Panera Franchisee Bankruptcy 2025: What Happened, Why It Matters, and the Bankruptcy Law Behind It

In August 2025, EYM Café of Texas LLC—a franchisee operating 15 Panera Bread locations in the Houston area—filed for Chapter 11 bankruptcy after a legal battle with Panera LLC. The case involved franchise agreement violations, food safety concerns, and millions in unpaid obligations.

This deep-dive covers the timeline of events, key bankruptcy law provisions, and stakeholder impacts, along with practical insights for business owners and consumers.

1. Timeline of Events

Date Event

May 23, 2025 Panera LLC files suit in the U.S. District Court for the Eastern District of Missouri alleging royalty

nonpayment, food safety violations, and breach of franchise agreement. (Chron)

Late May 2025 15 Houston-area Panera Bread locations are shut down following franchise termination. (The Sun)

Aug 2, 2025 EYM Café of Texas LLC files for Chapter 11 bankruptcy in the Eastern District of Texas, listing

$10M–$50M in liabilities and less than $50K in assets.

August 2025 Bankruptcy court proceedings begin, with EYM Café seeking protection while it addresses debt and

legal disputes.

What Happened?

EYM Café’s bankruptcy filing followed Panera LLC’s termination of the franchise agreement and allegations that the franchisee:

• Failed to pay royalties and third-party vendors.

• Violated food safety and sanitation standards.

• Continued using the Panera brand after its rights were revoked. (Chron)

The bankruptcy petition revealed:

• Liabilities: $10M–$50M

• Assets: <$50,000

• Franchise operations: No longer functional after closures.

This is not the first time the EYM group has faced bankruptcy—affiliated entities like EYM Pizza and EYM Chicken have previously filed. (The Sun)

3. Key Bankruptcy Law Sections Explained

When EYM Café filed for Chapter 11 under Title 11 of the U.S. Code, several sections came into play:

• 11 U.S.C. § 1121 – Gives the debtor an initial 120-day exclusive period to propose a reorganization plan.

• 11 U.S.C. § 1123 – Specifies the required contents of a Chapter 11 plan, including creditor classifications and treatment.

• 11 U.S.C. § 1124 – Defines when a creditor’s claim is considered “impaired” (i.e., changed under the plan).

• 11 U.S.C. § 1129 – Lays out the requirements for confirming a reorganization plan, including fairness and feasibility.

• 11 U.S.C. § 363 – Governs the debtor-in-possession’s ability to sell, use, or lease assets during bankruptcy.

For franchise cases, § 365 is also critical—it covers assumption or rejection of executory contracts, which includes franchise agreements.

4. Impacts on Stakeholders

For Panera LLC (Franchisor)

• Enforced franchise rights via termination and litigation.

• Took swift action to protect brand reputation and customer trust.

For EYM Café (Debtor)

• Chapter 11 offers temporary creditor relief, but without its Panera operations, revenue generation will be a challenge.

For Employees

• Many employees faced immediate layoffs when locations closed. (Chron)

For Consumers

• Gift cards purchased from the closed locations may only be redeemable at corporate-owned or other franchise Panera locations. This depends on Panera LLC’s policies and whether they honor cards issued by the terminated franchise.

5. FAQ: Common Consumer Questions

Q: Can I still use my Panera gift card?
A: If issued by EYM Café, it may not be honored unless Panera LLC chooses to accept it at corporate stores.

Q: What happens to outstanding catering orders?
A: Customers with deposits may become unsecured creditors in the bankruptcy case—meaning repayment is not guaranteed.

Q: Will Panera locations in other areas close?
A: This bankruptcy affects only the EYM Café-owned locations in Houston, not the brand nationwide.

TL;DR

In August 2025, EYM Café of Texas LLC, a Panera Bread franchisee, filed for Chapter 11 bankruptcy in the Eastern District of Texas, listing $10M–$50M in liabilities and less than $50K in assets, after Panera LLC sued for royalty nonpayment and franchise breaches. Key legal provisions include §§1121, 1123, 1124, 1129, and 363 of the Bankruptcy Code.

The Panera franchisee bankruptcy of 2025 is a prime example of how brand protection, operational compliance, and financial management intersect in franchise law. For business owners, it underscores the importance of honoring franchise obligations and maintaining liquidity. For consumers, it’s a reminder to act quickly when a favorite location suddenly shuts down—gift cards, deposits, and rewards may be at risk.