The Franchise Empire That Ran Out of Room
Published November 8, 2026
EYM Diner, which operates 30 Denny's restaurants in Texas and Florida, filed for Chapter 11 bankruptcy in November 2026 with less than $50,000 in assets against $10 million to $50 million in liabilities — including nearly $3.5 million in unpaid payroll taxes owed to the IRS. It is the latest collapse for a franchise group built by a former McDonald's executive that has now seen bankruptcies across five fast-food brands.
EYM Diner, which operates 30 Denny's restaurants in Texas and Florida, filed for Chapter 11 bankruptcy protection in a North Texas court in the first week of November 2026. The filing disclosed less than $50,000 in assets against between $10 million and $50 million in liabilities. Its largest unsecured creditor is the Internal Revenue Service, which is owed nearly $3.5 million in unpaid payroll taxes.
The company is the latest piece of a franchise empire built by Eduardo Diaz, a former McDonald's executive who assembled a portfolio of restaurants across five fast-food brands: Pizza Hut, Panera Bread, KFC, Burger King and Denny's. Since 2023, his EYM Group has suffered a string of bankruptcies and closures across those brands, as the debt taken on to build the portfolio collided with thinner margins, rising costs and weaker foot traffic. The Denny's filing follows the same pattern as the earlier ones: a large group of restaurants, a heavy load of secured and unsecured debt, and a business that could no longer meet its obligations.
Denny's itself is working to find new owners for the affected restaurants. Mark Burgess, the chain's senior vice president and chief development officer, said the company had spent the past two years working alongside Diaz to support a sale of the Denny's locations, and that viable restaurants in the group had franchise partners within the system willing to step in. The chain's focus, he said, is on continuity for the employees whose livelihoods depend on the restaurants and the customers who rely on them. Whether the 30 restaurants stay open under new ownership or go dark will be decided in the weeks ahead, as the bankruptcy case proceeds.
The filing lands at a difficult moment for the Denny's brand. The chain began in 1953 as a doughnut stand called Danny's Donuts in Lakewood, California, and grew into one of the country's best-known family-dining names. In 2025 the brand had 1,459 restaurants worldwide, about 96 percent of them franchised or licensed. Its parent company was taken private in January 2026 in a deal worth roughly $620 million, led by TriArtisan Capital Advisors, Treville Capital Group and Yadav Enterprises. The chain has also been shrinking: it closed more than 240 restaurants in the United States in the first half of 2026 alone.
EYM is not the only large franchisee under strain. Meritage Hospitality Group, a Wendy's franchisee that ran 314 restaurants when it filed for Chapter 11 in September 2026, is selling 42 of them for $18.6 million, and Wendy's says Meritage owes more than $27 million in unpaid royalties. Across the industry, franchise operators that expanded aggressively on borrowed money are now facing the same squeeze: higher minimum wages, rising food and labour costs, and customers who visit less often. When a franchisee's interest bill grows faster than its dining-room revenue, the math stops working no matter how many locations it owns.
The lesson is that borrowed growth is still borrowed. Thirty restaurants sound like a fortune, but a business is only worth what is left after the debts are paid, and EYM Diner's balance sheet shows almost nothing left. The tax bill alone, nearly $3.5 million owed to the IRS, is a reminder that payroll taxes are not a loan a company can quietly renegotiate. Scale can disguise a weak business for years; it cannot save one.
The lesson: Borrowed growth is still borrowed — a chain of thirty restaurants can be worth less than its tax bill when the debt outruns the dining room.
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