Item 10: The Hidden Loans Behind I Heart Mac & Cheese Franchise Sales
For years, I Heart Mac & Cheese told the world, and regulators, in bold letters:
Sounds straightforward, right?
Not so fast.
Technically, the franchisor named in every Franchise Disclosure Document (FDD) from 2017 to 2023, Mac and Cheese Franchise Operations, LLC (MCFO), was telling the truth. MCFO itself did not directly extend loans or guarantee franchisees’ debts (that we know of). On paper, their Item 10 disclosure wasn’t inaccurate.
But that’s only half the story.
Behind the scenes, another layer of entities, including Mac and Cheese Franchise Group, LLC (MCFG) and various related affiliates, stepped in as the real “sellers” in transactions for corporate-owned locations, possibly including franchisee-defaulted locations that corporate had overtaken. It was these entities, not MCFO, that quietly provided seller financing, signed promissory notes, and secured liens against franchisees’ businesses.
So while MCFO claimed “no financing,” the brand’s insiders were busy crafting deals that saddled franchisees with hundreds of thousands of dollars in undisclosed debt; and left them trapped in complex legal and financial entanglements, all for a system insiders quite likely knew would fail.
Court documents and franchisee lawsuits expose this shadow financing network; a network that renders MCFO’s clean Item 10 disclaimers deeply misleading in spirit, if not strictly false in the letter of the law.
Let’s pull back the curtain.
Meet the Players: MCFO, MCFG, Giordanella Holdings, and Various Mac Affiliates
The I Heart Mac & Cheese Franchise Disclosure Document (FDD) names Mac and Cheese Franchise Operations, LLC (MCFO) as the franchisor. But above MCFO sits Mac and Cheese Franchise Group, LLC (MCFG), listed as the parent company in Item 1 of the FDD.
According to sworn affidavits (including Stephen Giordanella’s own), MCFG was allegedly created for owning and operating corporate stores, not selling franchises. Yet the evidence shows that MCFG absolutely did sell stores to franchisees, and financed at least some of those sales itself.
And this wasn’t just a one-time event. It was a pattern with at least three stores and two franchisees; with this scenario suspected to have played out with every single corporate location sale, resale, and franchisee default/resale.
Three Corporate Stores, Three Hidden Loans
Here’s how the reality played out:
1. Athens, Georgia
Buyer: G5 Services, LLC
Deal: Originally signed for the Augusta, GA territory on February 19, 2019, but ultimately pivoted to buying the unopened I Heart Mac & Cheese store in Athens, GA from MCFG around September 2019. The purchase price was represented to G5 in writing by Joseph Amodio as $396,045.25, with a $49,000 rent waiver because MCFG admitted it was “late on building the location so we don’t expect you to pay that.”
Structure: Asset Purchase Agreement + Promissory Note
Financing: Seller-financed note for over $215,000 after G5 made a $200,196.99 down payment.
Dispute: G5 later filed suit against MCFG, MCFO, Mac and Cheese Athens, LLC, Stephen Giordanella, Joseph Amodio, Delia Valles, and Giordanella Holdings, LLC for:
Violation of Florida Deceptive and Unfair Trade Practices Act
Violation of the Florida Franchise Act
Breach of Contract (Asset Purchase Agreement)
Fraud in the Inducement
Rescission of Asset Purchase Agreement
Declaratory Judgment
Despite the franchisor’s claim of offering no financing, MCFG effectively acted as a lender, financing a significant portion of G5’s purchase.
At the time, G5 had been disclosed with the 2018 FDD. Under Item 7, Estimated Initial Investment, the projected cost for furniture, fixtures, and equipment (FF&E) ranged from $72,000 to $85,000. Yet, behind the scenes, Delia Valles arranged equipment financing for G5 through Alliance Funding Group. Alliance Funding allegedly paid MCFG $113,166.99 across two equipment leases for the Athens restaurant. Valles purportedly then directed G5 and its principal, Kimberly Grotz, to sign these leases, personally obligating them for the equipment debt. Alliance Funding then sold the leases to Amur Equipment Finance and Pawnee Leasing Corporation to collect the monthly payments. Notably, the total Estimated Initial Investment disclosed in the 2018 FDD did not exceed $327,000.
Although the Athens location’s grand opening was scheduled for November 20, 2019, MCFG and G5 reached that point without any executed Asset Purchase Agreement in place. Mere hours before opening, MCFG’s in-house counsel, Marci Rubin, sent G5 a stack of agreements, including an Asset Purchase Agreement, Promissory Note, Security Agreement, and an Addendum to the Franchise Agreement, for immediate execution. G5 feared that without signing, it would not be allowed to open, despite having already sunk hundreds of thousands of dollars into preparing the store.
To G5’s shock, the Asset Purchase Agreement listed the purchase price as $415,658.72, not the $396,045.25 that Joseph Amodio had quoted just weeks earlier. This new figure alone exceeded the maximum initial investment disclosed in the FDD by more than $130,000; a pattern all too familiar with the I Heart Mac & Cheese franchise.
Adding to the frustration, the Asset Purchase Agreement’s total included the cost of furniture, fixtures, and equipment (FF&E); even though MCFG had already been paid for that equipment through the financing arranged with Alliance Funding Group. As a result, G5 and the Grotz’s were left personally responsible for equipment leases totaling $113,166.99, entirely separate from the Asset Purchase Agreement. Meanwhile, the actual value assigned in the agreement for Equipment and Furniture and Fixtures was only $86,857.49, far less than the debt G5 had incurred through the leases.
Allegedly, Rubin and Giordanella further informed G5 that although Amodio promised a $49,000 rent waiver, G5 would now be responsible for paying half of the total carrying costs of $68,001.28; an amount that came to $34,000.64 according to the Asset Purchase Agreement’s breakdown of costs linked above. Under intense pressure, and facing the prospect of losing their entire investment (a familiar refrain), G5 and the Grotz family signed the agreements and opened the Athens location on November 20, 2019.
But the problems only snowballed from there.
As it turned out, MCFG, through Mac and Cheese Athens, LLC, was allegedly already in default on the lease for the Athens location on the very day G5 executed the Asset Purchase Agreement. This despite MCFG’s representation that it held the lease free of defaults. MCFG had also committed to cover rent payments through November 2019. Yet, by February 6, 2020, G5 received a letter from the landlord stating that a staggering $59,957.41 was due through December 31, 2019. Moreover, part of the Asset Purchase Agreement allegedly guaranteed G5 a tenant improvement allowance (TIA) of $71,706. The landlord’s February letter confirmed that MCFG and/or Mac and Cheese Athens had failed to submit the required documentation to claim the TIA. Subsequently, G5 was slapped with a notice of default demanding $70,842.61 in past-due rent. MCFG and/or Mac and Cheese Athens refused to pay these past-due amounts or help secure the TIA funds.
It didn’t stop there. G5 also learned that MCFG and Mac and Cheese Athens had misrepresented that the Athens store assets were free and clear of liens. In reality, Mac and Cheese Athens, via Giordanella Holdings, owed the contractor at least $18,196.96 for buildout costs. That contractor began directly demanding payment from G5 at the restaurant. Why would Giordanella Holdings, a non-disclosed entity, have executed construction contract for the build-out of the Athens, GA corporate locations instead of MCFG or Mac and Cheese Athens?
Here are a few possibilities:
1. Shielding the Franchisor and MCFG from Liability
By having Giordanella Holdings, LLC sign the construction contract, Stephen Giordanella created a legal barrier between the franchisor entities and the risks associated with the build-out:
Construction risk: If there are cost overruns, disputes, liens, or defects, the liability sits with Giordanella Holdings rather than directly hitting MCFG or Mac and Cheese Athens.
Creditor claims: If the contractor files a lien (which it did), the contractor must pursue Giordanella Holdings, which may be undercapitalized or simply a shell with minimal assets, rather than attacking the franchisor or MCFG.
This shields the “official” franchisor entities from lawsuits and financial exposure.
2. Avoiding FDD Disclosure Obligations
If the franchisor (MCFO) or even MCFG had executed the construction contract:
FDD disclosure rules might kick in. If the franchisor or its affiliates directly contract for significant build-outs, that relationship could arguably be considered a “supplier relationship,” triggering additional disclosures in Items 1, 3, or 8. That would expose connections the franchisor might prefer to keep quiet.
By keeping Giordanella Holdings out of the FDD entirely, Giordanella concealed the true contracting party behind the build-out costs and any debts arising from them.
3. Preserving Flexible Financial Flows
It’s also possible Giordanella used Giordanella Holdings as a funnel for funds:
Construction payments could be routed through Giordanella Holdings and used however Giordanella saw fit, without the same level of franchisee oversight or required financial reporting as MCFG would face.
This makes tracing money, e.g., deposits, payments to subcontractors, or diverted funds, far more complicated for franchisees, courts, or regulators.
4. Obscuring True Project Costs
Giordanella Holdings’ involvement creates layers of opacity:
Franchisees like G5 might see only invoices or asset purchase agreements from MCFG, without realizing Giordanella Holdings executed and controlled the original build-out contract.
This makes it easier to inflate costs or double-bill; for example, charging G5 for equipment already paid off through lease financing, or demanding payments for “assets” while separate construction debts remain unpaid.
This structure leaves franchisees exposed to liens and payment demands they never anticipated.
5. Control and Leverage Over Franchisees
By keeping the build-out contract outside the franchise entity structure:
Giordanella Holdings retained direct leverage over franchisees who might later occupy the store.
If franchisees defaulted or tried to walk away, Giordanella Holdings might claim a financial interest in the premises, the build-out, or the equipment, creating another layer of pressure to keep franchisees compliant.
In the end, G5 was on the hook for a total purchase price of $528,825.71, comprised of the $415,658.72 Asset Purchase Agreement and $113,166.99 in equipment leases, far exceeding the FDD’s disclosed maximum of $327,000 for an initial franchise investment. Facing eviction for debts owed by MCFG/Mac and Cheese Athens/Giordanella Holdings and with a contractor’s lien hanging over their business, G5 closed the Athens, GA restaurant on March 17, 2020. The Grotz family ultimately filed for bankruptcy, and the lawsuit was quietly settled between the bankruptcy trustee and the defendants not long after. This settlement is in direct contradiction to the latest FDD the G5 lawsuit is disclosed in, 2025 Pilar Coffee Bar and Iced Treats, in which the status is listed as “pending.”
2. Patchogue, New York
Buyer: BT Patchogue, LLC
Deal: Bought the corporate store at 3 Village Green, Patchogue, NY.
Price: $463,167.46.
Financing: Half paid upfront; half financed via a $231,583.73 Promissory Note at 7% interest.
Outcome: Franchisees defaulted. MCFG sued the Buyer’s principals in Florida to collect the unpaid balance plus default interest.
3. Bayside, Queens, New York
Buyer: BT Bayside, LLC
Deal: Bought the corporate store in Bayside, NY.
Price: $306,088.28.
Financing: Again, cash up front then financed in part via a $230,838.28 Promissory Note.
Outcome: Franchisees defaulted. MCFG sued the Buyer’s principals for nearly a quarter-million dollars plus interest.
The Torres & Attardo Saga: A Web of Hidden Loans, Insider Connections, and Legal Fallout
Another striking example of hidden financing and undisclosed conflicts behind I Heart Mac & Cheese emerges from the litigation involving New York franchisees Elizabeth Torres and Cory Attardo. Their story weaves through multiple lawsuits, revealing both undisclosed loans and deep insider relationships at the heart of the brand’s expansion.
MCFG v. Torres & Attardo – The Seller Financing Dispute
In 2019, Elizabeth Torres and Cory Attardo entered into transactions to purchase two corporate-owned I Heart Mac & Cheese restaurants:
One in Patchogue, NY
One in Bayside, Queens, NY
These deals were structured through Asset Purchase Agreements between Mac and Cheese Franchise Group, LLC (MCFG) and the franchisees’ business entities, BT Patchogue, LLC and BT Bayside, LLC. Each transaction involved:
Partial cash payments at closing.
Substantial balances financed through Promissory Notes personally guaranteed by Torres and Attardo; and, in the case of Patchogue, also by Diana Carbone and Frank Marino.
Key deal figures:
Patchogue, NY Store:
Purchase price: $463,167.46
Financed in part via a $231,583.73 promissory note at 7% interest for 5 years.
Bayside, NY Store:
Purchase price: $306,088.28
Financed in part via a promissory note totaling $230,838.28 under similar terms.
According to MCFG’s lawsuit:
Torres and Attardo defaulted on the promissory notes for both stores.
As of filing, MCFG claimed:
Over $195,657.26 plus interest was owed on the Patchogue note.
Over $223,690.05 plus interest on the Bayside note, suggesting additional amounts may have accrued from other fees, interest, or obligations beyond the base note value.
Default interest rates spiked as high as 18%.
However, a significant insider connection exists in the Patchogue transaction:
BT Patchogue, LLC had four members:
Elizabeth Torres
Cory Attardo
Frank Marino — who is Stephen Giordanella’s cousin
Diana Carbone — a friend of Frank Marino
Despite pursuing Elizabeth Torres and Cory Attardo for the Patchogue note defaults, MCFG did not name either Diana Carbone or Frank Marino as defendants for any breach of the Patchogue Promissory Note. This selective litigation raises serious questions about whether the franchisor’s pursuit of debt enforcement was influenced by personal relationships and potential conflicts of interest.
United States Industrial Service, Inc. v. MCFG – The Bayside Lease Fallout
While MCFG was suing Torres and Attardo for unpaid promissory notes, it faced its own legal troubles tied to the Bayside, NY location.
United States Industrial Service, Inc. (USIS) sued MCFG as the successor landlord under the Bayside restaurant’s lease. The complaint revealed:
The original lease for the Bayside premises (41-19 Bell Blvd., Bayside, NY) was signed in March 2018 between 83-32 Parsons Blvd LLC (the original landlord) and Mac and Cheese Bayside NY, LLC.
MCFG signed a Limited Guaranty of Lease, personally guaranteeing the tenant’s obligations under that lease.
The lease was later assigned to BT Bayside, LLC as part of Torres and Attardo’s purchase.
As of April 2020, BT Bayside, LLC stopped paying rent.
USIS sued MCFG for:
Breach of the lease guaranty.
Over $209,648.25 in unpaid rent plus additional costs.
Attorneys’ fees and collection expenses.
This lawsuit highlights a stark contradiction:
While MCFG was chasing franchisees for promissory note payments tied to Bayside, MCFG itself was defaulting on its own obligations under the Bayside lease.
Franchisees like Torres and Attardo were left sandwiched between MCFG’s debt collection lawsuits and landlord demands over unpaid commercial rent, further evidence of hidden financial risks never disclosed in the franchisor’s Item 10 statements.
Ultimately, both cases summarized above were settled.
Why This Matters for Item 10
These cases starkly illustrate how:
MCFG functioned as a hidden lender, financing franchise purchases of corporate-owned stores while simultaneously claiming in the franchisor’s FDDs that no direct or indirect financing was offered.
Franchisees were exposed to large debts secured by personal guarantees, often unaware of the true financial risks involved.
The presence of insiders like Frank Marino in BT Patchogue, LLC raises troubling questions about selective enforcement and potential conflicts of interest.
Franchisees faced hidden lease liabilities stemming from the franchisor’s own financial defaults, further entangling them in obligations never disclosed in the FDDs.
The Torres and Attardo saga perfectly demonstrates how a franchisor’s repeated public disclaimers of “no financing” can be legally true on paper, but deeply misleading in practice. The shifting roles of affiliated entities like MCFG, insider relationships, and undisclosed financing arrangements render the franchisor’s Item 10 disclosures deeply problematic, if not outright deceptive.
Asset Sale… Or Franchise Sale in Disguise?
Here’s the dirty secret: calling these deals “asset purchases” doesn’t change the reality:
✅ The buyers still had to sign franchise agreements to continue operating under the I Heart Mac & Cheese brand.
✅ The stores remained branded and operating within the franchise system, indistinguishable from any other franchise location.
✅ MCFG retained liens and security interests through security agreements and possibly UCC filings, effectively using the businesses themselves as collateral for seller-financed loans.
✅ Franchisees like G5 Services, Torres, and Attardo were pushed into signing these deals under extreme time pressure, inflated prices, and hidden liabilities, and in the case of G5; without fully executed agreements until the day of store opening.
In every practical sense, these were franchise sales financed by the franchisor’s insiders.
So why claim in the FDD that there’s no direct or indirect financing?
Because once a franchisor admits to offering financing, even indirectly, federal and state disclosure laws impose far stricter requirements. Interest rates, collateral terms, cross-default provisions, personal guarantees, and financial representations all belong in Item 10. None of this ever appeared in MCFO’s FDDs from 2017 to 2023.
A Shell Game of Entities
The franchisor’s defense? “It wasn’t us—it was MCFG,” the corporate-store entity and parent to MCFO, selling these businesses. But that’s a legal shell game.
MCFO sells new territories to franchisees.
MCFG sells existing corporate stores to franchisees.
Both routes trap franchisees inside the same I Heart Mac & Cheese system; only in these cases, the buyers were shackled to substantial seller-financed debt and hidden obligations.
And the insider connections only deepen the concerns:
In the Patchogue, NY deal, BT Patchogue, LLC included Frank Marino, Stephen Giordanella’s cousin, as a member. Yet MCFG chose not to sue him for breach of the promissory note, even as it pursued Elizabeth Torres and Cory Attardo for hundreds of thousands of dollars.
Stephen Giordanella himself admitted under oath that MCFG was created to own and operate corporate stores, not sell franchises. Yet selling corporate stores; especially under seller financing, with franchise agreements attached; is unequivocally selling franchises when the brand, system, and trademark remain unchanged.
The Real Consequences
By hiding behind MCFG and a maze of affiliates, the brand:
Avoided disclosing the true extent of franchisor-backed financing under Item 10.
Concealed from franchisees the brand’s willingness to act as a de facto lender.
Exposed franchisees to ballooning debts, default interest rates as high as 18%, hidden liens, unpaid leases, and personal liability.
Selectively enforced debts in ways that raise questions about fairness and potential insider protection.
When franchisees inevitably struggled under these crushing terms, lawsuits followed, one after another. And each time, the franchisor’s insiders swooped in to collect on the very loans they claimed never existed.
The Bottom Line
If a franchisor tells you, “We don’t offer financing,” demand proof.
Look for hidden affiliates. Search corporate records. Ask existing franchisees how their deals were really funded, and under what terms.
Because in the world of I Heart Mac & Cheese, the difference between a clean cash deal and a franchisor-financed trap is often buried under a different LLC name; and a pile of promissory notes and undisclosed obligations.
Beyond the binder, there’s reality. Always follow the money.
This information is based on publicly available documents, court filings, reports from franchisees, and the franchisor’s Franchise Disclosure Document (FDD). Interpretations, observations, and conclusions drawn herein represent the informed opinions of Franchise Reality Check™ and are intended to encourage deeper due diligence by prospective franchisees. This content should not be construed as legal, financial, or investment advice. Prospective investors should consult with a qualified franchise attorney and CPA before making any franchise purchase decisions.
