Popular doughnut chain files Chapter 11 bankruptcy

When a business owner buys into a franchise, they’re investing in the operator’s brand and promises — from marketing support to product consistency. But when that system breaks down, franchisees can find themselves trapped between contract restrictions and the need to protect their livelihoods.

That’s the challenge now facing Jack’s Donuts franchisees across Indiana and beyond.

The Commissary and Its Fallout

In October 2023, Jack’s Donuts opened a central production and distribution hub known as The Commissary. CEO Lee Marcum directed many franchise operators to stop producing doughnuts in their stores and instead purchase them from the new facility.

Following that directive, many franchisees sold off their baking equipment, laid off bakers, and dismantled their in-store production systems — effectively surrendering control of their main product.

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

Franchisees Warned of Trouble Ahead

Dissatisfaction over quality, coupled with rising operational issues, led franchise operators to send a formal letter to corporate leadership demanding Marcum’s resignation. The letter accused the company’s leadership of mismanagement and financial misconduct.

“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,” the franchisees wrote.

“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.”

Bankruptcy Filing Adds to Uncertainty

In the wake of mounting internal conflict, Jack’s Donuts of Indiana Commissary, LLC has filed for Chapter 11 bankruptcy protection under Subchapter V, a small business reorganization process.

Bankruptcy Summary:

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

The filing aims to restructure the company’s debts and operations, but it has intensified the challenges faced by individual franchise owners.

Franchisees Continue Operations Independently

Despite the turmoil, many franchisees continue to operate their stores. Some have begun renting kitchen space or repurchasing baking equipment to resume producing their own doughnuts. These independent efforts reflect both their resilience and frustration over corporate instability.

A Struggle for Stability

For Jack’s Donuts franchisees, the bankruptcy marks a turning point — one that underscores the risks of dependency within a franchise system. While the company’s future remains uncertain, local operators are working to maintain their businesses and restore customer confidence, even as corporate restructuring unfolds.

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