Freddy’s Frozen Custard Franchisee M&M Custard Files Chapter 11, Putting 32 Dairy Queen Rival Locations at Risk

OVERLAND PARK, Kan. — One of the largest operators of Freddy’s Frozen Custard & Steakburgers has filed for Chapter 11 bankruptcy protection, sending fresh shockwaves through the already-stressed frozen dessert and fast-casual sector on Sunday, November 16, 2025.

M&M Custard LLC, an Overland Park–based franchisee that runs 32 Freddy’s locations across six states, submitted its voluntary Chapter 11 petition to the U.S. Bankruptcy Court for the District of Kansas on Friday, November 14. Court filings show roughly $5–$5.2 million in assets against about $27.7–$28 million in liabilities, and list between 100 and 199 creditors. ^[1]

The case has sparked national coverage from outlets including KCTV5 in Kansas City, Newsweek, The Economic Times, ET Now and The Sun, all highlighting the potential risk to dozens of Freddy’s restaurants and the broader pressures facing frozen dessert chains in 2025. ^[2]

Who is M&M Custard — and how many Freddy’s locations are affected?

M&M Custard LLC is not the parent company of Freddy’s. It is a large franchisee that owns the rights to operate Freddy’s restaurants in multiple markets. The company has been part of the Freddy’s system for more than a decade and previously signed expansion agreements in the Chicago area. ^[3]

According to court documents and local reporting, the Chapter 11 filing covers 32 Freddy’s Frozen Custard & Steakburgers locations across:

Missouri
Kansas
Illinois
Indiana
Kentucky
Tennessee ^[4]

KCTV5 notes that three of the affected restaurants are in the Kansas City area, including:

Gardner, Kansas – 632 E. Main St.
Martin City neighborhood of Kansas City, Missouri – 13628 Washington St.
Sedalia, Missouri – 3171 W. Broadway Blvd. ^[5]

These addresses are part of the 32-unit footprint that M&M Custard operates under the Freddy’s banner.

Are Freddy’s locations closing right now?

For the moment, all 32 restaurants are still open.

In filings and in summaries reported by ET Now, KCTV5 and others, M&M Custard tells the court it intends to continue day-to-day operations while it restructures. The company has asked the judge for permission to: ^[6]

Keep using its existing bank accounts and cash-management system
Move money between affiliated restaurant entities to manage cash flow
Pay certain critical bills so stores can keep trading

Bankruptcy documents and media reports also indicate that some store closures are likely as part of the restructuring, even though the filing itself does not automatically shutter any location. ^[7]

For Freddy’s customers, that means:

You can still visit M&M Custard–operated Freddy’s stores today and get the usual menu.
Over the coming months, some locations listed in the bankruptcy schedules may be closed, sold to other franchisees, or otherwise restructured.

Inside the Chapter 11 filing: debts, creditors and affiliates

Newsweek’s review of the filing shows M&M Custard reporting about $5.2 million in assets and $27.7 million in liabilities, with dozens of unsecured creditors. ^[8]

Economic Times and ET Now further note that: ^[9]

The case includes M&M Custard LLC and 31 affiliated entities, all tied to Freddy’s-branded operations.
The company is explicitly seeking authority to keep normal banking relationships and intercompany transfers in place to avoid disruptions at store level.
Some creditors listed include regional banks and vendors such as food distributors and energy-efficiency service providers.

Bankruptcy-tracking sites show that the Chapter 11 case was opened in the Kansas bankruptcy court on November 14, 2025, with early procedural deadlines set into 2026 for a disclosure statement and reorganization plan. ^[10]

In plain language: M&M Custard is asking the court for breathing room to renegotiate its debts, possibly exit unprofitable leases, and reshape its footprint while keeping restaurants open.

What does this mean for the Freddy’s brand?

Several outlets have emphasized one crucial point: this is a franchisee bankruptcy — not a corporate collapse of Freddy’s as a brand. ^[11]

Freddy’s itself is in growth mode:

The chain has more than 550 locations in the U.S. and Canada, and generated over $1 billion in systemwide sales in the past year. ^[12]
In early September 2025, investment funds affiliated with private equity firm Rhône acquired Freddy’s from Thompson Street Capital Partners, with the goal of accelerating market expansion. Freddy’s leadership team — including President & CEO Chris Dull — remains in place. ^[13]

That means:

Most Freddy’s locations are not part of this bankruptcy and continue to operate under different franchise owners or corporate control.
Brand-level marketing, menu development and new-store growth plans remain intact under Rhône’s ownership.

Financial analysts have cautioned, however, that losing or shrinking a large operator like M&M Custard can expose fragility in a franchise system — especially if rising costs push other franchisees into distress. ^[14]

Why are frozen dessert and fast-casual chains under pressure in 2025?

M&M Custard’s filing lands in a year that has already been brutal for dessert-focused quick-service and fast-casual concepts.

1. Dairy Queen: nearly 30 Texas locations shut

Earlier in 2025, American Dairy Queen Corporation pulled franchise rights from Project Lonestar, a major operator in Texas, after a dispute over required remodels. Without access to corporate supply chains, nearly 30 Dairy Queen restaurants in Texas closed, hitting many small towns where the brand has long been a community staple. ^[15]

While those closures were not caused by bankruptcy, they underscore how capital-intensive remodels, franchise standards and supply relationships can make or break local operators.

2. Rita’s Italian Ice: multiple franchisee bankruptcies

Rita’s Italian Ice — another popular frozen treat chain — has also seen franchise-level bankruptcies in 2025:

A Florida franchisee filed for Chapter 11 in June, citing debts of up to $1 million.
Another operator in Tuscaloosa, Alabama, sought Chapter 11 protection in July. ^[16]

Despite these setbacks, Rita’s corporate entity continues to grow and has announced plans to open nearly 40 new locations in 2025, illustrating how franchise systems can face localized distress even while the overall brand expands. ^[17]

3. Consumer and cost pressures

Coverage from Newsweek, Economic Times and investment analysts highlights a broader pattern: ^[18]

Lower- and middle-income consumers have cut back on discretionary spending, including dining out and dessert splurges.
Labor, food, rent and utility costs have climbed sharply, squeezing restaurant-level margins.
Many franchisees carry significant debt from expansion, remodels or pandemic-era survival loans, making them vulnerable to even modest dips in traffic.

For dessert chains in particular, seasonality adds another layer of risk, with winter months often bringing softer sales.

How exposed is Freddy’s to this one franchisee?

While M&M Custard is a large and long-standing partner, it represents only a slice of Freddy’s total footprint:

Freddy’s has over 550–560 restaurants across 37 U.S. states and Canada, according to recent company and third-party data. ^[19]
The 32 locations in the M&M Custard case are concentrated in the Midwest and parts of the South, rather than spread across the entire network. ^[20]

For now, the main impacts are:

Local risk in specific markets (for example, Kansas City suburbs and smaller cities in Missouri, Kentucky and Tennessee) if units are closed or sold.
Operational complexity for Freddy’s corporate team, which will likely need to support transitioning locations, reassure other franchisees and protect brand standards during the restructuring.

The Freddy’s brand itself, backed by Rhône and a diversified base of franchise operators, is not currently seen as being in existential danger because of M&M Custard’s filing.

What happens next in the M&M Custard Chapter 11 case?

Bankruptcy-tracking services show that the newly filed case will move through several key stages in the coming months, including: ^[21]

First-day orders – where the court rules on immediate requests like the use of cash collateral, payroll, and ongoing vendor payments.
Negotiations with creditors – including banks, landlords and vendors, over how much debt will ultimately be repaid and on what terms.
Store-level decisions – M&M Custard will evaluate which restaurants are profitable, which leases are too costly, and whether any locations can be sold or assigned to other franchisees.
Plan of reorganization – a formal blueprint detailing how the company will restructure its obligations, which creditors will be paid what, and whether owners retain any stake.

If the plan is confirmed, M&M Custard could emerge from Chapter 11 as a leaner but still-operating Freddy’s franchise group. If negotiations stall or performance deteriorates, some or all locations could be sold off or closed entirely.

Customers and employees should watch for:

Local announcements from individual Freddy’s restaurants
Statements from Freddy’s corporate or Rhône about any transfer of units
Future court filings that specifically list stores to be rejected or sold

What customers should know right now

Here’s the bottom line as of November 16, 2025:

Your local Freddy’s is probably still open — including M&M Custard–run locations.
The bankruptcy is about restructuring debt, not an immediate shutdown of all 32 restaurants.
The Freddy’s brand remains in expansion mode under its new owner Rhône, with hundreds of locations run by other franchisees or corporate.
The frozen dessert and fast-casual sector as a whole is under stress, as seen in Texas Dairy Queen closures and multiple Rita’s franchisee bankruptcies, so more localized disruptions across brands are possible. ^[22]

Quick FAQ

Is Freddy’s Frozen Custard going out of business?

No. The Chapter 11 filing involves M&M Custard LLC, a franchisee, not Freddy’s corporate or the entire chain. Most Freddy’s locations are owned by other franchisees or the company itself and continue to operate normally. ^[23]

Which Freddy’s locations are affected by the bankruptcy?

The filing covers 32 restaurants in Missouri, Kansas, Illinois, Indiana, Kentucky and Tennessee, including at least three in the Kansas City region (Gardner, Martin City and Sedalia). All are currently open but may be evaluated for closure, sale or restructuring. ^[24]

Why are so many frozen dessert chains facing trouble in 2025?

Franchisees across chains such as Dairy Queen, Rita’s Italian Ice and Freddy’s operators are dealing with a mix of high operating costs, heavy debt, required remodel investments and softer spending by cost-conscious consumers. Some, like M&M Custard, are turning to Chapter 11 to stay afloat while they reorganize. ^[25]

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