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I Heart Mac & Cheese violated Indiana Franchise Act, complaint alleges

I Heart Mac & Cheese faces Indiana Franchise Act violations

INDIANAPOLIS (WISH) — The parent company of I Heart Mac & Cheese restaurants in Indiana is facing a complaint from Indiana authorities over alleged violations of the Indiana Franchise Act, the state’s Secretary of State’s office announced Tuesday afternoon.

The parent company, Mac and Cheese Franchise Operations LCC, had at least seven investors and 16 Indiana locations. The restaurants serve macaroni and cheese bowls, as well as grilled cheese sandwiches.

Restaurant Business magazine, in a July article, noted I Heart Mac & Cheese has faced controversy since it opened its first U.S. restaurant in 2016. Boca Raton, Florida-headquartered I Heart Mac & Cheese continues to operate restaurants in other states.

I Heart Mac & Cheese’s website on Tuesday showed no locations in Indiana. State authorities say all were closed after the Indiana Securities Division in May issued a cease-and-desist order, revoked the parent company’s registration, and stopped its ability to open franchises in Indiana.

A former location on West 10th Street in downtown Indianapolis was shown in May on Google Street View as closed with the building space available.

The Indiana Securities Division alleges the parent company represented its franchises as a chance to start a restaurant business “with low startup costs that required little prior business experience and a handful of employees to sell pre-made, frozen food,” a news release issued Tuesday from the Secretary of State’s Office said.

However, franchisees faced what the release called “ongoing problems related to misrepresented startup and ongoing operational costs,” contributing to the Indiana restaurants’ failure.

The complaint from the Securities Division also said the franchisees ended up getting little support from the parent company, and found it difficult to attract and retain employees. Plus, struggling franchisees were threatened with lawsuits.

The release also said that the parent company also “provided franchisees with deficient ‘Financial Disclosure Documents’ that were supposed to fairly disclose the risks of getting involved with ‘I Heart Mac & Cheese,’ but failed to disclose important information about prior lawsuits and the business experience of the executives.”

Mac and Cheese Franchise Operations LCC also misrepresented the profitability of the franchise and the demand for locations as a way to gain additional franchisees, the complaint said.