California regulators have fined the franchise I Heart Mac and Cheese, and will require the company be monitored over the next three years, over a series of disclosure violations in its franchise documents.
The fast-casual franchise and the California Department of Financial Protection and Innovation entered into a consent order this week that includes a small fine of $43,000.
The order also requires I Heart Mac and Cheese, or IHMC, to pay for an independent monitor that will ensure its compliance with franchise rules. The monitor will submit annual reports to the department at the chain’s expense.
California is the second state to penalize IHMC for franchise disclosure violations. Indiana ordered the company to stop selling franchises in that state last year.
IHMC was cited for not disclosing litigation and lawsuit settlements in its franchise documents dating back to 2017. California also cited the company for selling a franchise after its franchise disclosure document expired and for refusing to provide documents related to eviction proceedings.
The chain has been surrounded by controversy from almost the moment it was founded in 2016. The chain sells customizable macaroni and cheese bowls and opened its first location in Florida in 2016 and started franchising shortly thereafter. The chain has either filed or faced multiple lawsuits in multiple states, including multiple actions filed by the chain's franchisees.
A count on the company’s website lists 35 open locations, and many more than that listed as “coming soon.” That includes several locations “coming soon” in Indiana, where the chain is not allowed to sell franchises.
There are four locations open in California, according to the website, and another three “coming soon” either in the winter or summer of this year.
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