The state of Indiana has told the growing macaroni-and-cheese concept I Heart Mac and Cheese to stop selling franchises in that state, citing numerous violations in the company’s franchise disclosure documents dating back to 2018.
The Indiana secretary of state canceled the franchise registration for Mac and Cheese Franchise Operations (MACFO), I Heart’s franchising company. “MACFO’s failure to file materially sufficient disclosures rendered Indiana investors incapable of making informed decisions about investing in MACFO,” according to the secretary of state’s filing.
The disclosures largely relate to the work history of some top executives, including CEO Stephen Giordanella, as well as past legal actions involving the company and its top officers. Overall, the state listed 44 deficiencies in the documents dating from 2018 to 2022.
I Heart Mac & Cheese has been surrounded by controversy since shortly after it debuted just seven years ago in Florida. It was formed by Giordanella, who previously operated the now-defunct Cabo Flats chain, along with Miami chef Michael Blum, who came up with the idea for a brand based on mac and cheese. The company opened its first location in 2016 and started franchising the next year.
In the years since it has grown aggressively by selling franchises across the country. But it has also struggled with closing locations and lawsuits. A count on the chain’s website listed 38 restaurants in several states, but at least two of the locations listed as open are instead closed.
Two locations are listed for Indiana but one of those restaurants is now closed.
The website also lists 79 locations as “coming soon,” with a few coming in the spring of 2023 but yet to be open.
I Heart Mac & Cheese did not respond to multiple requests for comment.
This is not the first time the company has lost its registration. Its registration was canceled for a time in Minnesota last year before the company resubmitted its FDD and regained its ability to sell locations. But the company’s FDDs in both Wisconsin and California have expired, according to a search on those states’ websites.
The chain has also faced, or filed, a number of different lawsuits both at the state and federal level, including multiple lawsuits filed by franchisees. The company also sued a former franchisee for slander in 2020.
According to the Indiana legal filing, MACFO failed to disclose Giordanella’s employment and role with Cabo Flats in its 2018 FDD and his involvement in several subsidiaries of I Heart Mac & Cheese, including corporate locations and other entities. It also failed to properly disclose the work history for Blum and for Director of Finance Delia Valles.
Violations in later years’ FDDs would involve more work history issues as well as a failure to disclose various legal cases, including those involving unpaid rent at closed Cabo Flats locations in Florida and at least one involving a lawsuit over I Heart Mac & Cheese.
By 2022, the FDD’s disclosure on executives’ work history would become extensive, but the Indiana filing said that the FDD remains deficient by diminishing Giordanella’s role with Cabo Flats. That FDD says he “did not perform any significant duties for the company.”
The Indiana secretary of state noted, however, that in an interview published in 2017, Giordanella said that he started as an investor at one Cabo Flats location and then “quickly realized I wanted to be more hand on and I got more involved with the company. I took a liking to the business, so we expanded into Delray Beach. Then, additional locations opened up.”
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