EYM Pizza, a Pizza Hut franchisee with more than 125 stores in four states, has declared bankruptcy amid a legal dispute with its franchisor, according to media reports.
That development comes after Pizza Hut abruptly closed down 15 EYM-franchised stores in Northwest Indiana on Friday, June 24.
Not counting the shuttered stores in Indiana, EYM Pizza operates Pizza Hut locations in Wisconsin, South Carolina, Georgia and Illinois.
Dueling lawsuits between Pizza Hut and EYM Pizza have been filed over the past two years. In March 2023, EYM sued Pizza Hut for breach of contract, alleging that the latter failed to modernize its menu and digital ordering system. As PMQ sister publication QSR Magazine reports, that suit “highlighted grievances over Pizza Hut’s management practices and sought judicial intervention to prevent immediate termination of its franchise agreements. However, the court denied the operator’s request for a preliminary injunction, allowing Pizza Hut to proceed with enforcing its contractual rights.”
In August 2023, Pizza Hut and EYM entered into a forbearance agreement that would have allowed EYM to sell its restaurants. But Pizza Hut terminated the agreement in February 2024 after EYM didn’t fulfill certain requirements of the agreement, including “timely payments and operational standards” and selling its stores in Georgia and South Carolina, according to QSR.Pizza Hut hit EYM with a lawsuit in June 2024, claiming the franchisee had violated its franchise agreement by failing to make required payments for royalties, advertising fees and vendor services. Pizza Hut reportedly alleged that EYM Group accrued debt of more than $3 million in 2022 and $2.6 million in 2023.
EYM came back with another lawsuit, filed on July 16, seeking protection from the court against any attempts by Pizza Hut to terminate or disrupt EYM’s operations while the legal issues remained unresolved. But the court denied the temporary restraining order on Monday, and EYM quickly filed for bankruptcy.
QSR also reports that EYM Pizza’s sales fell by 10% from 2019 to 2023, a period when Pizza Hut’s overall same-store sales rose by 7%.
