Franchise News
Operators say years of declining sales, stalled advertising efforts and unreturned funds trace back to decisions made after the chain’s 2021 acquisition.
Round Table Pizza franchisees have filed a lawsuit against FAT Brands, accusing the company of “intentional mismanagement” of the chain’s marketing fund. According to the Round Table Owners Association, marketing efforts began deteriorating after FAT Brands acquired the chain in 2021, shifting from cohesive, effective campaigns to disjointed initiatives with no clear strategy. The association says the situation worsened dramatically this year, when a missed payment to a marketing consultant in March caused the entire marketing system to “collapse,” contributing to the steepest decline in average unit sales the brand has seen in decades.
The lawsuit arrives at a moment of significant financial distress for FAT Brands. Just days earlier, the company disclosed in an SEC filing that it risks bankruptcy after failing to make a required payment on its securitized debt, triggering a demand for immediate repayment of nearly $1.3 billion. Franchisees allege that FAT Brands has compounded the turmoil by diverting $800,000 from Round Table’s marketing fund to pay for its 2022 FAT Summit conference and by transferring tens of millions of dollars each year to company affiliates — funds that were originally expected to be returned. In 2025, the full $56.9 million transferred was reportedly deemed permanent.
Operators also accuse FAT Brands of refusing repeated audit requests for the marketing fund, despite annual appeals since 2023. The lawsuit further claims the franchisor reclassified marketing funds as gross revenue in order to bypass a franchise agreement rule that caps vendor rebates at 3.8% of gross revenue — an unusual accounting tactic that allegedly increased the company’s rebate income. This is not the first time FAT Brands has faced similar allegations; another portfolio brand, Hurricane Grill & Wings, has also sued over marketing fund misuse.
Read the original article here.
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