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Panera Bread franchisee, who has been terminated, files for bankruptcy

Cafe EYM, previously associated with the sale or closure of franchises for Pizza Hut, Burger King, and KFC, has filed for Chapter 11 bankruptcy protection.

Franchisee of Panera Bread, now terminated, files for bankruptcy.
Franchisee of Panera Bread, now terminated, files for bankruptcy.

Panera Bread franchisee, who has been terminated, files for bankruptcy

EYM Café's Bankruptcy and Legal Troubles: A Tale of Multiple Franchise Disputes

Eduardo Diaz's franchise operations, including EYM Café of Texas LLC, which previously operated 10 Panera Bread locations, have been embroiled in a series of financial and legal challenges. In August 2025, the company filed for Chapter 11 bankruptcy, citing liabilities between $10 million and $50 million and minimal assets[1][2].

The bankruptcy follows a federal court judge's permanent injunction in June 2025, ordering EYM Café to cease operating under the Panera Bread brand and to stop using its trademarks by early August. This injunction came after Panera terminated franchise rights due to alleged payment defaults, multiple food safety violations, and failure to comply with brand standards at several locations. Panera also filed a lawsuit against EYM Café for unauthorized operation of stores after termination[1][2][3][4].

EYM's troubles extend beyond Panera Bread. The group, which also operated dozens of Pizza Hut, Burger King, and KFC locations, has faced several bankruptcies and lawsuits. For instance, EYM Chicken closed 25 KFC locations in 2024 and filed for bankruptcy[1][3][5]. These financial and legal problems stemmed from unpaid loans (notably nearly $13 million owed to City National Bank) and ongoing disputes with franchisors over royalties, performance, and operational standards[1][3][5].

A notable legal consequence was a judge-imposed two-year non-compete clause barring Diaz from owning or advising competing dining businesses within five miles of any Panera location[3].

In the case of Pizza Hut, EYM had been involved in a legal dispute over royalties and performance. As a result, 77 Pizza Hut locations owned by EYM were acquired by the franchisor and several franchisees earlier this year for nearly $12 million[6].

Panera sent five notices of default before ultimately filing its lawsuit in June, which led to the injunction. EYM had closed 26 locations in Michigan in 2023, and in the year-plus leading up to the bankruptcy, the company had also closed several dozen Pizza Hut, Burger King, and KFC restaurants[6].

EYM Café has claimed between $10 million and $50 million in liabilities and less than $50,000 in assets[1]. Despite Panera suggesting that EYM's stores be put up for sale, with three franchisees qualified to buy some or all of the locations, no sale transaction was proposed[1][2]. The U.S. Treasury Office of Foreign Assets Control restricted EYM's bank account, preventing Panera from collecting royalty payments in February[4].

In conclusion, Eduardo Diaz's bankruptcy cases are a direct result of severe financial distress, repeated franchise agreement breaches, and ensuing lawsuits from major franchisors Panera Bread, Pizza Hut, and KFC, leading to numerous store closures and legal injunctions against his franchise operations[1][2][3][4][5][6].

[1] [Source 1] [2] [Source 2] [3] [Source 3] [4] [Source 4] [5] [Source 5] [6] [Source 6]

The financial troubles at EYM Café's restaurant business, including disputes with franchisors such as Panera Bread, Pizza Hut, and KFC, have caused significant losses in the industry, as evidenced by the company's bankruptcy filings and the closure of multiple locations. These business issues are largely attributable to unpaid loans, royalty disputes, and failure to meet performance and operational standards.

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