Freddy’s Frozen Custard Bankruptcy| Freddy’s Kansas City stores| M&M Custard LLC| Freddy’s franchise bankruptcy| Freddy’s location closures| Freddy’s restructuring news| Freddy’s frozen custard news

Freddy’s Frozen Custard & Steakburgers, a beloved American fast-casual chain known for its steakburgers, shoestring fries, and signature frozen custard, made unexpected headlines in November 2025 — but not because of the brand itself. Instead, one of its largest franchise operators, M&M Custard LLC, filed for Chapter 11 bankruptcy, triggering questions, confusion, and concern among customers, employees, and local communities, particularly in the Kansas City metropolitan area.

This report compiles every important detail from the beginning of the situation up to the latest developments, offering a complete understanding of what actually happened, why it happened, and what it means going forward.

1. Background: Understanding Freddy’s and Its Franchise Structure

Before diving into the bankruptcy, it’s important to understand how Freddy’s operates. Freddy’s Frozen Custard & Steakburgers uses a franchise-based model, meaning most stores nationwide are operated by independent franchisee companies. Each franchise group manages its own finances, hires staff, pays leases, buys inventory, and handles operations under Freddy’s brand standards.

Thus, when a franchisee experiences financial trouble, it does not automatically mean the entire Freddy’s brand is collapsing.
This distinction is crucial to understanding the current situation.

2. Who Filed Bankruptcy? — M&M Custard LLC

On November 14, 2025, M&M Custard LLC, based in Overland Park, Kansas, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Kansas.

2.1. What is M&M Custard LLC?

A major Freddy’s franchisee
Operates 32 Freddy’s Frozen Custard & Steakburger locations across multiple states
Has been in the Freddy’s system for years
Manages day-to-day operations at each franchise site

2.2. Chapter 11 Meaning

Chapter 11 does not mean liquidation or immediate closure.
It means:

Restructuring debt
Continuing normal operations
Seeking relief from financial obligations
Possibly closing unprofitable stores

Essentially, it buys time for the company to reorganize rather than shut down.

3. Financial Condition Revealed in the Filing

The bankruptcy filing disclosed the financial reality behind the decision:

3.1. Assets & Liabilities

Assets: around $5 million
Liabilities: around $27–28 million

This means the franchisee owed over five times more than it owned — a severe imbalance pointing to:

High lease costs
Supply and operational costs
Loans
Contracts and vendor payments
Staff salaries
Possibly declining store performance in certain regions

3.2. Signs of Prior Financial Stress

Several indicators point to long-running challenges:

Rising labor costs
Increased food product prices
Competitive pressure in the fast-casual category
Debt obligations on multiple store build-outs
Pandemic-era financial hangover still affecting franchise operators

All of this accumulated into the eventual decision to seek Chapter 11 protection.

4. How Many Freddy’s Stores Are Affected?

A total of 32 Freddy’s Frozen Custard & Steakburgers stores run by M&M Custard were listed in the filing.

States included:

Kansas
Missouri
Illinois
Indiana
Kentucky
Tennessee

This makes M&M Custard one of the largest Freddy’s franchise groups in the country.

5. Kansas City Area Locations Mentioned in the Filing

Local news outlets highlighted three Freddy’s locations in the Kansas City region that appear in the bankruptcy documents:

5.1. Kansas City–Area Freddy’s Affected

Gardner, Kansas
632 E. Main Street
Martin City, Kansas City, Missouri
13628 Washington Street
Sedalia, Missouri
3171 W. Broadway Boulevard

5.2. Are These Stores Closing?

As of now:

All remain open
No closure notices have been issued
Employees continue working
Customers can visit as usual

The filing does not automatically shut stores down, though future decisions may change depending on the restructuring plan.

6. Timeline: Complete From Start to Latest Update

Before Filing (Late 2024 – 2025)

Freddy’s had been exploring financing and franchise system expansion.
Certain franchise groups, especially multi-state operators, faced increasing operational costs.
Analysts reported growing debt pressure on some franchisees, including M&M Custard.

Early 2025

Informal signs emerged: lease pressures, regional performance variation, staffing challenges.
Some stores possibly underperforming, particularly in mid-sized markets.

November 14, 2025 — Bankruptcy Filed

M&M Custard LLC filed official Chapter 11 documents.
Filing included the list of assets, liabilities, leases, and all 32 operating Freddy’s units.

Immediately After Filing

Local and national media picked up the story.
Primary public concerns centered on:
- Possible closures
- Employee job security
- Impact on Kansas City markets

Following Days (Nov 14–16, 2025)

Management clarified internally that operations continue.
No official store closures announced.
Court docket shows:
- Motions for continuing payroll
- Motions to maintain bank accounts
- Motions to continue vendor payments
Franchisee seeks debtor-in-possession stability to keep stores running.

7. Why Did This Happen? — Deep Analysis

7.1. Financial Overstretch

Operating 32 units across six states requires massive:

Inventory investment
Payroll outflows
Lease commitments
Franchise royalty payments

Any slowdown or regional dip can strain finances.

7.2. Cost Inflation

Ingredients such as:

Beef
Dairy
Frying oils
Packaging
have all cost more in 2024–2025.

7.3. High Lease and Utility Costs

Restaurants with high lease rates in commercial zones often struggle unless sales are consistently strong.

7.4. Multi-State Operational Complexity

Managing stores across several states increases:

Transportation costs
Management overhead
Legal compliance
Training requirements

7.5. Competitive Pressure

Brands like:

Culver’s
Dairy Queen
Shake Shack
Five Guys
increasingly compete for similar customer segments.

All these pressures likely contributed cumulatively.

8. What Does This Mean for Customers?

Customers in Kansas City and other markets want to know: Should I be worried?

The short answer:

No — not for now.

Why?

Chapter 11 allows businesses to operate normally.
No store closures have been announced.
Freddy’s corporate continues unaffected.
The brand remains strong nationwide.

Your favorite Freddy’s is still open.

However, changes could occur later:

Lease rejections
Sale of certain stores
Transfer of ownership to another franchisee
Consolidation or restructuring

9. What Does It Mean for Employees?

Employees are typically the most affected group during restructuring.

Current status:

Workers at M&M Custard locations are still employed.
Stores are open and operating.
Payroll typically continues under court approval.

Future possibilities:

If some stores close, staff may be reassigned or laid off.
If stores are sold to another franchisee, employees may retain jobs.
Court decisions will influence long-term employment stability.

10. Impact on Kansas City Business Environment

The Kansas City metro area takes food and restaurant culture seriously, and Freddy’s has been a popular quick-service option for families.

Potential local impacts:

Any closure could affect foot traffic around neighboring businesses.
Job losses could hit local communities.
A restructuring might bring new franchise ownership to the area.
Customers may temporarily feel uncertain about long-term availability.

However, the overall region has a robust quick-service restaurant market, meaning any gaps would likely be filled quickly by other brands.

11. Impact on Freddy’s Corporate Brand

Important point:
This bankruptcy is NOT Freddy’s corporate filing.

Freddy’s Frozen Custard & Steakburgers remains:

Financially stable
Growing in other regions
Expanding new franchise development agreements

Large franchise systems often see individual operators face financial trouble — it doesn’t reflect the entire brand’s health.

In fact, Freddy’s corporate may use this situation to:

Acquire troubled locations
Sell them to stronger franchisees
Improve operational standards

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12. Legal and Court Process Explained

For full understanding, here’s what will happen in the coming weeks and months.

12.1. Case Administration

M&M Custard must file detailed schedules of assets, liabilities, contracts, and leases.
Court will review motions and restructuring plans.
Vendors and lenders may negotiate terms.

12.2. Possible Store Closures

If a store is losing money, the debtor may move to:

Reject the lease
Shut down operations
Transfer the unit

12.3. Store Sales to New Owners

Sometimes Chapter 11 leads to:

Selling stores to stronger franchisees
Converting operations to corporate-owned units

12.4. Long-term Outcome

Most likely endings:

Restructuring with fewer leases
Store sales
Debt reduction
Operational improvements

13. Customer FAQs (Must Include for SEO)

Q1. Is Freddy’s going out of business?

No. Only a franchise operator (M&M Custard) filed bankruptcy — not Freddy’s corporate.

Q2. Are Kansas City Freddy’s stores closing?

Not yet. All stores listed are still open.

Q3. Why did the franchisee file bankruptcy?

High debt, rising costs, operational strain, and lease pressure appear to be primary reasons.

Q4. Will I still be able to order Freddy’s online or via app?

Yes, digital operations continue normally.

Q5. Is my local Freddy’s affected?

Only stores operated by M&M Custard are listed; corporate or other franchisee locations are unaffected.

Q6. Will menu prices rise?

Possibly; inflation and restructuring pressures sometimes lead to price adjustments.

14. Overall Market & Industry Impact

This filing is not an isolated incident. Across the U.S., restaurant franchises face:

Higher credit costs
Wage inflation
Commercial rent escalation
Post-COVID economic rebalancing

M&M Custard’s bankruptcy reflects a broader trend in the industry rather than specific weaknesses in Freddy’s brand.

15. Final Conclusion

The Freddy’s Frozen Custard bankruptcy situation is serious but not catastrophic. It affects only one franchise group — though a large one — and does not undermine Freddy’s corporate growth or brand stability.

Key takeaways:

Freddy’s corporate is NOT bankrupt.
32 franchise stores (including 3 in Kansas City) are under restructuring.
All stores remain open for now.
No immediate closures announced.
The franchisee is reorganizing debts under Chapter 11.
Customers can continue enjoying Freddy’s as usual.

The situation will evolve in the coming weeks as the court reviews restructuring proposals. Some store closures or ownership transfers may happen later, but currently, operations continue uninterrupted.

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by Mirae Asset (m,Stock)