Seventeen Ways Into Your Back Pocket: The Real Story of I Heart Mac & Cheese's Item 8
From the beginning, the I Heart Mac & Cheese franchise system was built on a tightly controlled web of "approved vendors" and mandatory sourcing requirements that financially benefited the franchisor and its undisclosed affiliates. This vendor structure was formalized in Item 8 of the Franchise Disclosure Document (FDD), a section intended to protect franchisees by disclosing sourcing restrictions and conflicts of interest. But in reality, Item 8 became a mechanism to extract revenue at the expense of franchisee sustainability.
What was disclosed on paper didn’t match what happened in the field.
What Item 8 Disclosed, and What It Didn't
Between 2017 and 2023, Item 8 of the I Heart Mac & Cheese FDD consistently stated that franchisees were required to purchase from franchisor-approved vendors. It claimed these restrictions were in place for quality and uniformity. However, only in the 2023 FDD did the true extent of the franchisor’s profit from these restrictions begin to surface:
The 2023 FDD disclosed over 20 categories of supplier rebates, including for uniforms, pasta, bacon, architecture services, and more
Payments from vendors were routed through Giordanella Holdings, LLC and Mac and Cheese FLL, LLC, entities not disclosed in Item 1, to the tune of more than $1.3 million in 2022
Franchisees were told they would receive opening incentives from Coca-Cola and Sysco, $1,100 and $3,000 respectively, but I am the only franchisee I am aware of who received the Coca-Cola incentive. Most franchisees reported receiving their Sysco incentive as a credit on one of their invoices. I received my Coca-Cola incentive directly from Giordanella Holdings, LLC after chasing it down for several months
This arrangement created a closed-loop vendor system where insiders profited from every mandatory purchase. The franchisor controlled pricing, vendor relationships, and rebate flows, while franchisees had no visibility or leverage.
My Experience: The Cheese Sauce Debacle
As the first I Heart Mac & Cheese franchisee to open a location, I encountered the hidden costs and systemic failures embedded in the supply chain from day one. The proprietary cheese sauce, arguably the most essential menu item, never arrived in time for my grand opening on April 16, 2018. According to Sysco, the shipment was “lost,” and they had no idea when or if it would resurface. With customers on the way and no time to wait, my team and I had no choice but to scramble and produce the cheese sauce in-house, despite having no preparation and a full slate of launch responsibilities.
Sysco finally located the missing shipment, but the solution quickly became another problem. Throughout 2018, cheese sauce was being manufactured by two undisclosed vendors and funneled through Sysco for national distribution. The cost of that first case was $113, but it didn’t stay there long. Prices climbed to $129.96 per 4-gallon case, with roughly $40 of that cost attributed to shipping alone. Over time, I paid more than $7,000 in freight charges just to get required product into my Oklahoma store.
Worse, the product was deeply flawed. Bags arrived containing burnt residue, off-colors, hair, and foreign particles. The sauce was vacuum-sealed, making it impossible to inspect before opening, and impossible to trust once inside.
After documenting multiple incidents and escalating the issue to corporate, I was granted a rare variance to make the cheese sauce in-house using Chef Michael Blum’s proprietary recipe. This decision cut my cost to $36.40 per 4-gallon yield and eliminated the quality issues entirely. I later secured a second variance, this time to switch from Sysco to Ben E. Keith as my primary food distributor. The result? Lower prices, fresher ingredients, and vastly improved service. The relief was short-lived, however. With revenues falling weekly, the reprieve was “too little, too late”.
These variances weren’t handed out, they were the result of persistent advocacy. And to my knowledge, no other franchisees were offered the same opportunities, leaving them trapped in a system that profited off their dependence.
Franchisee Reports After 2019
By 2020, other franchisees began reporting the same problems. Over the next four years:
Franchisees received cheese sauce that was expired by up to two years
Products were found with mold inside sealed buckets
IHMAC issued internal "Shelf-Life Extension" letters to justify selling old inventory, but these were not USDA-approved nor backed by any certified lab
Franchisees were forced to pay more than $240 for a 5-gallon bucket of sauce, almost 7x my own in-house production cost
In March 2023, a new entity, IHMAC Prepared Foods, LLC, was quietly formed in Florida. Its authorized persons are Stephen Giordanella and Delia Valles, and its listed manager is Mac and Cheese Franchise Group, LLC, the parent of the franchisor. While this entity did not have to be disclosed in the 2023 FDD, it is believed to be the current manufacturer of the proprietary cheese sauce. If true, it will require full disclosure in both Item 1 and Item 8 of the 2024 FDD. Bearing in mind, we have not seen the 2024 nor the 2025 FDD yet to ascertain whether this entity was disclosed or not.
Selling to the Public While Franchisees Struggle
In 2024, I Heart Mac & Cheese began selling frozen prepared mac and cheese bowls directly to the public through QVC. Priced at $85 for eight 8.5 oz bowls, the product uses the same proprietary ingredients that franchisees are contractually required to purchase at inflated prices. The QVC launch was presented as a brand milestone, but franchisees were never consulted, notified in advance, or offered any form of participation or revenue share.
Chef Michael Blum appeared on air to promote the products, despite no longer being listed in Item 2 of the Franchise Disclosure Document. Meanwhile, franchisees continued to report issues with expired, overpriced, and poor-quality ingredients. The cheese sauce used in these frozen bowls was the same sauce that many franchisees received with mold or past-due expiration dates, some of which came with questionable internal "certificates of guarantee" rather than USDA or FDA clearance.
Stephen Giordanella announced the QVC partnership in an internal email to franchisees after the fact, framing it as an opportunity to increase brand awareness and drive local traffic. However, there was no marketing plan, no store tie-in, and no measurable benefit offered to the franchisees. This email, combined with the franchisor’s control over the supply chain, made clear that the real purpose was to create a new revenue stream for insiders using the infrastructure and ingredients funded by franchisee investment.
By selling directly to the public through QVC, the franchisor is effectively bypassing its own franchise system. It is leveraging the very supply chain that franchisees are required to support, while providing them with no pricing relief, no quality guarantees, and no stake in the public-facing revenue their stores helped create.
Could Sysco Be Liable For Food Safety Issues?
As the exclusive national distributor, Sysco had a duty to ensure food safety, labeling compliance, and proper storage. If Sysco distributed products it knew, or should have known, were expired or mislabeled, it could face liability under:
Its Master Distribution Agreement (MDA) with the franchisor
State and federal food safety laws, particularly if shelf-life extensions were not USDA/FDA compliant
The Uniform Commercial Code (UCC), which requires that goods be fit for consumption and match what was represented
Franchisees received cheese sauce labeled "Use By 12/04/22" in April 2024, with only an internal IHMAC letter claiming it was still safe. If Sysco accepted that internal guarantee without third-party testing or regulatory clearance, it may be complicit in distributing food that was unfit for public sale.
Bottom Line
Item 8 was supposed to protect franchisees by disclosing sourcing limitations and conflicts. Instead, it became a blueprint for extracting profit from franchisees at every turn:
Vendors were controlled or owned by the franchisor and its affiliates
Rebates flowed back to undisclosed entities
Franchisees paid inflated prices for low-quality product
Efforts to secure better pricing were discouraged or outright denied
New revenue streams (e.g., QVC) excluded franchisees entirely
Franchisees deserve transparency. Regulators deserve answers. And prospective franchisees deserve the truth before signing on the dotted line. That truth lives in Item 8.
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.
