming locations and close those restaurants.
