Bankruptcy in the Franchise World: Why MCFO’s Potential Filing Could Follow Its Founders for 10 Years
When a franchisor files for bankruptcy, it’s not just the end of a legal entity, it’s the start of a decade-long disclosure obligation under the FTC Franchise Rule. That obligation doesn’t stop at the corporate level; it follows the people behind the brand, even if they launch or run new franchises under different names.
With multiple brands under the ABC Franchise Group umbrella, including I Heart Mac & Cheese, Pilar Coffee Bar, Rush Iced Treats, and Cheese Lovers Kitchen; a potential bankruptcy by Mac and Cheese Franchise Operations, LLC (MCFO) could ripple across the entire group.
What Item 4 Requires
Item 4 of the Franchise Disclosure Document (FDD) requires disclosure of any bankruptcy during the last 10 years by:
The franchisor entity itself
Any predecessor of the franchisor
Any affiliate that sells franchises
Any officer, general partner, managing member, or other individual with management responsibility
The disclosure must include the name of the debtor, the court where the case was filed, the case number and filing date, and the current status or outcome of the bankruptcy.
Why MCFO’s Bankruptcy Would Follow the People Behind It
If MCFO files bankruptcy, that filing would appear in Item 4 of any FDD where:
MCFO is a predecessor or affiliate
If the new franchisor entity for I Heart Mac & Cheese is connected to MCFO through ownership or control, MCFO’s bankruptcy would be reported in the entity history.Its officers show up in another franchisor
If Steve Giordanella, Delia Valles, Max Gonzalez, or any other MCFO officers take officer or manager roles in Pilar, Rush Iced Treats, or Cheese Lovers Kitchen, MCFO’s bankruptcy must be disclosed in their personal Item 4 history.Even “off-paper” control can trigger disclosure
The FTC and state regulators can require disclosure for individuals exercising real management authority, even if they’re not officially listed as officers. “Straw owners” don’t erase disclosure obligations if control remains in place.
How Long Does Disclosure Last?
Bankruptcy filings must be disclosed for 10 years from the filing date.
This is a rolling requirement; after 10 years, it can drop off the FDD. If MCFO files bankruptcy in 2025, the disclosure stays until at least 2035.
The “Sublicense Flip” Risk
The 2023 FDD’s Item 13 shows that IHMAC franchisees don’t have a direct license from the trademark owner. Instead, the TM Holder licenses the brand to Mac and Cheese Franchise Group, LLC (MCFG), which sublicenses it to MCFO.
If leadership wants to keep the brand alive while bankrupting MCFO, they could simply terminate the sublicense to MCFO and issue a new sublicense to a different entity they control. The new entity could then operate the brand, but without any obligation to honor MCFO’s franchise agreements.
For franchisees, this means:
Bankruptcy could end your right to use the brand overnight.
A new entity could choose whether to offer you a new agreement, and on what terms.
Even if they keep the brand going, you might be left out.
Warning Signs for Franchisees
Franchise Reality Check™ has been monitoring MCFO and its related brands for months. We’ve seen signs; based on credible sources, public records, and past patterns; that suggest assets may be moving out of MCFO. Such moves often precede bankruptcy filings, especially in franchise systems where leadership has a history of restructuring around debt and legal exposure.
One anonymous source familiar with leadership described plans to shift the I Heart Mac & Cheese brand to another person’s name and tax entity, leaving MCFO to face bankruptcy while funds are already moved. While these claims have not been independently verified, they align with known risk factors in Item 13 and prior restructuring tactics used in other troubled franchise systems.
Our Commitment to Ongoing Oversight
Franchise Reality Check™ will continue tracking this story and will review every FDD we can obtain for I Heart Mac & Cheese, Pilar Coffee Bar, Rush Iced Treats, Cheese Lovers Kitchen, and any future brands tied to the same leadership team.
If MCFO files bankruptcy, we will examine whether the required Item 4 disclosures are made accurately and on time, and we will report on any omissions or inconsistencies we find. Our coverage will extend beyond the bankruptcy filing itself, following the evolution of these brands in the months and years ahead, when corporate restructures and new FDDs often attempt to rewrite history.
Due Diligence Questions to Ask
If you’re a prospective franchisee of any brand linked to ABC Franchise Group, ask:
Who are the officers, and what are their 10-year bankruptcy histories?
Are there shared owners, officers, or controlling parties with MCFO?
Has any predecessor or affiliate filed bankruptcy in the past 10 years?
What’s the current trademark license structure? Could my rights be cut off if an affiliate files bankruptcy?
The Bottom Line
Franchise bankruptcies aren’t isolated events, they can cast a 10-year shadow over every brand the same leaders touch. Whether you’re running an I Heart Mac & Cheese location today or considering a Pilar Coffee Bar, Rush Iced Treats, or Cheese Lovers Kitchen tomorrow, understanding the disclosure rules for bankruptcy is essential to protecting your investment.
This post is for educational purposes only and is based on the FTC Franchise Rule, publicly available information, and credible but unverified sources. It does not constitute legal advice. The scenarios discussed are hypothetical and intended to help franchisees and prospective franchisees understand potential risks in the franchise relationship. Readers should consult a qualified franchise attorney before making decisions related to bankruptcy disclosures or franchise investments.
