Freddy's franchisee files for bankruptcy. What it means for other restaurants.

A Freddy's Frozen Custard & Steakburgers franchisee filed for bankruptcy successful Kansas aft closing 11 stores successful the Chicago country since 2024.

M&M Custard filed for Chapter 11 protections Nov. 14 and successful an affidavit M&M Custard co-founder and CEO Eric Cole said that the franchisee volition beryllium successfully reorganized present that the underperforming stores person been removed from its holdings.

Court records amusement that the franchisee reported assets of $5.2 cardinal to $27.65 cardinal successful liabilities. The institution has implicit 100 creditors.

M&M Custard opened its archetypal Freddy's franchise successful 2012 successful Jefferson City, Missouri and held 42 franchises earlier the Chicago closures. Cole confirmed successful an email to USA TODAY Nov. 19 that the institution volition support the remaining 31 locations it operates crossed six states open.

Here's what to cognize astir the M&M Custard bankruptcy.

M&M Custard acquired 3 stores successful the Chicago country successful 2021 aft being approached by Freddy's to make the market, according Cole's affidavit. By March of 2024, the franchisee had 11 stores successful the market.

Cole said successful the affidavit the franchisee had evolved into 2 "fundamentally antithetic businesses" with the Chicago stores "creating a fiscal drag" connected the institution portion its 31 "legacy stores" remained profitable.

"The operation of sustained antagonistic EBITDA, constricted purchaser appetite for underperforming assets, and the progressively burdensome regulatory and taxation situation successful Illinois eroded the semipermanent viability of the market," Cole said.

The stores began closing successful March 2024, with the past 1 shuttering successful October of 2025.

Freddy's called the bankruptcy an "unfortunate and isolated situation" successful a connection to USA TODAY and added that it is moving to guarantee that the restaurants spot "little to nary interruption" during the bankruptcy process.

"It is important to enactment that this filing applies lone to this circumstantial franchisee radical and is not a reflection of Freddy's firm stableness oregon the show of different franchisees," the connection reads.

Restaurant commercialized outlet Nation's Restaurant News reported that Freddy's had a stronger 2024 than its burger-chain peers with 6.8% year-over-year income growth.

This nonfiction primitively appeared connected USA TODAY: Freddy's franchisee filed for bankruptcy. See impacted stores.