Pilar Coffee Bar Franchise-item 3

Pilar Coffee Bar & Iced Treats – MARCH 2025

Any time you see a 🔎, that means that members of our staff have done SOME (not all) due diligence for our readers already. This marked information was not found in the FDD and could only be discovered by searching available public records.

Item 3 of the Franchise Disclosure Document (FDD) is intended to alert prospective franchisees to lawsuits or regulatory actions involving the franchisor, its affiliates, or leadership. These disclosures are meant to help potential buyers assess the risk of doing business with the franchise.

In the case of Pilar Coffee Bar & Iced Treats, Item 3 disclosures raise serious concerns. The document reflects a complex legal history inherited from affiliated brands, particularly Mac and Cheese Franchise Operations, LLC. Many of the listed lawsuits involve recurring allegations of franchise fraud, misrepresentation, and regulatory violations; yet even more concerning is how these disclosures are presented: with omissions, misstatements, and selective framing.

Overview

• Franchise: Pilar Coffee Bar & Iced Treats (Pilar Operations, LLC)

• FDD Year Reviewed: 2025 (covers business through December 31, 2024

• Industry: Food Service; Beverages

• Notes: Publicly filed FDD obtained from the State of Illinois, as filed by the franchisor

Key Observations

🔎 Several lawsuits marked as 'pending' were in fact settled/voluntarily dismissed, including the G5 Services and Leaf/Miller cases. Listing settled cases as ongoing gives the appearance of transparency while obscuring resolution terms and liability.

🔎 Other cases marked as 'settled' are still active. This includes the RQ Management lawsuit, which remains open.

🔎 Disclosed regulatory actions omit key filings, such as the Administrative Complaint issued by the State of Indiana, which succeeded a cease and desist order.

🔎 The flagship I Heart Mac and Cheese location was evicted twice; once in 2017 and again in 2019, but neither event is disclosed. Both are material to understanding the financial and operational viability of the franchisor since the same individuals operate both Pilar Coffee and I Heart Mac and Cheese. Noted, however, that the 2019 eviction action was settled/dismissed on April 7, 2021.

🔎 The California DFPI Consent Order is minimized, despite being a three-year regulatory action resulting from FDD deficiencies and other violations of California law.

🔎 The Lena Dawley case involved a confidential settlement, yet the FDD discloses that Stephen Giordanella and his trust paid $150,000 to resolve it. Disclosure of a confidential settlement amount raises concerns about inconsistent disclosure standards and selective transparency.

🔎 A 2020 federal lawsuit against franchisees was never disclosed, even though it involved claims of defamation and tortious interference filed by the franchisor against its own franchisees (Case No. 20-82048, removed from Palm Beach County Case No. CACE 20-010969). According to the Indiana Administrative Complaint, this lawsuit was not disclosed in multiple DFPI filings between 2020 and 2022, nor was it disclosed in Pilar’s 2025 FDD. The omission of litigation initiated by the franchisor against its own franchisees is a significant red flag, as it speaks directly to how disputes with franchisees are handled and may influence a prospective buyer’s decision to invest.

Summary of Concerns

• Some lawsuits are misrepresented as active when they’ve already been resolved

• Other cases marked as resolved are, in fact, still being litigated

• Key regulatory complaints and administrative actions are omitted

• Multiple material evictions are never disclosed

• Settlement terms are disclosed selectively, with some confidential amounts shared while others are concealed

Reality Check: Pilar Coffee Bar’s Item 3 disclosures reflect a pattern of selective transparency and downplayed liability. Prospective franchisees should view these omissions and misrepresentations as red flags, especially given the leadership’s deep ties to brands with ongoing franchisee complaints and legal action.

Because once you sign, it’s too late for a reality check.

This report is based on publicly available documents, court filings, and the franchisor’s Franchise Disclosure Document (FDD) as filed with the State of Illinois. 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.