Meritage Hospitality Group

Meritage Hospitality Group is primarily engaged in the franchised retail food service business. The company operates through two main business segments: Wendy's of Michigan and O'Charley's of Michigan. Meritage operates 48 "Wendy's Old Fashioned Hamburgers" quick-service restaurants in Western and Southern Michigan. Meritage is the nation's only publicly traded Wendy's franchisee, serving over nine million Wendy's customers annually. All Wendy's restaurants are operated under franchise agreements with Wendy's International, Inc. From 1999 through 2002, Meritage opened a new Wendy's restaurant on average every eight weeks. The company has completed development of Wendy's restaurants in the West Michigan market but continues to evaluate development and/or acquisition opportunities in other market areas. The Wendy's restaurants are operated by Wendy's of Michigan, a Michigan limited partnership owned by a wholly-owned subsidiary of Meritage. In December 2003, Meritage entered into an exclusive multi-unit development agreement with O'Charley's Inc. to develop O'Charley's casual service restaurants throughout the State of Michigan. Meritage is the nation's first O'Charley's franchisee. Since August 2004, the company has opened five O'Charley's restaurants: two in the greater Grand Rapids area and three in the greater Detroit area. At least one additional O'Charley's restaurant is planned for fiscal 2006.