• The parent company’s bankruptcy puts that fate of its franchise operators at severe risk.
  • Many of the franchises have had to scramble to make doughnuts in recent months.
  • The fate of the entire brand is uncertain.

When a business person buys a franchise, they’re making a bet on the franchise operator. They expect that the company will live up to its promises on advertising, marketing support, and product delivery.

When that doesn’t happen, it puts the franchise operators in a challenging situation. In most cases, their agreements prevent them from doing certain things, but in many situations, they have no choice but to step in and make choices on their own.

Jack’s Donuts franchisees have recently been placed in this situation.

Jack’s Donuts opened a production and distribution center back in October 2023, called The Commissary.

When that facility opened, CEO Lee Marcum asked many of the company’s franchisees to stop making doughnuts in their stores and buy them from The Commissary. Many did that, selling their baking equipment, laying off their bakers, and generally giving up their ability to make their core product themselves.

“The donuts weren’t great,” franchise owner Angi O’Connell Bone told WRTV. “We lost customers when we changed over, and they compared us to a gas station donut. That was heartbreaking.”

Jack’s Donuts franchisees saw trouble coming

That situation, and other mounting legal problems led to franchise operators sending a letter to corporate calling for Marcum to resign.

“The ongoing mismanagement, coupled with troubling financial actions, has not only directly impacted our operations but has also led to a broader loss of confidence in the company’s future,” read the letter.

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“Over the past 18 months, we have seen a noticeable decline in sales, revenue, and customer loyalty. We strongly believe that these issues stem from your leadership decisions, which have included misappropriation of company funds, financial mismanagement, and the creation of multiple entities for personal financial gain.”

Since that letter was sent, the situation has gotten worse and Jack’s Donuts, the parent company, has filed for Chapter 11 bankruptcy.

The franchise operators, it should be known, have continued to operate their stores, with some having to rent kitchens or buy equipment to go back to making doughnuts.

Jack’s Donuts has filed for Chapter 11 bankruptcy protection.

Jack’s Donuts of Indiana Commissary: LLC bankruptcy summary

  • Court: U.S. Bankruptcy Court, Southern District of Indiana
  • Case number: 25-773353
  • Filed:October 24, 2025
  • Chapter:11 (Subchapter V, small business reorganization)
  • Judge: James M. Carr
  • Status: Active, voluntary petition

Jack’s Donut’s financial overview

  • Estimated assets: $1 million-$10 million
  • Estimated liabilities: $1 million-$10 million
  • Estimated creditors: 50-99

Major Jack’s Donut’s creditors (per initial filings)

  • Old National Bank: Secured business loan $2.9 million
  • First Merchants Bank: Equipment financing
  • U.S. Small Business Administration: EIDL loan
  • Prairie Farms Dairy: Supplier claim
  • Duke Energy: Utilities
  • Indiana Department of Revenue: Tax claim
  • Various construction & franchise vendors: Unpaid invoices

Key Jack’s Donut’s operational notes

  • Covers the commissary production entity only (not franchise stores).
  • Seeks to restructure debt and maintain production for franchisees.
  • Filing follows lawsuits, supplier disputes, and loan defaults in 2024-25.
  • Subchapter V trustee appointed to oversee reorganization efforts.

Jack’s Donuts legal problems are significant

Jack’s Donuts has 24 locations operated by 14 franchisees. The parent company, not the franchise operators, face multiple lawsuits and other legal problems.

  • Old National Bank: Suing for default on ~$2.9 million in loans; foreclosure on commissary property.
  • Specialty Fitters (Ohio): Won $104,995.80 for unpaid construction work.
  • Avanza Capital Holdings: Judgment for $292,768.
  • Amerifi Capital: Judgment for $61,888.
  • Spartan Business Solutions: Judgment for $44,113.97.
  • Novus Capital: Lawsuit pending over financing default.
  • Indiana Secretary of State: Cease-and-desist for selling unregistered securities (2025).
  • Franchisees: Multiple complaints and letters alleging mismanagement and product quality issues.
    Sources: The Indiana Lawyer, WRTV

Total judgments: About $503,000+ in 2025, plus the $2.9 million bank foreclosure action.

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