McDonald's Franchisee Just Declared a Rare Bankruptcy

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Even McDonald's is bankrupt this year. Corner Bakery, two major Burger King franchisees, and a Popeyes franchisee have filed for bankruptcy since 2023.

Although these businesses blamed their troubles on inflation and consumer traffic, a McDonald's franchisee filed for bankruptcy due to legal turmoil that has plagued the operator for over a year.

Pittsburgh's Rice Enterprises LLC runs eight McDonald's locations. The franchisee declared bankruptcy last week as it deals with legal concerns and

the financial ramifications from a former manager's February 2021 assault of a 14-year-old girl employee in the restaurant where they worked.

This is the second McDonald's franchisee bankruptcy in six years, following Iowa-based Brown Customer Delight Group Inc.'s 2016 bankruptcy.

Despite doing time for indecent assault on a 10-year-old child, the former Rice Enterprises manager was hired as a franchisee manager.

Management pled guilty to assault, but Rice Enterprises and McDonald's are still fighting the case.

In September 2021, the girl's family sued the franchisee and fast food company for negligence.

McDonald's claimed that manager's conduct should not hold it accountable, but a court allowed the lawsuit to proceed in July 2022.

Rice Enterprises filed for bankruptcy to structure its debt, protect its assets, acquire more breathing room and

time to decrease litigation expenditures, and improve the number of its estate for all creditors and stakeholders.

The managing partner of Rice Enterprises' legal firm said all franchisee locations are working regularly. Rice Enterprises did not immediately reply to bankruptcy filing inquiries.

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