The 19-year-old has been a Gunner since 2005 after joining from Barcelona's youth side, and has steadily progressed to the fringes of the first-team, attracting comparisons with club captain and fellow countryman Cesc Fabregas in the process.
Merida, a midfielder who can operate on both the left-flank or centrally, has yet to start a Premier League game for the Emirates Stadium outfit, coming off the bench three times, as well as making six outings in the Carling Cup.
As a result, the talented teenager was wanted by several clubs on loan ahead of the 2009/10 campaign, with Spanish sides Levante, Sevilla and Atletico Madrid and London rivals West Ham United reportedly interested in securing his services.
However, Wenger eventually decided against sending him out on loan again - with Merida having previously made 14 league appearances for Real Sociedad in 2008.
And the Frenchman has admitted that he decided to keep the midfielder at Arsenal, as he was reluctant to let another club benefit from his skills, having worked hard on developing the starlet.
"Fran had a good pre-season and after the pre-season he was away a lot with Spain. Now he is back, so I hope he can show how good he is," he told the club's official website.
"I nearly gave him out on loan, but on the day I had to make the decision, I decided to keep him. It would have been good for him, but I felt that he has too much quality to go out.
"He just has football in his blood and these players always have a good chance to come through.
"We educate the players and then they play for somebody else and that I find a little bit too generous, especially when you have worked with them for years.
"I believe it is better to give them the maximum chance with your club."
