Freddy's franchisee files for bankruptcy. What it means for other restaurants.
A franchisee of Freddy's Frozen Custard & Steakburgers, M&M Custard, filed for Chapter 11 bankruptcy in Kansas after closing 11 underperforming stores in the Chicago area since March 2024. The co-founder noted that the closures were necessary to eliminate financial burdens while maintaining the viability of their 31 profitable locations across six states. The franchisee reported liabilities between $27.65 million and $5.2 million, with over 100 creditors involved. Freddy's corporate emphasized that this bankruptcy is an isolated incident and does not reflect the overall health of the brand, which experienced a notable 6.8% sales growth in 2024 compared to its competitors. Moving forward, the company aims to ensure stability for its remaining locations during the reorganization process.
Dive Deeper:
M&M Custard, the franchisee, first opened a Freddy's location in 2012 and expanded to 42 franchises before the closures.
The bankruptcy filing occurred on November 14, 2024, following significant losses linked to the Chicago market.
Eric Cole, M&M Custard's CEO, attributed the financial struggles to sustained negative EBITDA and a challenging regulatory environment in Illinois.
The 11 stores began closing in March 2024, with the last one shuttering in October 2025, marking a significant withdrawal from the Chicago area.
Freddy's corporate stated that it is actively working to minimize disruptions for customers and maintain operations at the remaining franchise locations.
Despite the bankruptcy of this franchisee, Freddy's as a whole demonstrated resilience with a reported 6.8% increase in sales in 2024.