A 10-unit Panera Bread franchisee has filed for bankruptcy. | Photo: Shutterstock.
EYM Café, which at one point operated 15 Panera Bread locations, has filed for bankruptcy after a federal court judge demanded they stop using the company’s name and other trademarks.
It is also the latest in a remarkable collapse of a multi-brand operation run by the former McDonald’s executive Eduardo Diaz. Over the past year-plus, Diaz has closed or sold several dozen Pizza Hut, Burger King and KFC restaurants.
His companies have filed for multiple bankruptcies and have been involved in several different legal disputes with franchisors.
In this case, a federal judge in June issued a permanent injunction against EYM Café, requiring them to stop using Panera’s trademarks at 10 still-open shops by Aug. 1. EYM filed for Chapter 11 bankruptcy, claiming between $10 million and $50 million in liabilities and less than $50,000 in assets.
Diaz in 2019 acquired 15 Panera Bread locations in the Houston market. Four of the locations have closed this year, according to Panera’s lawsuit against the franchisee.
Panera accused EYM of falling behind on royalty payments. According to court documents, Panera’s attempt to collect royalty payments in February was prevented by a restriction on the operator’s bank account by the U.S. Treasury Office of Foreign Assets Control.
That same month, according to the lawsuit, distributor Sygma Foods told Panera Bread that EYM’s payments had been stopped by the operator’s bank.
Panera also accused the operator of failing to maintain standards of cleanliness on multiple locations.
The franchisor said that it suggested that the stores be put up for sale and said that three franchisees would be qualified to buy some or all of the locations, but EYM did not sign the agreement, according to the lawsuit. No sale transaction was proposed.
Panera sent five notices of default before ultimately filing its lawsuit in June, which led to the injunction.
Bankruptcy court documents said that EYM Café owes $854,714.05 to the IRS, among other unsecured claims.
At one point, EYM owned a vast empire of fast-food restaurants, including 142 Pizza Hut locations. The franchisor and several franchisees acquired 77 of those locations, in Illinois, Wisconsin, Georgia and South Carolina, earlier this year for nearly $12 million. The rest of those locations closed.
EYM and Pizza Hut had been in an intense legal dispute over royalties and performance.
EYM last year closed 25 KFC locations. In 2023, EYM closed 26 locations in Michigan.
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