I Heart Mac and Cheese: The Item 7 Illusion

How Initial Investment Estimates Were Repeatedly Understated, Ignored, and Outpaced by Reality

📘 Item 7: Initial Investment – What the FDD Claimed

When I Heart Mac & Cheese issued its first Franchise Disclosure Document (FDD) in 2017, Item 7 estimated that the total investment necessary to begin operation of a single location would range from $175,000 to $271,000.

That estimate included:

• Build-out: $47,400 to $100,000

• Equipment: $72,000 to $85,000

Those numbers looked reasonable, until you tried to build a store.

📉 My Actual Build-Out Cost? $373,476.22

That’s more than the entire high-end estimate disclosed in the FDD. And I’m not alone.

Here’s what’s critical:
At the time the 2017 FDD was issued (April 2017), the only built location was the Fort Lauderdale flagship, constructed by Alternative Constructors under contract with founder Michael Blum.

According to public court records from Alternative Constructors v. I Heart Mac and Cheese, LLC (CACE-16-010241, Broward County), the contract amount for that build-out was $125,000, already 25% higher than the disclosed maximum of $100,000. Both Blum and VP/General Counsel Marci Adler (formerly Rubin, the author of the FDD) were aware of that cost.

Yet they still signed off on a FDD that understated actual construction expenses.

🗓️ Discovery Day: What I Was Told vs. What I Knew

By the time of my Discovery Day on September 1, 2017, I hadn’t received the FDD. Instead, in August I was emailed a Confidential Business Plan Summary dated May 2017, which claimed the total investment ranged from $164,000 to $270,000; even lower than the FDD would later disclose.

That day, I was told by Michael Blum and their in-house contractor that the cost to build the new locations in Pembroke Pines, Coral Springs, and Parkland, FL, three stores then under lease or construction, was within the range stated in the Summary document. What they didn’t tell me was that those locations were already seeing costs higher than expected.

I signed a franchise agreement on October 17, 2017 not knowing the true costs, because those responsible for providing that information hadn’t disclosed the truth.

📊 A Pattern of Understatement: 2017–2023

The misleading ranges didn’t end with 2017. In fact, they became part of the I Heart Mac and Cheese playbook.

Here’s how the Item 7 figures evolved; still failing to reflect real-world franchisee experiences:

FDD Year Disclosed Investment Range Franchisee Reports

2017* $175,000 – $271,000 Only the flagship location was constructed during the 2016 reporting period

2018* $197,500 – $327,000 No locations finished construction by December 31, 2017

2019* $216,000 – $355,500 My location: $373K for the 2018 reporting period. 1 other franchise and 5 corporate opened in 2018

2020 $251,100 – $464,500 Franchisees report they topped $500K during the 2019 reporting period

2021 $273,200 – $536,000 Franchisees report $750K+ during the 2020 reporting period

2022 $277,500 – $756,300 Franchisees report $800K+ during the 2021 reporting period

2023 $330,000 – $808,500 One franchisee reported almost $1.5 million initial expenses during the 2022 reporting period

*The amount listed for Leasehold Improvements/Build Out remained the same for each of these years; $47,400-$100,000

What’s missing from this table?

That original $175,000 “low end” vanished, despite the FTC’s requirement that franchisors include their actual lowest and highest investment figures.

Meanwhile, public statements by company leadership told a much different story.

In a QSR Magazine article published December 2018, CEO Stephen Giordanella was quoted as saying:

“Because I Heart Mac & Cheese has no need for expensive back-of-house equipment, buildouts range from $190,000 to $250,000.”

That statement directly contradicted the 2018 FDD, which disclosed a high-end build-out investment of $327,000, and Giordanella would have reviewed and authorized that FDD earlier that year.

Worse still, the article cites corporate annual sales of $5 million, a performance representation that was not included in the FDD’s Item 19 at the time. Making public financial performance claims outside of a valid Item 19 violates FTC disclosure requirements and state franchise laws.

The same article highlights how I Heart Mac & Cheese was marketed:

“It’s a very inexpensive franchise to get into,” Giordanella says. “It’s created for the family that may have a little equity in their home, where they could take out a second mortgage and get into their own business and control their own destiny as a family.”

That statement is particularly troubling. Encouraging financially vulnerable families to borrow against their homes to enter a franchise system whose actual startup costs were routinely underreported, misleading, or omitted entirely is reckless; and raises serious ethical and regulatory concerns.

Franchisees were given investment estimates that didn’t reflect reality. Then they were marketed a dream of affordable ownership, sometimes through media outlets that weren’t subject to the truth-in-disclosure rules that govern FDDs.

As the years went on, more and more franchisees signed on, spent far more than they were told to expect, and watched their stores close. The ones who opened in 2021, for example, were told they’d need a maximum of $536,000. One franchisee later reported spending nearly $1.5 million.

And through it all, the franchisor’s leadership continued making claims in the press that didn’t align with their own legal disclosures.

💔 The Impact on All of Us

The Item 7 estimates weren’t just off, they were damaging. Every franchisee who signed on during this period was working with financial expectations that were never real. People emptied their savings, borrowed from retirement accounts, took on SBA loans; believing they were buying into a business model that was affordable and proven.

What they bought into was a system that knew its numbers didn’t match reality and disclosed them anyway.

The consequences were devastating. Stores failed. Lives were upended. And the people who signed those disclosures moved on to their next franchise venture, Pilar Coffee Bar and Iced Treats, without accountability nor reparations made to the damaged I Heart Mac and Cheese franchisees.

I lived it. I lost almost everything. Went through Chapter 7 bankruptcy in 2019 because of it. And I know I’m not the only one.

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.