Freddy’s Frozen Custard Franchisee Files Chapter 11 – Why 32 Locations Are at Risk in 2025
A major alarm has sounded for the beloved frozen dessert chain Freddy’s Frozen Custard & Steakburgers. Its longtime franchise operator, M&M Custard LLC, has filed for Chapter 11 bankruptcy, putting 32 Freddy’s locations at risk. This is not a Freddy’s corporate collapse — but it is a serious moment that could reshape parts of its franchise business.
🔍 What’s Going On: Key Details from the Filing
- On November 14, 2025, M&M Custard LLC, based in Overland Park, Kansas, submitted a voluntary Chapter 11 bankruptcy petition.
- Their most recent financial statement reports $5.2 million in assets versus nearly $28 million in liabilities — a sign of deep financial trouble.
- The petition covers 32 Freddy’s restaurant locations distributed across six states, including Missouri, Kansas, Illinois, Indiana, Kentucky, and Tennessee.
- Despite the bankruptcy, all 32 restaurants are currently remaining open, according to the filing. M&M Custard has asked the court for operational flexibility to keep business running.
- As part of their restructuring plan, they want permission to move money between affiliate units, presumably to manage cash flow more efficiently during the reorganization.
💡 Why This Is a Big Deal — Not Just for One Franchisee
This bankruptcy is more than a simple financial restructuring — it could have ripple effects across the Freddy’s brand and the broader fast-casual market:
- Franchise vs. Brand Risk
Even though Freddy’s corporate itself isn’t filing, the bankruptcy of a major franchisee like M&M Custard could shake consumer confidence and franchise stability in the affected markets. - New Leadership & Strategy
Freddy’s is navigating a fresh chapter after being acquired by a private investment firm. That new ownership may need to manage or even support this restructuring to protect the brand’s reputation. - Economic Pressure on Franchisees
Rising costs, tight profit margins, and intense competition in the fast-food dessert niche are squeezing franchise operators. This filing signals stress not just for M&M — but possibly for other franchisees too. - Opportunity to Realign
Chapter 11 is often a tool for companies to transform rather than shut down. M&M Custard may emerge leaner and more efficient, with its most profitable locations intact. - Franchise System Signal
Investors and competing franchise networks will be watching closely. This event could influence how future Freddy’s franchise deals are structured, especially around debt and operating costs.
🔭 What Might Happen Next
- Selective Store Closures: Not all 32 locations are guaranteed to close — some underperforming units might be shut down during restructuring, while stronger locations continue operating.
- New Buyer Opportunities: Freddy’s corporate or another franchisee might step in to take over certain struggling stores.
- Debt Negotiations: M&M Custard could renegotiate with lenders to reduce its financial burden and extend deadlines.
- Brand Support: Freddy’s leadership may need to back M&M with financial or operational support to avoid damaging franchise fallout.
- Reinvestment Phase: If the restructuring succeeds, there could be reinvestment in refreshed store locations or updated business strategies.
✅ Why This Matters for Customers, Employees & Investors
- Customers in the affected regions may wonder if their local Freddy’s will shut down — but continued operations suggest there’s hope.
- Employees face uncertainty but also the potential for stabilization if the bankruptcy plan goes through and stores remain open.
- Investors and Franchisees will use this situation as a data point on risk, expansion strategies, and how Freddy’s and similar brands manage financial pressure.
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🧭 Final Thoughts
M&M Custard’s Chapter 11 filing is a turning point for Freddy’s Frozen Custard in certain markets. While it’s not the end of Freddy’s, it’s a wake-up call: even well-known franchise brands are vulnerable when key operators run into trouble.
If managed smartly, this could be a restructuring opportunity — enabling M&M to shed debt, keep core stores, and work for a more stable long-term future. But missteps could jeopardize trust among customers and franchise partners.
In the fast-casual dessert world, this moment may define Freddy’s next chapter.
Frequently Asked Questions (FAQ)
Q1: Does this mean Freddy’s is going out of business?
No — the bankruptcy filing is from a franchisee, not Freddy’s corporate. There’s no indication that Freddy’s as a brand is shutting down.
Q2: How many Freddy’s locations are affected?
The filing covers 32 Freddy’s restaurants across six states.
Q3: Will any of those restaurants close?
It’s possible. Some locations may close as part of the restructuring, but the current plan allows them to remain open while reorganizing.
Q4: Why did M&M Custard face bankruptcy?
Their reported debt is high — nearly $28 million — and they need time to realign their finances, renegotiate with creditors, and stabilize operations.
Q5: What could this mean long-term for Freddy’s?
This could lead to a restructuring that strengthens M&M’s business or shifts some locations to new operators. Freddy’s corporate brand may also respond strategically to maintain stability.