Popular doughnut chain files Chapter 11 bankruptcy
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The bankruptcy of the parent company puts the fate of franchise operators at serious risk.
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Many franchises have had to scramble to make donuts in recent months.
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The fate of the entire brand is uncertain.
When a businessman buys a franchise, he is betting on the franchise operator. They expect the company to deliver on its promises regarding advertising, marketing support and product delivery.
Failure to do so puts franchise operators in a difficult situation. In most cases, their agreements prevent them from doing certain things, but in many cases they have no choice but to step in and make choices on their own.
Jack’s Donuts franchisees have been in this situation recently.
Jack’s Donuts opened a manufacturing and distribution center called The Commissary in October 2023.
When this facility opened, CEO Lee Marcum asked many of the company’s franchisees to stop making donuts in their stores and buy from The Commissary. Many did so by selling their baking equipment, laying off their bakers, and generally giving up the ability to make their core products themselves.
“The donuts weren’t great,” said franchise owner Angi O’Connell Bone WRTV. “When we changed, we lost customers and they compared us to donuts at the gas station. It was heartbreaking.”
This situation and other mounting legal issues led franchise operators to send a letter to the company asking for Marcum’s resignation.
“Ongoing mismanagement, combined with problematic financial activity, has not only directly impacted our operations but has also led to a broader loss of confidence in the company’s future.” letter.
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“Over the past 18 months, we have seen a noticeable decline in sales, revenue, and customer loyalty. We firmly believe that these problems are caused by your leadership decisions, including the misuse of company funds, financial mismanagement, and the creation of multiple entities for personal financial gain.”
The situation has worsened since that letter was sent, and parent company Jack’s Donuts has filed for Chapter 11 bankruptcy.
It should be noted that franchise operators continue to operate their stores, and some have had to rent kitchens or purchase equipment to return to donut making.
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Court: U.S. Bankruptcy Court, Southern District of Indiana
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Case number: 25-773353
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Filed:24 October 2025
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Section:11 (Subpart V, small business reorganization)
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Judge: James M. Carr
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Situation: Active, voluntary petition
