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What changed in Fat Brands, Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Fat Brands, Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+218 added−193 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-12)

Top changes in Fat Brands, Inc's 2024 10-K

218 paragraphs added · 193 removed · 139 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

21 edited+4 added−1 removed104 unchanged
Biggest changeTypically, licenses must be renewed annually and may be revoked or suspended for cause by such authority at any 11 Table of Contents time. To date, we have not been materially adversely affected by such licensing and regulation or by any difficulty, delay or failure to obtain required licenses or approvals. International Operations .
Biggest changeTo date, we have not been materially adversely affected by such licensing and regulation or by any difficulty, delay or failure to obtain required licenses or approvals. 11 Table of Contents International Operations . Our restaurants outside the U.S. are subject to national and local laws and regulations which in general are similar to those affecting U.S. restaurants.
We communicate with restaurant customers in creative and organic ways that we believe fortifies our connections with them and increase brand awareness. Site Selection and Development Our franchisees work alongside our franchise development department during the search, review, leasing and development process for a new restaurant location.
We communicate with restaurant customers in creative and organic ways that we believe fortifies our connections with them and increases brand awareness. Site Selection and Development Our franchisees work alongside our franchise development department during the search, review, leasing and development process for a new restaurant location.
Twin Peaks has grown from 85 units to 111 units since our acquisition of the brand in October 2021. We will pursue the continued growth of this brand through additional company-owned and franchised units. • Driving Store Growth Through Co-Branding.
Twin Peaks has grown from 85 units to 115 units since our acquisition of the brand in October 2021. We will pursue the continued growth of this brand through additional company-owned and franchised units. • Driving Store Growth Through Co-Branding.
We utilize these systems following a multi-faceted approach to monitor restaurants operational performance, food safety, quality control, customer feedback and profitability.
We utilize these systems following a multi-faceted approach to monitor restaurant operational performance, food safety, quality control, customer feedback and profitability.
We have developed a pipeline of more than 1,000 restaurants under development driven in part by our diverse and attractive portfolio of brands. • Asset Light Business Model Driving High Free Cash Flow Conversion.
We have developed a pipeline of approximately 1,000 restaurants under development driven in part by our diverse and attractive portfolio of brands. • Asset Light Business Model Driving High Free Cash Flow Conversion.
Our Growth Strategy The principal elements of our growth strategy include: • Organically Grow New Store Pipeline and Attract New Franchisees. We have developed a pipeline of more than 1,000 restaurants under development among our existing and newly acquired franchisees.
Our Growth Strategy The principal elements of our growth strategy include: • Organically Grow New Store Pipeline and Attract New Franchisees. We have developed a pipeline of approximately 1,000 restaurants under development among our existing and newly acquired franchisees.
Smokey Bones Bar & Fire Grill is a full-service restaurant chain delivering great barbecue, award-winning ribs, perfectly seared steaks and memorable moments in 61 locations across 16 states.
Smokey Bones Bar & Fire Grill is a full-service restaurant chain delivering great barbecue, award-winning ribs, perfectly seared steaks and memorable moments in approximately 60 locations across 16 states.
Based in Chandler, Arizona, Native Grill & Wings is a family-friendly sports grill with locations in Arizona, Illinois and Texas. Native Grill & Wings serves over 20 wing flavors that guests can order by the individual wing, as well as an extensive menu of pizza, burgers, sandwiches and salads. Polished Casual Dining ● Twin Peaks.
Based in Chandler, Arizona, Native Grill & Wings is a family-friendly sports grill with locations in Arizona, Illinois and Texas. Native Grill & Wings serves over 20 wing flavors that guests can order by the individual wing, as well as an extensive menu of pizza, burgers, sandwiches and salads.
Additionally, we directly owned and operated approximately 190 restaurants as of such date. System wide sales of our franchised and owned locations during fiscal 2023 were $2.3 billion. The FAT Brands Difference – Fresh. Authentic. Tasty. Our name represents the values that we embrace as a company and the food that we provide to customers – F resh. A uthentic.
Additionally, we directly owned and operated 181 restaurants as of such date. System wide sales of our franchised and owned locations during fiscal 2024 were $2.4 billion. The FAT Brands Difference – Fresh. Authentic. Tasty. Our name represents the values that we embrace as a company and the food that we provide to customers – F resh. A uthentic.
In addition to our restaurant operations, we own and operate a manufacturing and production facility in Atlanta, Georgia, which supplies our franchisees with cookie dough, pretzel dry mix and other ancillary products. As of December 31, 2023, our franchisee base consisted of approximately 790 franchisees, who operated an aggregate of approximately 2,300 restaurants, including restaurants under construction.
In addition to our restaurant operations, we own and operate a manufacturing and production facility in Atlanta, Georgia, which supplies our franchisees with cookie dough, pretzel dry mix and other ancillary products. As of December 29, 2024, our franchisee base consisted of over 730 franchise partners, who operated an aggregate of approximately 2,300 restaurants, including restaurants under construction.
Ultimately, we understand that we are only as good as the last meal served, and we are dedicated to having our franchisees consistently deliver tasty, high-quality food and positive guest experiences in their restaurants.
Ultimately, we understand that we are only as good as the last meal served, and we are dedicated to having our franchisees consistently deliver tasty, high-quality food and positive guest experiences in their restaurants. Our Concepts We and our majority-owned subsidiary Twin Hospitality Group Inc.
Our principal Internet website address is www.fatbrands.com. The information on our website is not incorporated by reference into, or a part of, this Annual Report.
The information on our website is not incorporated by reference into, or a part of, this Annual Report.
Menu items include smashed and seared to order burgers, in-house smoked ribs, street tacos and hand-breaded chicken wings. We currently franchise, and also directly own and operate, Twin Peaks restaurants in various states in the United States, and three international locations in Mexico. ● Smokey Bones. The Masters of Meat.
Menu items include smashed and seared to order burgers, in-house smoked ribs, street tacos and hand-breaded chicken wings. Twin Hospitality currently franchises, and also directly owns and operates, Twin Peaks restaurants in various states in the United States, and has three franchised Twin Peaks restaurants located in Mexico. ● Smokey Bones. The Masters of Meat.
Our Concepts As of December 31, 2023, we were the owner and franchisor of the following restaurant brands in four main categories – Quick Service, Fast Casual, Casual Dining and Polished Casual Dining. Quick Service ● Round Table Pizza. Round Table Pizza is the franchisor of quick service restaurants located primarily in California and the western United States.
("Twin Hospitality") are the owner and franchisor of the following restaurant brands in four main categories – Quick Service, Fast Casual, Casual Dining and Polished Casual Dining. Quick Service ● Round Table Pizza. Round Table Pizza is the franchisor of quick service restaurants located primarily in California and the western United States.
From time to time, we also sponsor meal events for first responders and medical professionals during local disasters. As of December 31, 2023, we had approximately 7,390 employees, including approximately 2,600 full time employees. This amount includes approximately 2,230 full time and 4,790 part time employees at restaurants which we own and operate.
From time to time, we also sponsor meal events for first responders and medical professionals during local disasters. As of December 29, 2024, we had approximately 7,131 employees, including approximately 2,089 full time employees. This amount includes approximately 1,714 full-time and 5,042 part time employees at restaurants which we own and operate.
In the future, we plan to refinance these notes and may seek an investment rating on a portion of the notes in order to further reduce our cost of capital. Additionally, we may consider selling or spinning off as standalone companies various assets. • Continue Expanding FAT Brands Internationally.
We have refinanced and may continue in the future to refinance these notes and may seek an investment rating on a portion of the notes in order to further reduce our cost of capital. • Continue Expanding FAT Brands Internationally.
In addition, alcoholic beverage control regulations require each of our restaurants which sells alcohol to apply to a federal and state authority and, in certain locations, municipal authorities for a license and permit to sell alcoholic beverages on and off-premises.
In addition, alcoholic beverage control regulations require each of our restaurants which sells alcohol to apply to a federal and state authority and, in certain locations, municipal authorities for a license and permit to sell alcoholic beverages on and off-premises. Typically, licenses must be renewed annually and may be revoked or suspended for cause by such authority at any time.
We have a significant global presence, with franchised stores in 38 countries, including 49 states within the United States.
We have a significant global presence, with franchised stores in 34 countries, including 46 states within the United States and Washington D.C. and Puerto Rico.
See “Risk Factors” for a discussion of risks relating to federal, state, local and international regulation of our business. Our Corporate Information FAT Brands Inc. was formed as a Delaware corporation on March 21, 2017. Our corporate headquarters are located at 9720 Wilshire Blvd., Suite 500, Beverly Hills, California 90212. Our main telephone number is (310) 319-1850.
Our Corporate Information FAT Brands Inc. was formed as a Delaware corporation on March 21, 2017. Our corporate headquarters are located at 9720 Wilshire Blvd., Suite 500, Beverly Hills, California 90212. Our main telephone number is (310) 319-1850. Our principal Internet website address is www.fatbrands.com.
Our restaurants outside the U.S. are subject to national and local laws and regulations which in general are similar to those affecting U.S. restaurants. The restaurants outside the U.S. are also subject to tariffs and regulations on imported commodities and equipment and laws regulating foreign investment, as well as anti-bribery and anti-corruption laws.
The restaurants outside the U.S. are also subject to tariffs and regulations on imported commodities and equipment and laws regulating foreign investment, as well as anti-bribery and anti-corruption laws. See “Risk Factors” for a discussion of risks relating to federal, state, local and international regulation of our business.
We develop and produce most marketing initiatives for our brands in-house, including advertising campaigns, product placements and social media / digital marketing. We have developed a diverse and loyal base of approximately 790 franchisees with restaurants located in 38 countries, including 49 states within the United States, without any excessive market concentration among the franchisees.
We have developed a diverse and loyal base of over 730 franchise partners with restaurants located in 34 countries, including 46 states within the United States and Washington D.C. and Puerto Rico, without any excessive market concentration among the franchisees.
Removed
We have a diverse workforce and have initiated a program to enhance diversity, equity and inclusion among our employees and stakeholders, led by an executive level Diversity, Equity & Inclusion Officer.
Added
Polished Casual Dining The Twin Peaks and Smokey Bones brands are owned and operated through our subsidiary, Twin Hospitality Group Inc.
Added
In January 2025, we distributed approximately 5% of the fully-diluted shares of Class A Common Stock of Twin Hospitality to our common stockholders, and Twin Hospitality began trading as a standalone publicly traded company listed on NASDAQ under the symbol "TWNP".
Added
We retained the remaining shares of Twin Hospitality outstanding immediately following the distribution, and we will continue to consolidate our financial statements with Twin Hospitality as required under generally accepted accounting principles. ● Twin Peaks.
Added
We develop and produce most marketing initiatives for our brands in-house, including advertising campaigns, product placements and social media / digital marketing.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

35 edited+13 added−19 removed160 unchanged
Biggest changeIn addition, the Delaware General Corporation Law, or the DGCL, to which we are subject, prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at least 15% of our common stock.
Biggest changeIn addition, the Delaware General Corporation Law, or the DGCL, to which we are subject, prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at least 15% of our common stock. 23 Table of Contents We may continue to issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Common Stock, which could depress the price of our Common Stock.
Our franchisees face many challenges associated with opening new restaurants, including: • identification and availability of suitable restaurant locations with the appropriate size; visibility; traffic patterns; local residential neighborhood, retail and business attractions; and infrastructure that will drive high levels of customer traffic and sales per restaurant; • competition with other restaurants and retail concepts for potential restaurant sites and anticipated commercial, residential and infrastructure development near new or potential restaurants; • ability to negotiate acceptable lease arrangements; • availability of financing and ability to negotiate acceptable financing terms; • recruiting, hiring and training of qualified personnel; 13 Table of Contents • construction and development cost management; • completing their construction activities on a timely basis; • obtaining all necessary governmental licenses, permits and approvals and complying with local, state and federal laws and regulations to open, construct or remodel and operate our franchised restaurants; • unforeseen engineering or environmental problems with the leased premises; • avoiding the impact of adverse weather during the construction period; and • other unanticipated increases in costs, delays or cost overruns.
Our franchisees face many challenges associated with opening new restaurants, including: • identification and availability of suitable restaurant locations with the appropriate size; visibility; traffic patterns; local residential neighborhood, retail and business attractions; and infrastructure that will drive high levels of customer traffic and sales per restaurant; • competition with other restaurants and retail concepts for potential restaurant sites and anticipated commercial, residential and infrastructure development near new or potential restaurants; • ability to negotiate acceptable lease arrangements; • availability of financing and ability to negotiate acceptable financing terms; • recruiting, hiring and training of qualified personnel; • construction and development cost management; 13 Table of Contents • completing their construction activities on a timely basis; • obtaining all necessary governmental licenses, permits and approvals and complying with local, state and federal laws and regulations to open, construct or remodel and operate our franchised restaurants; • unforeseen engineering or environmental problems with the leased premises; • avoiding the impact of adverse weather during the construction period; and • other unanticipated increases in costs, delays or cost overruns.
These factors, over which neither our franchisees nor we have control, may include such issues as (but not limited to): • recessionary or expansive trends in international markets; • changing labor conditions and difficulties in staffing and managing our foreign operations; • increases in the taxes we pay and other changes in applicable tax laws; • legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws; • changes in inflation rates; • changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of funds; • difficulty in protecting our brand, reputation and intellectual property; • difficulty in collecting our royalties and longer payment cycles; • expropriation of private enterprises; • increases in anti-American sentiment and the identification of our brands as American brands; • political and economic instability; and 19 Table of Contents • other external factors.
These factors, over which neither our franchisees nor we have control, may include such issues as (but not limited to): • recessionary or expansive trends in international markets; • changing labor conditions and difficulties in staffing and managing our foreign operations; • increases in the taxes we pay and other changes in applicable tax laws; • legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws; • changes in inflation rates; • changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of funds; • difficulty in protecting our brand, reputation and intellectual property; • difficulty in collecting our royalties and longer payment cycles; 19 Table of Contents • expropriation of private enterprises; • increases in anti-American sentiment and the identification of our brands as American brands; • political and economic instability; and • other external factors.
These provisions include: • dual class structure of our Common Stock, which concentrates voting control with the current holders of Class B Common Stock; • net operating loss protective provisions, which require that any person wishing to become a “5% shareholder” (as defined in our certificate of incorporation) must first obtain a waiver from our Board of Directors, and any person 23 Table of Contents that is already a “5% shareholder” of ours cannot make any additional purchases of our stock without a waiver from our board of directors; • authorizing the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares and thwart a takeover attempt; • limiting the ability of stockholders to call special meetings or amend our bylaws; • requiring all stockholder actions to be taken at a meeting of our stockholders; and • establishing advance notice and duration of ownership requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
These provisions include: • dual class structure of our Common Stock, which concentrates voting control with the current holders of Class B Common Stock; • net operating loss protective provisions, which require that any person wishing to become a “5% shareholder” (as defined in our certificate of incorporation) must first obtain a waiver from our Board of Directors, and any person that is already a “5% shareholder” of ours cannot make any additional purchases of our stock without a waiver from our board of directors; • authorizing the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares and thwart a takeover attempt; • limiting the ability of stockholders to call special meetings or amend our bylaws; • requiring all stockholder actions to be taken at a meeting of our stockholders; and • establishing advance notice and duration of ownership requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
For example, California recently adopted a state-wide minimum wage of $20 per hour for employees of restaurants that are part of a national fast food chain effective April 1, 2024.
For example, California adopted a state-wide minimum wage of $20 per hour for employees of restaurants that are part of a national fast food chain effective April 1, 2024.
For example, we and our franchisees are subject to laws and regulations such as (but not limited to): • Government orders regarding the response to health and other public safety concerns such as the various restrictions on business operations relating to the COVID-19 pandemic being experienced in 2020; • The Americans with Disabilities Act in the U.S. and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas; 21 Table of Contents • The U.S.
For example, we and our franchisees are subject to laws and regulations such as (but not limited to): • Government orders regarding the response to health and other public safety concerns such as the various restrictions on business operations relating to the COVID-19 pandemic being experienced in 2020; • The Americans with Disabilities Act in the U.S. and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas; • The U.S.
Fog Cutter Holdings LLC controls approximately 55.5% of the voting power of our Common Stock and has significant influence over our corporate management and affairs and is able to control virtually all matters requiring stockholder approval, including election of directors and significant corporate transactions.
Fog Cutter Holdings LLC controls approximately 55.6% of the voting power of our Common Stock and has significant influence over our corporate management and affairs and is able to control virtually all matters requiring stockholder approval, including election of directors and significant corporate transactions.
There can be no assurance that Fog Cutter Acquisition, LLC will be successful in defending against this action, and an unfavorable outcome in excess of the reserves could have a material adverse effect on our financial condition and results of operations. Changes in, or noncompliance with, governmental regulations may adversely affect our business operations, growth prospects or financial condition.
There can be no assurance that Fog Cutter Acquisition, LLC will be successful in defending against this action, and an unfavorable outcome in excess of the reserves could have a material adverse effect on our financial condition and results of operations. 21 Table of Contents Changes in, or noncompliance with, governmental regulations may adversely affect our business operations, growth prospects or financial condition.
We rely on a combination of protections provided by contracts, copyrights, patents, trademarks, service marks and other common law rights, such as trade secret and unfair competition laws, to protect our franchised restaurants and services from infringement. We have registered certain trademarks and service marks in the U.S. and foreign jurisdictions.
We rely on a combination of protections provided by contracts, 16 Table of Contents copyrights, patents, trademarks, service marks and other common law rights, such as trade secret and unfair competition laws, to protect our franchised restaurants and services from infringement. We have registered certain trademarks and service marks in the U.S. and foreign jurisdictions.
A shortage or interruption in the availability of certain food products, raw materials or supplies could increase costs and limit the availability of products critical to our franchisees’ and company-owned restaurant operations, which in turn could lead to restaurant closures and/or a decrease in sales and therefore , and a reduction in our revenues and royalty fees paid to us.
A shortage or interruption in the availability of certain food products, raw materials or supplies could increase costs and limit the availability of products critical to our franchisees’ and company-owned restaurant operations, which in turn could 18 Table of Contents lead to restaurant closures and/or a decrease in sales and therefore, and a reduction in our revenues and royalty fees paid to us.
If a significant franchisee or a significant number of our franchisees become financially distressed, our operating and financial results could be impacted through reduced or delayed royalty payments. Our success also depends on the willingness and ability of our franchisees to implement major initiatives, which may include 12 Table of Contents financial investment.
If a significant franchisee or a significant number of our franchisees become financially distressed, our operating and financial results could be impacted through reduced or delayed royalty payments. Our success also depends on the willingness and ability of our franchisees to implement major initiatives, which may include financial investment.
Any such incidents (even if resulting from actions of a competitor or franchisee) could cause a decline directly or indirectly in 16 Table of Contents consumer confidence in, or the perception of, our brands and/or our products and reduce consumer demand for our products, which would likely result in lower revenues and profits.
Any such incidents (even if resulting from actions of a competitor or franchisee) could cause a decline directly or indirectly in consumer confidence in, or the perception of, our brands and/or our products and reduce consumer demand for our products, which would likely result in lower revenues and profits.
While we and our third-party vendors have implemented security systems and infrastructure to prevent, detect and/or mitigate the risk of unauthorized access to technology systems or platforms, there can be no assurance that these measures will be effective.
While we and our third- 17 Table of Contents party vendors have implemented security systems and infrastructure to prevent, detect and/or mitigate the risk of unauthorized access to technology systems or platforms, there can be no assurance that these measures will be effective.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability which could 17 Table of Contents materially affect our results of operations.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability which could materially affect our results of operations.
Alcoholic beverage control regulations require applications to state authorities and, in certain locations, county and municipal authorities for a license and permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, the licenses are renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations require applications to state authorities and, in certain locations, 15 Table of Contents county and municipal authorities for a license and permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, the licenses are renewed annually and may be revoked or suspended for cause at any time.
Any such violations or suspected violations could subject us to civil or criminal penalties, including substantial fines and significant investigation costs, and could also materially damage our reputation, brands, international expansion efforts and growth prospects, business and operating results.
Any such violations or suspected violations could subject us to civil or criminal penalties, including substantial fines and significant investigation costs, and could also 22 Table of Contents materially damage our reputation, brands, international expansion efforts and growth prospects, business and operating results.
See “Business—Supply Chain Assistance.” 18 Table of Contents Climate change and the shift to more sustainable business practices could negatively affect our business or damage our reputation.
See “Business—Supply Chain Assistance.” Climate change and the shift to more sustainable business practices could negatively affect our business or damage our reputation.
The occurrence of foodborne illnesses or food safety issues could also adversely affect the price and availability of 15 Table of Contents affected ingredients, which could result in disruptions in our supply chain and/or lower revenues and margins for us and our franchisees.
Additionally, allegations of foodborne illness or food safety issues could result in litigation involving us and our franchisees. The occurrence of foodborne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain and/or lower revenues and margins for us and our franchisees.
We currently have franchised restaurants in 38 countries, including 49 states within the United States, and we plan to continue to grow internationally. Expansion in international markets may be affected by local economic and market as well as geopolitical conditions.
We currently have franchised restaurants in 34 countries, including 46 states within the United States and Washington D.C. and Puerto Rico, and we plan to continue to grow internationally. Expansion in international markets may be affected by local economic and market as well as geopolitical conditions.
Additionally, the failure of our franchisees to focus on the fundamentals of restaurant operations, such as quality service and cleanliness (even if such failures do not rise to the level of breaching the related franchise documents), could have a negative impact on our business. Our franchisees could take actions that could harm our business and may not accurately report sales.
Additionally, the failure 12 Table of Contents of our franchisees to focus on the fundamentals of restaurant operations, such as quality service and cleanliness (even if such failures do not rise to the level of breaching the related franchise documents), could have a negative impact on our business.
Increasing weather volatility or other long-term changes in global weather patterns, including any changes associated with global climate change, could have a significant impact on the price, availability and timing of delivery of some of our ingredients. If inflation in food ingredients or supplies persists, our financial condition and business operations could be adversely impacted.
Increasing weather volatility or other long-term changes in global weather patterns, including any changes associated with global climate change, could have a significant impact on the price, availability and timing of delivery of some of our ingredients.
The food products sold by our franchisees and in our company-owned restaurants, and the raw materials used in their these restaurants, are sourced from a variety of domestic and international vendors, suppliers and distributors.
Supply chain shortages or interruptions in the availability and delivery of food and other supplies may increase costs or reduce revenues. The food products sold by our franchisees and in our company-owned restaurants, and the raw materials used in their these restaurants, are sourced from a variety of domestic and international vendors, suppliers and distributors.
Any reduction of our brands’ goodwill, consumer confusion, or reputational dilution is likely to impact sales, and could materially and adversely impact our business and results of operations. 14 Table of Contents Risks Relating to Our Business and Operations We have significant outstanding indebtedness under our whole-business securitization facilities, which require that we generate sufficient cash flow to satisfy the payment and other obligations under the terms of our debt and exposes us to the risk of default and lender remedies.
Risks Relating to Our Business and Operations We have significant outstanding indebtedness under our whole-business securitization facilities, which require that we generate sufficient cash flow to satisfy the payment and other obligations under the terms of our debt and exposes us to the risk of default and lender remedies.
Subject to contractual restrictions, we and our financing subsidiaries may incur additional indebtedness for various purposes, including to fund future acquisitions, the construction of company-owned restaurants and operational needs.
The aggregate principal balance of the indebtedness under our whole-business securitization facilities was $1.3 billion as of December 29, 2024. Subject to contractual restrictions, we and our financing subsidiaries may incur additional indebtedness for various purposes, including to fund future acquisitions, the construction of company-owned restaurants and operational needs.
Moreover, unauthorized third parties may use our intellectual property to trade on the goodwill of our brands, resulting in consumer confusion or dilution of our brands’ value.
Moreover, unauthorized third parties may use our intellectual property to trade on the goodwill of our brands, resulting in consumer confusion or dilution of our brands’ value. Any reduction of our brands’ goodwill, consumer confusion, or reputational dilution is likely to impact sales, and could materially and adversely impact our business and results of operations.
Attorney or SEC investigations, or from our own independent investigations, we could be 20 Table of Contents required to pay damages and/or penalties or have other remedies imposed on us, and the Company or our officers, directors or employees may be subject to additional civil litigation against the Company or our officers and directors regarding such matters.
If we are ultimately subject to adverse findings resulting from such pending government charges and stockholder litigation, we could be required to pay damages and/or penalties or have other remedies imposed on us, and we and/or our directors, officers or employees may be subject to additional civil litigation against our Company and/or our directors and officers regarding such matters.
The Company acts as the manager of each of these subsidiaries under a Management Agreement and performs management, franchising, distribution, intellectual property and operational functions on behalf of the subsidiaries for which it receives a management fee. The aggregate principal balance of the indebtedness under our whole-business securitization facilities was $1.2 billion as of December 31, 2023.
The Company acts as the manager of each of these 14 Table of Contents subsidiaries under a Management Agreement and performs management, franchising, distribution, intellectual property and operational functions on behalf of the subsidiaries for which it receives a management fee.
If our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts or if we reduce our guidance for future periods, the market price of our Class A Common Stock or Class B Common Stock may decline as well. 24 Table of Contents Our ability to pay regular dividends to our stockholders is subject to the discretion of our Board of Directors and may be limited by our holding company structure and applicable provisions of Delaware law.
If our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts or if we reduce our guidance for future periods, the market price of our Class A Common Stock or Class B Common Stock may decline as well.
The franchisees own, operate, and oversee the daily operations of their restaurants, and their employees are not our employees. Accordingly, their actions are outside of our control.
However, although we attempt to properly train and support all our franchisees, they are independent third parties whom we do not control. The franchisees own, operate, and oversee the daily operations of their restaurants, and their employees are not our employees. Accordingly, their actions are outside of our control.
Increased competition could have an adverse effect on our sales, profitability or development plans, which could harm our financial condition and operating results. Supply chain shortages or interruptions in the availability and delivery of food and other supplies may increase costs or reduce revenues.
Increased competition could have an adverse effect on our sales, profitability or development plans, which could harm our financial condition and operating results.
Our franchisees are contractually obligated to operate their restaurants in accordance with the operations, safety, and health standards set forth in our agreements with them and applicable laws. However, although we attempt to properly train and support all our franchisees, they are independent third parties whom we do not control.
Our franchisees could take actions that could harm our business and may not accurately report sales. Our franchisees are contractually obligated to operate their restaurants in accordance with the operations, safety, and health standards set forth in our agreements with them and applicable laws.
At this stage, we are not able to reasonably estimate the outcome or duration of these investigations, nor can we predict what consequences any investigation may have on us, including significant legal and accounting expenses. Moreover, there could be developments of which we are not aware, which could result in further proceedings against our Company, Mr.
Such governmental charges and stockholder action present certain risks, and at this stage, we are not able to reasonably estimate the outcome or duration of these actions, nor can we predict what consequences any such action may have on our Company.
These investigations, the results of the investigations or remedial actions that we have taken or may take as a result of such investigations may materially adversely affect our business, financial condition and reputation. If we are subject to adverse findings resulting from the U.S.
These pending government charges and stockholder litigation, the results thereof, including any fines, penalties or settlements payable by us, and any actions that we have taken or may take as a result thereof may materially adversely affect our business, financial condition, and reputation.
We may continue to issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Common Stock, which could depress the price of our Common Stock. Our amended and restated certificate of incorporation authorizes us to issue one or more series of preferred stock.
Our amended and restated certificate of incorporation authorizes us to issue one or more series of preferred stock.
The effects of these changes could require us to modify our business practices, and could result in increased litigation, governmental investigations or proceedings, administrative enforcement actions, fines and civil penalties . Failure to comply with antibribery or anticorruption laws could adversely affect our business operations. The U.S.
Publicity relating to any such noncompliance could also harm our reputation and adversely affect our revenues. Failure to comply with antibribery or anticorruption laws could adversely affect our business operations. The U.S.
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Additionally, allegations of foodborne illness or food safety issues could result in litigation involving us and our franchisees.
Added
We have experienced and continue to experience inflationary conditions with respect to the cost for food, labor, construction and utilities, and we may not be able to increase prices or implement operational improvements sufficient to fully offset inflationary pressures on such costs, which may adversely impact our revenues and results of operations.
Removed
Risks Related to Government Regulation and Litigation The Company faces risks related to pending government investigations. The government investigations mentioned below in Item 3, Legal Proceedings present certain risks.
Added
The profitability of our company-owned restaurants and franchised restaurants depends in part on our ability to anticipate and react to changes in food and other supply costs, including labor costs, construction costs, and utility costs.
Removed
Wiederhorn and our other directors, officers and employees. These matters may also divert management's attention from other business concerns, or result in the loss of the services of Mr. Wiederhorn or our other directors, officers or employees, which could harm the business and could result in reputational damage. Any proceedings commenced against us or Mr.
Added
Prices may be affected by general economic conditions, increased competition, supply shortages and interruptions due to weather, disease, inflation, and other conditions and factors beyond our control. Our inability to anticipate and respond effectively to one or more adverse changes in any of these factors could have a significant adverse effect on our results of operations and financial condition.
Removed
Wiederhorn by a regulatory agency could result in administrative orders, the imposition of penalties and/or fines, and the imposition of sanctions against us, Mr. Wiederhorn and other of our current or former officers, directors and employees.
Added
We expect inflationary pressures and other fluctuations impacting the price of these items to continue to impact our business. Our attempts to offset cost pressures, such as through implementing operational efficiencies and increasing menu pricing, may not be successful.
Removed
We maintain director and officer liability insurance for losses or advancement of defense costs in the event legal actions are brought against the Company's directors, officers or employees for alleged wrongful acts in their capacity as directors, officers or employees.
Added
To the extent price increases are not sufficient to adequately offset higher costs or do not do so in a timely manner, or if such price increases result in significant decreases in revenue volume due to loss in customer retention, our revenues from sales may be adversely affected, and as a result our business, results of operations, and financial condition may also be materially and adversely affected.
Removed
Such insurance contains certain customary exclusions that may make it unavailable to the Company or our directors and officers in the event it is needed; and, in any case, such insurance may not be adequate to fully protect the Company against liability for the conduct of its directors, officers or employees or the Company's indemnification obligations to its directors and officers.
Added
Risks Related to Government Regulation and Litigation We face risks related to pending government charges against the Company and are a party to stockholder litigation, which could cause us to incur additional expenses and could materially adversely affect our business, financial condition, and reputation. On May 10, 2024, the U.S.
Removed
Publicity relating to any such noncompliance could also harm our reputation and adversely affect our revenues. In January 2022, the California State Assembly passed Assembly Bill (AB) No. 257, the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act), and Governor Gavin Newsom signed the bill into law on September 5, 2022.
Added
Department of Justice indicted the Company on two violations of Section 402 of the Sarbanes-Oxley Act for directly and indirectly extending and/or arranging for the extension of credit in 2019 and 2020 to our former Chief Executive Officer, Andrew Wiederhorn, in the aggregate amount of $2.65 million.
Removed
The FAST Recovery Act provides increased rights to the state’s fast-food workers. The FAST Recovery Act is poised to create the Fast Food Sector Council within the California Department of Industrial Relations (DIR).
Added
In addition, the SEC filed a complaint against us alleging that for periods covering 2017 through 2020, we failed to disclose certain related party transactions, failed to maintain proper books and records and internal accounting controls, made false or misleading statements 20 Table of Contents regarding our liquidity and use of proceeds from certain transactions, and directly or indirectly extended credit to Mr.
Removed
Under the law, the Fast Food Sector Council will establish specific new minimum standards on wages, maximum working hours, and working conditions related to the health, safety, and welfare of fast-food restaurant workers at restaurants with at least 100 establishments nationwide.
Added
Wiederhorn in the form of a personal loan. A putative civil securities class action lawsuit was subsequently filed in June 2024 by an investor against our Company, Mr.
Removed
The FAST Recovery Act will also, among other things, institute statutory requirements aimed at expanding fast-food franchisors’ liability for certain acts of its franchisees.
Added
Wiederhorn and our co-Chief Executive Officers, alleging that the defendants made false and misleading statements and omitted material facts in our reports filed with the SEC related to the subject matter of the government investigations and litigation, our handling of these matters, and our cooperation with the government.
Removed
In January 2023, the implementation of the FAST Recovery Act was enjoined by a court pending the results of a statewide effort to overturn the FAST Recovery Act through a referendum on the California ballot in November 2024.
Added
Moreover, there could be developments of which we are not aware, and which could result in further proceedings against Mr. Wiederhorn, our Company, and our other directors, officers and employees. We may incur additional costs in connection with the defense or settlement of existing and any future government charges and stockholder actions.
Removed
If and when the referendum challenging AB 257 qualifies for the ballot, the law will be put on hold until the vote in November 2024. If an when it is sustained and implemented in its current form, the FAST Recovery Act is likely to increase our franchisees’ labor and compliance costs and decrease profitability at our California restaurants.
Added
Our ability to pay regular dividends to our stockholders is subject to the discretion of our Board of Directors and may be limited by our holding company structure and applicable provisions of Delaware law.
Removed
A broader standard for determining joint employer status recently adopted by the NLRB may adversely affect our business operations and increase our liabilities resulting from actions by our franchisees.
Added
Under a letter agreement that we executed in November 2024 in connection with the refinancing of the Twin Securitization Notes, we agreed not to pay a dividend on our common stock until at least $25,000,000 in proceeds from Qualified Equity Offerings (as defined in the Base Indenture for the Twin Securitization Notes) have been used to prepay the Twin Securitization Notes.
Removed
In October 2023, the National Labor Relations Board ("NLRB") issued a final rule adopting a new and broader standard for determining when two or more otherwise unrelated employers may be found to be a joint employer of the same employees under the National Labor Relations Act.
Removed
Under the new standard, an entity, such as a franchisor, may be considered a joint employer of another entity’s employees if they share or codetermine one or more of the employees’ essential terms and 22 Table of Contents conditions of employment, as defined in the new rule.
Removed
The new standard considers the authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect. The final rule was scheduled to become effective on February 26, 2024, but was recently vacated by a federal district court in Texas.
Removed
The court’s decision to vacate the rule may be appealed and the original rule could be restored by an appellate court.
Removed
If the original rule is restored on appeal or a similar rule is adopted in the future by the NLRB, the joint employer standard could cause us to be considered a joint employer of our franchisees’ employees, which could cause us to be held liable or responsible for unfair labor practices, violations of wage and hour laws, and other violations by our franchisees, and require us to conduct collective bargaining negotiations regarding employees of our franchisees.
Removed
The joint employer standard could also make it easier to organize our franchisees’ staff into labor unions, and provide the staff and their union representatives with bargaining power to request that our franchisees raise wages.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+3 added−1 removed15 unchanged
Biggest changeRisk Factors for additional information about the risks to our business associated with a breach or other compromise to our information and operational technology systems. Cybersecurity Governance Our Board of Directors oversees the execution of our cybersecurity strategy and the assessment of cybersecurity risks, along with the actions that we take seeking to mitigate and address those cybersecurity risks.
Biggest changeRisk Factors for additional information about the risks to our business associated with a breach or other compromise to our information and operational technology systems.
Application and infrastructure subject matter experts subscribe to various third-party vendor security 25 Table of Contents notifications to receive proactive notifications on, among other things, bugs, security flaws and mitigations, related to operational and information systems. The above cybersecurity risk management processes are integrated into our overall risk management program.
Application and infrastructure subject matter experts subscribe to various third-party vendor security notifications to receive proactive notifications on, among other things, bugs, security flaws and mitigations, related to operational and information systems. The above cybersecurity risk management processes are integrated into our overall risk management program.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Our business is substantially dependent upon our computer systems, devices and networks to collect, process and store the data necessary to conduct most aspects of our business.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy 24 Table of Contents Our business is substantially dependent upon our computer systems, devices and networks to collect, process and store the data necessary to conduct most aspects of our business.
Our CIO and other cybersecurity professionals provide periodic updates regarding cybersecurity risks to our Cyber Incident Response Steering Committee and Board of Directors.
To promote transparency and informed decision-making, the CIO and cybersecurity team provide periodic updates regarding cybersecurity risks and initiatives to both our Cyber Incident Response Steering Committee and the Board of Directors. This ensures alignment and clarity among all stakeholders concerning our cybersecurity posture.
Removed
Our Chief Information Officer (CIO) oversees our cybersecurity activities and leads our team of cybersecurity professionals responsible for our cybersecurity program and is informed about and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents as part of our cybersecurity programs.
Added
Cybersecurity Governance 25 Table of Contents Our Board of Directors oversees the execution of our cybersecurity strategy and the assessment of cybersecurity risks, along with the actions that we may take seeking to mitigate and address those cybersecurity risks.
Added
The position of Chief Information Officer (CIO), which is currently vacant, leads our cybersecurity initiatives, managing a dedicated cybersecurity team focused on implementing and overseeing a robust cybersecurity program. The cybersecurity team has related academic degrees, certifications, and real-world experience in managing cybersecurity incidents and risks. The cybersecurity program emphasizes proactive prevention, detection, mitigation, and remediation of potential cybersecurity incidents.
Added
By nurturing collaboration between our board, executive leadership, and cybersecurity professionals, we are devoted to protecting our digital assets and maintaining stakeholder trust. Our commitment to enhancing our cybersecurity framework equips FAT Brands to effectively address the dynamic threat landscape.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed3 unchanged
Biggest changeIn addition to the above locations, certain of our subsidiaries directly own and operate restaurant locations, substantially all of which are located in leased premises. As of December 31, 2023, we owned and operated 190 restaurant locations.
Biggest changeOur subsidiary, Smokey Bones, LLC, leases offices located in Plantation, Florida comprising approximately 6,000 square feet under a lease expiring in February 2033. In addition to the above locations, certain of our subsidiaries directly own and operate restaurant locations, substantially all of which are located in leased premises. As of December 29, 2024, we owned and operated 181 restaurant locations.
ITEM 2. PROPERTIES Our corporate headquarters, including our principal administrative, sales and marketing, customer support, and research and development operations, are located in Beverly Hills, California, comprising approximately 15,000 square feet of space, pursuant to a lease that expires on September 29, 2025.
ITEM 2. PROPERTIES Our corporate headquarters, including our principal administrative, sales and marketing, customer support, and research and development operations, are located in Beverly Hills, California, comprising approximately 15,000 square feet of space, pursuant to a lease that expires on January 31, 2031.
The leases have remaining terms ranging from 1 month to 26.8 years. 26 Table of Contents We believe that our existing facilities are in good operating condition and adequate to meet our current and foreseeable needs. Additional information related to our operating leases are disclosed in Note 9.
The leases have remaining terms ranging from less than 1 year to 25.8 years. We believe that our existing facilities are in good operating condition and adequate to meet our current and foreseeable needs. Additional information related to our operating leases are disclosed in Note 9.
Removed
Our subsidiary, Native Grill & Wings Franchising, LLC, leases offices located in Chandler, AZ comprising 5,825 square feet under a lease expiring on October 31, 2024. Such offices have been sub-leased for the duration of the remaining lease term.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

21 edited+20 added−15 removed6 unchanged
Biggest changeSquire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc., and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2021-0511) On June 10, 2021, plaintiffs James Harris and Adam Vignola (“Plaintiffs”), putative stockholders of the Company, filed a shareholder derivative action in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn (the “Individual Defendants”)), and the Company’s majority stockholders, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc.
Biggest changeOn June 10, 2021, plaintiffs James Harris and Adam Vignola, putative stockholders of the Company, filed a stockholder derivative action (“ Harris I ”) in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn) and the Company’s current and former majority stockholders, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc.
The Company is unable to predict the ultimate outcome of this matter, however, reserves have been recorded on the balance sheet of FAT Brands relating to this litigation. There can be no assurance that the defendants will be successful in defending against these actions. SBN FCCG LLC v FCCGI (Los Angeles Superior Court, Case No.
The Company is unable to predict the ultimate outcome of this matter, however, reserves have been recorded on the balance sheet of FAT Brands relating to this litigation. There can be no assurance that the defendants will be successful in defending against these actions. SBN FCCG LLC v FCCGI (Los Angeles Superior Court, Case No. BS172606).
BS172606) SBN FCCG LLC (“SBN”) filed a complaint against Fog Cutter Capital Group, Inc. (“FCCG”) in New York state court for an indemnification claim (the “NY case”) stemming from an earlier lawsuit in Georgia regarding a certain lease portfolio formerly managed by a former FCCG subsidiary.
SBN FCCG LLC (“SBN”) filed a complaint against Fog Cutter Capital Group, Inc. (“FCCG”) in New York state court for an indemnification claim (the “NY case”) stemming from an earlier lawsuit in Georgia regarding a certain lease portfolio formerly managed by a former FCCG subsidiary.
However, subject to certain limitations, we are obligated to indemnify our directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition.
However, subject to certain limitations, we are obligated to indemnify our current and former directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition.
As of December 31, 2023, the Company had accrued an aggregate of $5.1 million for the specific matters mentioned above and claims and legal proceedings involving franchisees as of that date. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II
As of December 29, 2024, the Company had accrued an aggregate of $5.1 million for the specific matters mentioned above and claims and legal proceedings involving franchisees as of that date. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II
The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on its business, financial condition, results of operations, liquidity or capital resources.
The Company does not believe that the ultimate resolution of 28 Table of Contents these actions will have a material adverse effect on its business, financial condition, results of operations, liquidity or capital resources.
Securities and Exchange Commission (the “SEC”) informed the Company that they had opened investigations relating to the Company and our former Chief Executive Officer, Andrew Wiederhorn, and were formally seeking documents and materials concerning, among other things, the Company’s December 2020 merger with Fog Cutter Capital Group Inc., transactions between those entities and Mr.
Securities and Exchange Commission (the “SEC”) informed the Company that they had opened investigations relating to the Company and our former CEO, Andrew Wiederhorn, and were formally seeking documents and materials concerning, among other things, the Company’s December 2020 merger with Fog Cutter Capital Group Inc. (“FCCG”), transactions between those entities and Mr.
SBN FCCG LLC v FCCGI (Supreme Court of the State of New York, County of New York, Index No. 650197/2023) On January 13, 2023, SBN filed another complaint against FCCG in New York state court for an indemnification claim stemming from a lawsuit in Oklahoma City regarding the same lease portfolio formerly managed by Fog Cap (the “OKC Litigation”), and a bankruptcy proceeding involving Fog Cap (the “Bankruptcy Proceeding”).
On January 13, 2023, SBN filed another complaint against FCCG in New York state court for an indemnification claim stemming from a lawsuit in Oklahoma City regarding the same lease portfolio formerly managed by Fog Cap (the “OKC Litigation”), and a bankruptcy proceeding involving Fog Cap (the “Bankruptcy Proceeding”).
Defendants dispute the allegations of the lawsuit and intend to vigorously defend against the claims. As this matter is still in the early stages, we cannot predict the outcome of this lawsuit. This lawsuit does not assert any claims against the Company.
Defendants dispute the premises and allegations of the lawsuit and intend to vigorously defend against the claims. We cannot predict the outcome of this lawsuit. This lawsuit does not assert any claims against the Company.
This lawsuit does not assert any claims against the Company. However, subject to certain limitations, we are obligated to indemnify our directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition.
We are obligated to indemnify our current and former directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition.
On March 11, 2024, the court issued an order granting FCCG’s motion to dismiss SBN’s complaint without prejudice to refile 28 Table of Contents the complaint, if at all, once the underlying proceedings (the OKC Litigation and the Bankruptcy Proceeding) were complete.
On March 11, 2024, the court issued an order granting FCCG’s motion to dismiss SBN’s complaint without prejudice to refile the complaint, if at all, once the underlying proceedings (the OKC Litigation and the Bankruptcy Proceeding) were complete. On April 10, 2024, SBN filed a notice of appeal of the trial court's order dismissing SBN's complaint.
Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn and Fog Cutter Holdings, LLC, and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2022-0254) On March 17, 2022, plaintiffs James Harris and Adam Vignola (“Plaintiffs”), putative stockholders of the Company, filed a shareholder derivative action in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn (the “Individual Defendants”)), and the Company’s majority stockholder, Fog Cutter Holdings, LLC (collectively with the Individual Defendants, “Defendants”).
On March 17, 2022, plaintiffs James Harris and Adam Vignola, putative stockholders of the Company, filed a stockholder derivative action (“ Harris II ”) in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn) and the Company’s majority stockholder, Fog Cutter Holdings, LLC.
(now known as Fog Cutter Acquisition, LLC), for alleged environmental contamination on their properties, stemming from dry cleaning operations on one of the properties. The property owners seek damages in the range of $12.0 million to $22.0 million. From 2002 to 2008, a former Fog Cutter subsidiary managed a lease portfolio, which included the subject property.
The property owners seek damages in the range of $12.0 million to $22.0 million. From 2002 to 2008, a former Fog Cutter subsidiary managed a lease portfolio, which included the subject property.
The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v.
The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v. Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn and Fog Cutter Holdings, LLC, and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2022-0254-NAC).
The parties have not entered into a formal settlement agreement, and they have not yet discussed the terms for the payment of the remaining balance.
The parties have not entered into a formal settlement agreement, and they have not yet discussed the terms for the payment of the remaining balance. SBN FCCG LLC v FCCGI (Supreme Court of the State of New York, County of New York, Index No. 650197/2023).
(collectively with the Individual Defendants, “Defendants”). Plaintiffs assert claims of breach of fiduciary duty, unjust enrichment and waste of corporate assets arising out of the Company’s December 2020 merger with Fog Cutter Capital Group, Inc.
Plaintiffs assert claims of breach of fiduciary duty, unjust enrichment and waste of corporate assets arising out of the Company’s December 2020 merger with Fog Cutter Capital Group, Inc. Since it was originally filed, the parties engaged in motion practice and substantial discovery, and the Company’s Board appointed a Special Litigation Committee.
The Wells Notice issued to the Company alleges violations of Securities Act Section 17(a)(2), and Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(k), and 14(a) and Rules 10b-5(b), 12b-20, 13a-1, 13a-13, 14a-3, and 14a-9 thereunder, relating solely to conduct occurring during or prior to fiscal year 2020.
Concurrently with the DOJ’s charges, the SEC filed a complaint against the Company, claiming violations of Section 17(a)(2) of the Securities Act of 1933; Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(k), and 14(a) of the Securities Exchange Act of 1934; and Rules 10b-5(b), 12b-20, 13a-1, 13a-13, 14a-3, and 14a-9 thereunder.
Wiederhorn, as well as compensation, extensions of credit and other benefits or payments received by Mr. Wiederhorn or his family from those entities prior to the merger. From August 23, 2022 until March 28, 2023, our Board of Directors maintained a Special Review Committee comprised of directors other than Mr.
Wiederhorn, as well as compensation, extensions of credit and other benefits or payments received by Mr. Wiederhorn or his family from those entities prior to the merger. On May 10, 2024, the U.S.
The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. 27 Table of Contents Government Investigations In December 2021, the U.S. Attorney’s Office for the Central District of California (the “U.S. Attorney”) and the U.S.
ITEM 3. LEGAL PROCEEDINGS Government Investigations and Litigation In December 2021, the U.S. Attorney’s Office for the Central District of California (the “U.S. Attorney”) and the U.S.
Foot Locker Retail Inc. (U.S. District Court for the Western District of Oklahoma, Case No. 5:12-cv-772-HE) In 2012 and 2013, two property owners in Oklahoma City, Oklahoma sued numerous parties, including Foot Locker Retail Inc. and our subsidiary Fog Cutter Capital Group Inc.
In 2012 and 2013, two property owners in Oklahoma City, Oklahoma sued numerous parties, including Foot Locker Retail Inc. and our subsidiary Fog Cutter Capital Group Inc. (now known as Fog Cutter Acquisition, LLC), for alleged environmental contamination on their properties, stemming from dry cleaning operations on one of the properties.
Plaintiffs assert claims of breach of fiduciary duty in connection with the Company’s June 2021 recapitalization transaction. On May 27, 2022, Defendants filed a motion to dismiss Plaintiff's complaint (the "Motion"). Argument on the Motion was heard on November 17, 2022, and again on February 23, 2023, and the Court took its decision under advisement.
Plaintiffs assert claims of breach of fiduciary duty in connection with the Company’s June 2021 recapitalization transaction. Since it was originally filed, the parties engaged in motion practice and substantial discovery, and the Company’s Board appointed a Special Litigation Committee.
Removed
ITEM 3. LEGAL PROCEEDINGS James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v.
Added
Department of Justice (“DOJ”) indicted the Company on two violations of Section 402 of the Sarbanes-Oxley Act for directly and indirectly extending and/or arranging for the extension of credit in 2019 and 2020 to former CEO Andrew Wiederhorn in the amount of $2.65 million. These charges allege that the Company, through its subsidiary Fatburger N.A., transferred approximately $600,000 to Mr.
Removed
Defendants filed a motion to dismiss Plaintiffs’ complaint, which the Court denied in an oral ruling on February 11, 2022 and subsequent written order on May 25, 2022.
Added
Wiederhorn in the form of a personal loan on January 30, 2019, and lent approximately $2 million in 2020 to its former parent company FCCG which indirectly funded a personal loan from FCCG 26 Table of Contents to Mr. Wiederhorn. The indictment also includes charges against Mr.
Removed
On April 7, 2022, the Court entered a Scheduling Order setting forth the key dates and deadlines that would govern the litigation, including a discovery cutoff of March 24, 2023 and trial date of February 5-9, 2024. To date, the parties have engaged in substantial written discovery, though no depositions have been taken.
Added
Wiederhorn, the Company’s former CFO, Rebecca Hershinger, and the Company’s former tax advisor, William Amon, on violations of various federal tax and other laws related to loans from FCCG to Mr. Wiederhorn.
Removed
On February 3, 2023, the Company’s board of directors appointed a Special Litigation Committee (“SLC”), which retained independent counsel and moved for a six-month stay of the action pending resolution of the SLC's investigation, which the Court granted on February 17, 2023.
Added
The SEC’s claims pertain principally to allegations that, for fiscal periods covering 2017 through 2020, the Company failed to disclose certain related party transactions, failed to disclose the salaries of Mr.
Removed
On April 5, 2023, the Court granted Plaintiffs’ motion to lift the stay of the proceedings, and entered a Second Amended Pre-Trial Scheduling Order resetting key dates and deadlines, including a fact discovery cutoff of August 4, 2023, and a trial date to be set sometime after May 10, 2024.
Added
Wiederhorn’s adult children working at the Company, failed to maintain proper books and records and internal accounting controls, made false or misleading statements regarding the Company’s liquidity and use of proceeds from certain transactions, and directly or indirectly extended credit to Mr. Wiederhorn in the form of a personal loan. The SEC’s complaint also names Mr. Wiederhorn, Ms.
Removed
On May 4, 2023, a new SLC was appointed, and on May 8, 2023, the new SLC moved for a six-month stay of the action pending resolution of its investigation. Two days later, on May 10, 2023, the United States of America moved for a partial stay of discovery pending its own investigation.
Added
Hershinger, and the Company’s SVP of Finance, Ron Roe, as defendants. The SEC is seeking injunctive relief, disgorgement, and civil monetary penalties. The Company is evaluating these charges and intends to vigorously defend itself against them. Derivative Litigation James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v.
Removed
On May 31, 2023, the Court granted the United States of America’s Motion, except that it granted a six-month stay of all proceedings in the action, and on that basis deemed the SLC’s motion to be moot.
Added
Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc., and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2021-0511-NAC).
Removed
On December 4, 2023, the stay of all proceedings was extended through March 3, 2024, and on March 1, 2024, the stay of all proceedings was extended to June 3, 2024. Defendants dispute the allegations of the lawsuit and intend to vigorously defend against the claims. We cannot predict the outcome of this lawsuit.
Added
On June 3, 2024, the Court granted the United States’ request to extend the stay of all proceedings in this matter pending resolution of the charges in United States v. Wiederhorn, et al. , 2:24-CR-295-RGK (C.D. Cal.).
Removed
The Court denied the motion on April 5, 2023. On May 2, 2023, the Court entered a pre-trial scheduling order setting key dates and deadlines that will govern the litigation, including a fact discovery cutoff of February 2, 2024, and a trial date to be set sometime after October 15, 2024.
Added
In January 2025, the principal parties to this matter participated in a mediation in Wilmington, DE and agreed in principle to settle this matter and the Harris II litigation. The settlement is subject to final documentation and approval of the Delaware court, as well as non-objection by the United States.
Removed
On July 21, 2023, the Company’s board of directors appointed a Special Litigation Committee (“SLC”), which retained independent counsel and moved for a six-month stay of the action pending resolution of the SLC’s investigation.
Added
In January 2025, the principal parties to this matter participated in a mediation in Wilmington, DE and agreed in principle to settle this matter and the Harris I litigation. The settlement is subject to final documentation and approval of the Delaware court, as well as non-objection by the United States.
Removed
On August 10, 2023, the parties filed a stipulation to stay the case for six months, conditioned upon Defendants continuing to review the documents in response to Plaintiffs' First Requests for Production and to produce non-privileged responsive documents to the SLC and to Plaintiffs no later than December 1, 2023. The Court granted the stipulation the same day.
Added
We are obligated to indemnify our current and former directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition.
Removed
In accordance with the stipulation, Defendants produced documents to the SLC and Plaintiffs by the December 1, 2023 deadline. On February 7, 2024, the SLC requested, and the Court granted, an extension of the stay of all proceedings through May 6, 2024, granting the SLC an additional 90 days to complete its investigation.
Added
The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. Richard Collura v. Andrew A. Wiederhorn, et al. (Delaware Chancery Court, Case No. 2024-1305-NAC).
Removed
Wiederhorn to oversee a review of the issues raised by the U.S. Attorney and SEC investigations. The Company intends to cooperate with the U.S. Attorney and the SEC regarding these matters and is continuing to actively respond to inquiries and requests from the U.S. Attorney and the SEC.
Added
In December 2024, plaintiff Richard Collura, a putative stockholder of the Company, filed a stockholder derivative action in the Delaware Court of Chancery nominally on behalf of the Company against certain of the Company’s current and former officers and directors (Andrew Wiederhorn, Kenneth Kuick, Robert Rosen, Ron Roe, John Allen, Kenneth Anderson, Donald Berchtold, Tyler Child, Lynne Collier, Mark Elenowitz, James Ellis, Peter Feinstein, Amy Forrestal, Matthew Green, Squire Junger, John Metz, James Neuhauser, Edward Rensi, Carmen Vidal, Mason Wiederhorn, Taylor Wiederhorn and Thayer Wiederhorn), and the Company’s majority stockholder, Fog Cutter Holdings, LLC.
Removed
At this stage, we are not able to reasonably estimate or predict the outcome or duration of either of the U.S. Attorney’s or the SEC’s investigations. On February 15, 2024, the Company, Andrew Wiederhorn and one current and one former officer of the Company each received a “Wells Notice” from the Staff of the SEC.
Added
Plaintiff alleges that Mr. Wiederhorn and certain of the other defendants engaged in an unlawful scheme to distribute money to Mr. Wiederhorn and his family for their own personal benefit through 2020, which they allege attracted the attention of the U.S.
Removed
A Wells Notice is neither a formal charge of wrongdoing nor a determination that the recipient has violated any law. The Company is continuing its efforts to cooperate with the SEC and maintains that its actions were appropriate, and intends to pursue the Wells Notice process, including submitting a formal response to the SEC. Stratford Holding LLC v.
Added
Attorney’s office and the SEC, and that the Company indicated in public statements and filings that it was cooperating with the government investigations but allegedly was not 27 Table of Contents actually cooperating and investigating the scheme, which caused the Company’s stock price to fall.
Added
The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. Other Litigation Mitchell Kates v. FAT Brands, Inc., Andrew Wiederhorn, Kenneth J. Kuick and Robert G. Rosen (United States District Court for the Central District of California, Case No. 2:24-cv-04775-MWF-MAA) .
Added
On June 7, 2024, plaintiff Mitchell Kates, a putative investor in the Company, filed a putative class action lawsuit against the Company, Andrew Wiederhorn, Kenneth J. Kuick and Robert G.
Added
Rosen, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and Rule 10b-5 promulgated thereunder, alleging that the defendants made false and misleading statements and omitted material facts necessary to make statements not misleading in the Company’s reports filed with the SEC under the 1934 Act related to the subject matter of the government investigations and litigation discussed above, the Company’s handling of these matters and its cooperation with the government.
Added
Plaintiff alleges that the Company’s public statements wrongfully inflated the trading price of the Company’s common stock, preferred stock and warrants. Plaintiff is seeking to certify the complaint as a class action and is seeking compensatory damages in an amount to be determined at trial.
Added
Plaintiff’s motion for appointment as lead plaintiff, filed on August 6, 2024, remains sub judic e. As this matter is still in the early stages, we cannot predict the outcome of this lawsuit. Stratford Holding LLC v. Foot Locker Retail Inc. (U.S. District Court for the Western District of Oklahoma, Case No. 5:12-cv-772-HE).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−3 removed2 unchanged
Biggest changeThe following table sets forth information as of December 31, 2023, with respect to compensation plans under which equity securities that we have authorized for issuance: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 3,938,610 $ 7.68 2,084,828 Equity compensation plans not approved by security holders — — — Total 3,938,610 $ 7.68 2,084,828 Issuer Purchases of Equity Securities We do not have a program in place to repurchase our own Common Stock or Preferred Stock and as of December 31, 2023, we have not repurchased any of these securities except for the cancellation of shares issued under the Plan, and as set forth in the following paragraph. 30 Table of Contents On October 21, 2022, the Company entered into an Exchange Agreement with the sellers of Twin Peaks and redeemed 1,821,831 shares of the Company's 8.25% Series B Cumulative Preferred Stock at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption, in exchange for $46.5 million aggregate principal amount of secured debt ($43.2 million net of original issue discount).
Biggest changeThe following table sets forth information as of December 29, 2024, with respect to compensation plans under which equity securities that we have authorized for issuance: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 3,885,664 $ 7.88 1,860,240 Equity compensation plans not approved by security holders — — — Total 3,885,664 $ 7.88 1,860,240 30 Table of Contents Issuer Purchases of Equity Securities We do not have a program in place to repurchase our own Common Stock or Preferred Stock and as of December 29, 2024, we have not repurchased any of these securities except for the cancellation of shares issued under the Plan.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A Common Stock, par value $0.0001 per share, is traded on the NASDAQ Capital Market under the ticker symbols “FAT” and our Class B Common Stock, par value $0.0001 per share, is traded on the NASDAQ Capital Market under the ticker symbol "FATBB." Holders of Our Common Stock As of March 5, 2024, there were approximately 41 stockholders of record of our Class A Common Stock and approximately 37 stockholders of record of our Class B Common Stock.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A Common Stock, par value $0.0001 per share, is traded on the NASDAQ Capital Market under the ticker symbols “FAT” and our Class B Common Stock, par value $0.0001 per share, is traded on the NASDAQ Capital Market under the ticker symbol "FATBB." Holders of Our Common Stock As of February 24, 2025, there were 37 stockholders of record of our Class A Common Stock and 35 stockholders of record of our Class B Common Stock.
Awards which lapse or are forfeited become available again for grant. See Note 14 in our consolidated financial statements for more details on our share-based compensation.
The purpose of the Plan is to help attract, motivate and retain qualified personnel and thereby enhance stockholder value. Awards which lapse or are forfeited become available again for grant. See Note 14 in our consolidated financial statements for more details on our share-based compensation.
Equity Compensation Plan Information We maintain a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries. The purpose of the Plan is to help attract, motivate and retain qualified personnel and thereby enhance stockholder value.
Such restriction does not apply to dividends on our outstanding Series B Cumulative Preferred Stock (FATBP). Equity Compensation Plan Information We maintain a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries.
Removed
Prior to the redemption, the Twin Peaks sellers held 2,847,393 shares of Series B Cumulative Preferred Stock, which shares were issued to it on October 1, 2021 as partial consideration for the Company's acquisition of the Twin Peaks restaurant chain.
Added
Under a letter agreement that we executed in November 2024 in connection with the refinancing of the Twin Securitization Notes, we agreed not to pay a dividend on our common stock (FAT and FATBB) until at least $25,000,000 in proceeds from Qualified Equity Offerings (as defined in the Base Indenture for the Twin Securitization Notes) have been used to prepay the Twin Securitization Notes.
Removed
Recent Sales of Unregistered Securities During the fiscal year ended December 25, 2022, we issued 4,761 shares of Class A Common Stock in a transaction that was not registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 thereunder, and in reliance on similar exemptions under applicable state securities laws.
Removed
Such shares were issued to a director who elected to receive cash compensation in the form of Class A Common Stock at market value at the time the election was made at a weighted average price per share of $6.30. ITEM 6. [RESERVED].

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+38 added−14 removed40 unchanged
Biggest change(In Thousands) For the Fiscal Years Ended December 31, 2023 December 25, 2022 Consolidated statement of operations data: Revenues Royalties $ 94,036 $ 87,921 Restaurant sales 299,029 241,001 Advertising fees 39,490 37,997 Factory revenue 37,983 33,504 Franchise fees 4,979 3,706 Other revenue 4,940 3,095 Total revenues 480,457 407,224 Costs and expenses General and administrative expense 93,117 113,313 Cost of restaurant and factory revenues 282,887 221,627 Depreciation and amortization 31,131 27,015 Impairment of goodwill and other intangible assets 500 14,000 Refranchising loss 2,873 4,178 Acquisition fees — 383 Advertising expense 47,619 44,612 Total costs and expenses 458,127 425,128 Income (loss) from operations 22,330 (17,904) Total other expense, net (118,695) (89,474) Loss before income tax provision (96,365) (107,378) Income tax provision (6,255) 18,810 Net loss $ (90,110) $ (126,188) Net loss for the fiscal year ended December 31, 2023, totaled $90.1 million consisting of revenues of $480.5 million less costs and expenses of $458.1 million, other expense of $118.7 million, and income tax provision of $6.3 million.
Biggest change(In Thousands) For the Fiscal Years Ended December 29, 2024 December 31, 2023 Consolidated statement of operations data: Revenues Royalties $ 90,035 $ 94,036 Restaurant sales 413,480 299,029 Advertising fees 39,473 39,490 Factory revenue 37,949 37,983 Franchise fees 6,487 4,979 Other revenue 5,228 4,940 Total revenues 592,652 480,457 Costs and expenses General and administrative expense 128,564 93,117 Cost of restaurant and factory revenues 393,131 282,887 Depreciation and amortization 41,528 31,131 Impairment of goodwill and other intangible assets 30,600 500 Refranchising loss 1,949 2,873 Advertising expense 49,100 47,619 Total costs and expenses 644,872 458,127 (Loss) income from operations (52,220) 22,330 Total other expense, net (140,380) (118,695) Loss before income tax benefit (192,600) (96,365) Income tax benefit (2,753) (6,255) Net loss $ (189,847) $ (90,110) Net loss for the fiscal year ended December 29, 2024, totaled $189.8 million consisting of revenues of $592.7 million less costs and expenses of $644.9 million, other expense of $140.4 million, and income tax benefit of $2.8 million.
Equity Issuances On November 14, 2022, we entered into an ATM Sales Agreement (the "Sales Agreement") with ThinkEquity LLC (the "Agent"), pursuant to which we may offer and sell from time to time through the Agent up to $21,435,000 maximum aggregate offering price of shares of our Class A Common Stock and/or 8.25% Series B Cumulative Preferred Stock.
Equity Issuances On November 14, 2022, we entered into an ATM Sales Agreement (the "ThinkEquity Sales Agreement") with ThinkEquity LLC (the "Agent"), pursuant to which we may offer and sell from time to time through the Agent up to 21,435,000 maximum aggregate offering price of shares of our Class A Common Stock and/or 8.25% Series B Preferred Stock.
Net proceeds totaled $140.8 million, which consisted of the combined face amount of $144.5 million, net of debt offering costs of $3.0 million and original issue discount of $0.7 million. A portion of the proceeds was used to repay and retire notes issued in 2021 under the Base Indenture (the "2020 Securitization Notes").
Net proceeds totaled $140.8 million, which consisted of the combined face amount of $144.5 million, net of debt offering costs of $3.0 million and original issue discount of $0.7 million. A portion of the proceeds was used to repay and retire notes issued in 2022 under the Base Indenture (the "2020 Securitization Notes").
Goodwill and other intangible assets: Goodwill and other intangible assets with indefinite lives, such as trademarks, are not amortized but are reviewed for impairment annually, or more frequently if indicators arise, as was done in 2023 and 2022.
Goodwill and other intangible assets: Goodwill and other intangible assets with indefinite lives, such as trademarks, are not amortized but are reviewed for impairment annually, or more frequently if indicators arise, as was done in 2024 and 2023.
Net proceeds totaled $180.6 million, which consisted of the combined face amount of $193.8 million, net of debt offering costs of $3.8 million and original issue discount of $9.4 million. The proceeds were used to close the acquisitions of Fazoli's and Native, and to provide working capital for the 35 Table of Contents Company.
Net proceeds totaled $180.6 million, which consisted of the combined face amount of $193.8 million, net of debt offering costs of $3.8 million and original issue discount of $9.4 million. The proceeds were used to close the acquisitions of Fazoli's and Native, and to provide working capital for the Company.
As of December 31, 2023, the Company owned eighteen restaurant brands: R ound Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses.
As of December 29, 2024, the Company owned eighteen restaurant brands: R ound Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses.
In a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations, which may cause our revenue, expenses and other results of operations to be higher due to an additional week of operations. The 2023 fiscal year is a 53-week year.
In a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations, which may cause our revenue, expenses and other results of operations to be higher due to an additional week of operations. The 2024 fiscal year is a 52-week year.
Net proceeds totaled $338.9 million, which consisted of the combined face amount of $350.0 million, net of debt offering costs of $6.0 million and original issue discount of $5.1 million. Substantially all of the proceeds were used to acquire GFG.
Net proceeds totaled $338.9 million, which consisted of the 34 Table of Contents combined face amount of $350.0 million, net of debt offering costs of $6.0 million and original issue discount of $5.1 million. Substantially all of the proceeds were used to acquire GFG.
The amount and size of any future dividends will depend upon our future results of operations, financial condition, capital levels, cash requirements, and other factors. There can be no assurance that we will declare and pay dividends in future periods. Capital Expenditures As of December 31, 2023, we do not have any material commitments for capital expenditures.
The amount and size of any future dividends will depend upon our future results of operations, financial condition, capital levels, cash requirements, and other factors. There can be no assurance that we will declare and pay dividends in future periods. Capital Expenditures As of December 29, 2024, we do not have any material commitments for capital expenditures.
Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. We utilize a two-step approach to recognize and measure uncertain tax positions.
Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. 39 Table of Contents We utilize a two-step approach to recognize and measure uncertain tax positions.
At December 31, 2023, the Company had approximately 2,300 locations open or under construction, of which approximately 92% were franchised. Under our franchised business model, we generate revenue by charging franchisees an initial franchise fee as well as ongoing royalties.
At December 29, 2024, the Company had approximately 2,300 locations open or under construction, of which approximately 92% were franchised. Under our franchised business model, we generate revenue by charging franchisees an initial franchise fee as well as ongoing royalties.
FAT Brands Fazoli's Native I, LLC In connection with the acquisition of Fazoli's and Native Grill & Wings, on December 15, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Fazoli's Native I, LLC, of an aggregate principal amount of $193.8 million.
(See Note 19, Subsequent Events) FAT Brands Fazoli's Native I, LLC In connection with the acquisition of Fazoli's and Native Grill & Wings, on December 15, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Fazoli's Native I, LLC, of an aggregate principal amount of $193.8 million.
FAT Brands Twin Peaks I, LLC In connection with the acquisition of Twin Peaks, on October 1, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Twin Peaks I, LLC, of an aggregate principal amount of $250.0 million.
Twin Hospitality I, LLC (Formerly FAT Brands Twin Peaks I, LLC) Prior Securitization Notes In connection with the acquisition of Twin Peaks, on October 1, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, Twin Hospitality I, LLC (formerly FAT Brands Twin Peaks I, LLC), of an aggregate principal amount of $250.0 million.
Depreciation and amortization increased $4.1 million in fiscal year 2023 compared to fiscal year 2022, primarily due to the acquisition of Smokey Bones in September 2023 and depreciation of new property and equipment at company-owned restaurant locations.
Depreciation and amortization increased $10.4 million in fiscal year 2024 compared to fiscal year 2023, primarily due to the acquisition of Smokey Bones in September 2023 and depreciation of new property and equipment at company-owned restaurant locations.
Immediately following the closing of the acquisition of Twin Peaks, the Company contributed the franchising subsidiaries of Twin Peaks to FAT Brands Twin Peaks I, LLC,, pursuant to a Contribution Agreement.
Immediately following the closing of the acquisition of Twin Peaks, the Company contributed the franchising subsidiaries of Twin Peaks to Twin Hospitality I, LLC, pursuant to a Contribution Agreement.
FB Resid Holdings 1, LLC On July 8, 2023, FB Resid Holdings I, LLC (“FB Resid”), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance of two tranches of fixed rate secured notes with a total aggregate principal amount of $150.0 million.
FB Resid Holdings 1, LLC On July 8, 2023, FB Resid Holdings I, LLC (“FB Resid”), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance of two tranches of fixed rate secured notes with a total aggregate principal amount of $150.0 million pursuant to a Base indenture, dated July 10, 2023 (the "FB Resid Indenture").
We believe that we have sufficient 33 Table of Contents liquidity to meet our liquidity needs and capital resource requirements for at least the next twelve months primarily through currently available cash and cash equivalents, cash flows from operations and access to the capital markets. As of December 31, 2023, we had cash and restricted cash totaling $91.9 million.
We believe that we have sufficient liquidity to meet our liquidity needs and capital resource requirements for at least the next twelve months primarily through currently available cash and cash equivalents, cash flows from operations and access to the capital markets. 33 Table of Contents As of December 29, 2024, we had cash and restricted cash totaling $67.4 million.
Our primary sources of funds for liquidity during the fiscal year ended December 31, 2023 consisted of cash on hand at the beginning of the period and net proceeds of $127.4 million from the sale of secured debt as discussed in Note 10 of the accompanying consolidated financial statements.
Our primary sources of funds for liquidity during the fiscal year ended December 29, 2024 consisted of cash on hand at the beginning of the period and net proceeds of $85.9 million from the sale of secured debt as discussed in Note 10 of the accompanying consolidated financial statements.
The 2022 fiscal year was a 52-week year. 31 Table of Contents Results of Operations of FAT Brands Inc. The following table summarizes key components of our consolidated results of operations for the fiscal years ended December 31, 2023 and December 25, 2022 .
The 2023 fiscal year was a 53-week year. 31 Table of Contents Results of Operations of FAT Brands Inc. The following table summarizes key components of our consolidated results of operations for the fiscal years ended December 29, 2024 and December 31, 2023 .
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, impairment of goodwill and other intangible assets, depreciation and amortization, refranchising losses, acquisition fees and advertising 32 Table of Contents expense.
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, impairment of goodwill and other intangible assets, refranchising losses and advertising expense.
Refranchising net loss for the fiscal year ended December 31, 2023, was comprised of restaurant operating costs, net of food sales, of $3.0 million, partially offset by $0.1 million in net gains related to the sale or closure of refranchised restaurants.
Refranchising net loss for the fiscal year ended December 31, 2023, was comprised of restaurant operating costs, net of food sales, of $3.0 million, partially offset by $0.1 million in net gains related to the sale or closure of refranchised restaurants. Advertising expense increased $1.5 million for the fiscal year ended December 29, 2024, compared to the prior year.
Dividends The dividends declared on the Company's common stock by the Board of Directors during the fiscal year ended December 31, 2023 are as follows (in millions): Declaration Date Dividend Per Share Record Date Payment Date Total Dividend (In Millions) January 3, 2023 $ 0.14 February 15, 2023 March 1, 2023 $ 2.3 April 4, 2023 $ 0.14 May 15, 2023 June 1, 2023 $ 2.3 July 11, 2023 $ 0.14 August 15, 2023 September 1, 2023 $ 2.3 October 3, 2023 $ 0.14 November 15, 2023 December 1, 2023 $ 2.4 The declaration and payment of future dividends, as well as the amount thereof, are subject to the discretion of our Board of Directors.
Dividends The dividends declared on the Company's common stock by the Board of Directors during the fiscal year ended December 29, 2024 are as follows (in millions): Declaration Date Dividend Per Share Record Date Payment Date Total Dividend (In Millions) January 9, 2024 $ 0.14 February 15, 2024 March 1, 2024 $ 2.4 April 17, 2024 $ 0.14 May 15, 2024 May 31, 2024 $ 2.4 July 9, 2024 $ 0.14 August 15, 2024 August 30, 2024 $ 2.4 October 29, 2024 $ 0.14 November 15, 2024 November 29, 2024 $ 2.4 38 Table of Contents The declaration and payment of future dividends, as well as the amount thereof, are subject to the discretion of our Board of Directors.
The sale of these assets is generally expected to be completed within one year. The combined assets are valued at the lower of their carrying amount or fair value, net of costs to sell and included as current assets on the Company’s consolidated balance sheet. Assets classified as held-for-sale are not depreciated.
The combined assets are valued at the lower of their carrying amount or fair value, net of costs to sell and included as current assets on the Company’s consolidated balance sheet. Assets classified as held-for-sale are not depreciated.
We recorded non-cash impairment charges for goodwill and other intangible assets of $0.5 million and $14.0 million during the fiscal years ended December 31, 2023 and December 25, 2022, respectively.
We recorded non-cash impairment charges for goodwill and other intangible assets of $30.6 million and $0.5 million during the fiscal years ended December 29, 2024 and December 31, 2023, respectively.
We recorded an income tax provision of $6.3 million for the year ended December 31, 2023, compared to an income tax provision of $18.8 million for the fiscal year ended December 25, 2022. These tax results were based on a net loss before taxes of $96.4 million for fiscal year 2023 and $107.4 million for fiscal year 2022.
We recorded an income tax benefit of $2.8 million for the year ended December 29, 2024, compared to an income tax benefit of $6.3 million for the fiscal year ended December 31, 2023. These tax results were based on a net loss before taxes of $192.6 million for fiscal year 2024 and $96.4 million for fiscal year 2023.
The following table summarizes key components of our audited consolidated cash flows for the fiscal years ended December 31, 2023, and December 25, 2022 : (In thousands) For the Fiscal Years Ended December 31, 2023 December 25, 2022 Net cash used in operating activities $ (35.6) $ (47.4) Net cash used in investing activities (59.8) (12.5) Net cash provided by financing activities 118.6 28.7 Net increase (decrease) in cash and restricted cash $ 23.2 $ (31.2) Operating Activities Net cash used in operating activities increased $11.8 million in 2023 compared to 2022, primarily due to higher debt service costs associated with our securitizations and by changes in working capital.
The following table summarizes key components of our consolidated cash flows for the fiscal years ended December 29, 2024, and December 31, 2023 : (In thousands) For the Fiscal Years Ended December 29, 2024 December 31, 2023 Net cash used in operating activities $ (56.2) $ (35.6) Net cash used in investing activities (26.5) (59.8) Net cash provided by financing activities 58.2 118.6 Net (decrease) increase in cash and restricted cash $ (24.5) $ 23.1 Operating Activities Net cash used in operating activities increased $20.6 million to $56.2 million in fiscal 2024 compared to $35.6 million in fiscal 2023, and is primarily related to higher debt service costs associated with our securitizations and by changes in working capital compared to fiscal 2023.
On September 8, 2023, FAT Brands Twin Peaks I, LLC issued an additional $98.0 million aggregate principal amount of 2 tranches of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors.
On September 8, 2023, Twin Hospitality I, LLC issued an additional $98.0 million aggregate principal amount of 2 tranches of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $98.0 million aggregate principal amount, $48.0 million was sold privately during the third quarter of 2023 resulting in net proceeds of $45.2 million.
Comparison of Cash Flows Our cash and restricted cash balance was $91.9 million as of December 31, 2023, compared to $68.8 million as of December 25, 2022.
Comparison of Cash Flows Our cash and restricted cash balance was $67.4 million as of December 29, 2024, compared to $91.9 million as of December 31, 2023.
As of December 31, 2023, the outstanding principal balance subject to the put/call option was $17.3 million. 34 Table of Contents FAT Brands GFG Royalty I, LLC In connection with the acquisition of GFG, on July 22, 2021, FAT Brands GFG Royalty I, LLC (“GFG Royalty”), a special purpose, wholly-owned subsidiary of the Company, completed the issuance and sale in a private offering (the “GFG Offering”) of three tranches of fixed rate senior secured notes.
FAT Brands GFG Royalty I, LLC In connection with the acquisition of GFG, on July 22, 2021, FAT Brands GFG Royalty I, LLC (“GFG Royalty”), a special purpose, wholly-owned subsidiary of the Company, completed the issuance and sale in a private offering (the “GFG Offering”) of three tranches of fixed rate senior secured notes.
In connection with the bonds repurchased, the Company recognized a $2.7 million net loss on extinguishment of debt. The remaining $50.0 million in aggregate principal of notes issued by FAT Twin Peaks I, LLC was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.
The remaining $50.0 million in aggregate principal of notes issued by Twin Hospitality I, LLC was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.
The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. The amendments improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities.
The amendments require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss.
Net loss for the fiscal year ended December 25, 2022, totaled $126.2 million consisting of revenues of $407.2 million less costs and expenses of $425.1 million, other expense of $89.5 million plus an income tax provision of $18.8 million. Revenues consist of royalties, franchise fees, advertising fees, restaurant sales, factory revenues, and other revenue.
Net loss for the fiscal year ended December 31, 2023, totaled $90.1 million consisting of revenues of $480.5 million less costs and expenses of $458.1 million, other expense of $118.7 million plus an income tax benefit of $6.3 million. Revenues consist of royalties, franchise fees, advertising fees, restaurant sales, factory revenues, and other revenue.
Net cash used in investing activities was $12.5 million in 2022, primarily related to purchases of property and equipment in connection with company-owned restaurants. 36 Table of Contents Financing Activities Net cash provided by financing activities was $118.6 million in 2023, primarily comprised of proceeds from borrowings, partially offset by repurchases of previously issued securitized notes and dividends paid on our Class A and Class B Common Stock and our Series B Cumulative Preferred Stock.
Financing Activities Net cash provided by financing activities was $58.2 million in fiscal 2024 compared to $118.6 million in fiscal 2023, and is primarily comprised of proceeds from borrowings, partially offset by repurchases of previously issued securitized notes and dividends paid on our Class A and Class B Common Stock and our Series B Cumulative Preferred Stock.
We earned revenues of $480.5 million for the fiscal year ended December 31, 2023 compared to $407.2 million for the fiscal year ended December 25, 2022. The increase of $73.2 million reflects revenue from the system-wide sales growth, new restaurant openings and the acquisition of Smokey Bones in September 2023.
We earned revenues of $592.7 million for the fiscal year ended December 29, 2024 compared to $480.5 million for the fiscal year ended December 31, 2023. The increase of $112.2 million is primarily driven by revenue from our acquisition of Smokey Bones in September 2023 and revenues from new restaurant openings.
The amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the income taxes paid disaggregated by jurisdiction.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
Of the $98.0 million aggregate principal amount, $48.0 million was sold privately during the third quarter of 2023 resulting in net proceeds of $45.2 million. A portion of the proceeds was used to purchase $14.9 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors.
A portion of the proceeds was used to purchase $14.9 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. In connection with the bonds repurchased, the Company recognized a $2.7 million net loss on extinguishment of debt.
The remaining $44.2 million in aggregate principal of notes issued by FB Resid was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors. We believe that we will be in compliance with our debt covenants and have sufficient sources of cash to meet our liquidity needs for the next twelve months.
The remaining $44.2 million in aggregate principal of notes issued by FB Resid was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and dough factory and increased $61.3 million, or 27.6%, to $282.9 million in fiscal 2023 compared to fiscal 2022, primarily due to the acquisition of Smokey Bones in September 2023 and higher company-owned restaurant and factory sales.
Cost of restaurant and factory revenues are related to the operations of our company-owned restaurant locations and factory produced dough and batter and increased $110.2 million, or 39.0%, to $393.1 million in fiscal 2024 compared to fiscal 2023, primarily due to the acquisition of Smokey Bones in September 2023 and increased costs at company-owned restaurant.
Our costs and expenses increased from $425.1 million in the 2022 fiscal year to $458.1 million in the comparable period of 2023, primarily due to the acquisition of Smokey Bones in September 2023, increased activity from Company-owned restaurants and the Company's factory as well as professional fees related to certain litigation matters, partially offset by the recognition of Employee Retention Credits.
Our costs and expenses increased from $458.1 million in the 2023 fiscal year to $644.9 million in the comparable period of 32 Table of Contents 2024, primarily due to the acquisition of Smokey Bones in September 2023 and increased activity from Company-owned restaurants.
The Company recorded impairment charges of $0.5 million and $14.0 million relating to goodwill and other intangible assets during the fiscal years ended December 31, 2023 and December 25, 2022, respectively. 37 Table of Contents Assets classified as held-for-sale: Assets are classified as held-for-sale when we commit to a plan to sell the asset, the asset is available for immediate sale in its present condition and an active program to locate a buyer at a reasonable price has been initiated.
Assets classified as held-for-sale: Assets are classified as held-for-sale when we commit to a plan to sell the asset, the asset is available for immediate sale in its present condition and an active program to locate a buyer at a reasonable price has been initiated. The sale of these assets is generally expected to be completed within one year.
During fiscal year 2023, pursuant to the Sales Agreement, we sold and issued 339,650 shares of Series B Cumulative Preferred Stock, at a weighted average share price of $15.60, paid the Agent commissions of $158,994 for such sales and received net proceeds of $5,139,178 (net of fees and commissions) for such sales.
During the three months ended December 29, 2024, pursuant to the Noble Sales Agreement, the Company sold and issued 169,247 shares of 8.25% Series B Cumulative Preferred Stock, at a weighted average share price of $9.73, paid the Sales Agent commissions of approximately $50,000 for such sales and received net proceeds of $1.6 million (net of fees and commissions) for such sales.
Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is still evaluating the impact the adoption of this standard will have on its consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is still evaluating the impact the adoption of this standard will have on its consolidated financial statements. Off-Balance Sheet Arrangements As of December 29, 2024, we did not have any off-balance sheet arrangements. ITEM 7A.
The remaining $45.7 million in aggregate principal amount was issued to FAT Brands, Inc., pending sale to third party investors.
In October 2023, $20.2 million aggregate principal amount previously issued to FAT Brands Inc. was sold privately resulting in net proceeds of $18.1 million. The remaining principal amount remains issued to FAT Brands, Inc., pending sale to third party investors as of December 29, 2024.
General and administrative expenses decreased $20.2 million for the fiscal year ended December 31, 2023, compared to the prior year, primarily due to the recognition of $16.9 million in Employee Retention Credits during 2023, partially offset by professional fees related to certain litigation matters.
General and administrative expenses increased $35.4 million for the fiscal year ended December 29, 2024, compared to the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and increased professional fees related to pending litigation.
On July 13, 2023, pursuant to the Exchange Agreement, the Twin Peaks sellers exercised their put option.
On July 13, 2023, pursuant to the Exchange Agreement, the Twin Peaks sellers exercised their put option. During the first quarter of fiscal 2024, the Company paid $1.0 million to settle the 10% per annum interest in perpetuity and to settle the put option.
Refranchising net loss for the fiscal year ended December 25, 2022, was comprised of restaurant operating costs, net of food sales, of $4.2 million. Advertising expense increased $3.0 million for the fiscal year ended December 31, 2023, compared to the prior year. These expenses vary in relation to advertising revenues.
Refranchising net loss for the fiscal year ended December 29, 2024, was comprised of restaurant operating costs, net of food sales, of $0.9 million, and $1.0 million in net loss related to the sale or closure of refranchised restaurants.
Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is still evaluating the impact the adoption of this standard will have on its consolidated financial statements.
The Update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
Investing Activities Net cash used in investing activities was $59.8 million in fiscal year 2023.
Investing Activities Net cash used in investing activities was $26.5 million in fiscal 2024 compared to $59.8 million in fiscal 2023, and is primarily related to purchases of property and equipment in connection with company-owned restaurants.
Total other expense, net for the fiscal year ended December 25, 2022 was $89.5 million and consisted primarily of net interest expense of $94.8 million. This increase is primarily due to new debt offerings which occurred in the second half of fiscal year 2022 and first three quarters of 2023.
These expenses vary in relation to advertising revenues. Total other expense, net for the fiscal year ended December 29, 2024 was $140.4 million and consisted primarily of net interest expense of $138.3 million and net losses on extinguishment of debt in the amount of $1.8 million.
Actual results could differ from those estimates. Recently Adopted Accounting Standards In March 2022, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.
Actual results could differ from those estimates. Recently Adopted Accounting Standards In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements.
The amendments require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting within annual reporting periods beginning after December 15, 2027.
Removed
During the fourth quarter and fiscal year 2022, pursuant to the Sales Agreement, (i) we sold and issued 1,648 shares of Class A Common Stock, at a weighted average share price of $7.04, paid the Agent commissions of $348 and received net proceeds of $11,260 (net of fees and commissions) for such sales and (ii) we sold and issued 30,683 shares of Series B Cumulative Preferred Stock, at a weighted average share price of $18.13, paid the Agent commissions of $16,692 for such sales and received net proceeds of $539,698 (net of fees and commissions) for such sales.
Added
As a result, as of December 29, 2024, the outstanding principal balance owned by the Twin Peaks seller is no longer subject to the put option.
Removed
Net cash provided by financing activities was $28.7 million in 2022, primarily as a result of proceeds from borrowings, offset by dividends paid on our Class A and Class B Common Stock and our Series B Cumulative Preferred Stock.
Added
On March 20, 2024, Twin Hospitality I, LLC issued an additional $50.0 million aggregate principal amount of one tranche of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $50.0 million aggregate principal amount, $38.8 million was sold privately during the first quarter of 2024 resulting in net proceeds of $36.4 million.
Removed
The purpose of this amendment is to enhance disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. It requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.
Added
A portion of the proceeds was used to purchase $7.4 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. In connection with the bonds repurchased, the Company recognized a $0.4 million net gain on extinguishment of debt.
Removed
The amendments should be applied prospectively and are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASC No. 2022-02 for the fiscal year beginning December 26, 2022, which did not have an effect on the Company's condensed consolidated financial statements.
Added
During the second quarter of 2024, the remaining $11.2 million in aggregate principal of notes was sold privately to a third party investor resulting in net proceeds of $10.7 million. 35 Table of Contents Twin Securitization Notes On November 21, 2024, Twin Hospitality I, LLC refinanced all of its above-referenced secured notes through the issuance and sale of four tranches of fixed rate secured notes to third party investors for a total aggregate principal amount of $416.7 million.
Removed
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments . This guidance replaced the previous incurred loss impairment methodology.
Added
Net Proceeds from the sale of the Twin Securitization notes were $407.5 million and consisted of $6.0 million of debt offering costs and $3.2 million of original issue discounts.
Removed
Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts.
Added
The net proceeds from the sale of the Twin Securitization Notes was used to redeem all of the Prior Securitization Notes, which included principal of $388.8 million and accrued interest of $2.3 million, with the remainder to be used for working capital and general corporate purposes. The Company recognized a loss on extinguishment of debt of $2.4 million.
Removed
In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates (“ASU 2019-10”) . The purpose of this amendment was to create a two-tier rollout of major updates, staggering the effective dates between larger public companies and all other entities.
Added
Also on November 21, 2024, the Company contributed Twin Hospitality I, LLC, to a new holding company, Twin Hospitality Group Inc., in anticipation of a planned listing of Twin Hospitality as a standalone public company.
Removed
This granted certain classes of companies, including Smaller Reporting Companies (“SRCs”), additional time to implement major FASB standards, including ASU 2016-13. Larger public companies had an effective date for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
Added
In January 2025, the Company distributed approximately 5% of the fully-diluted shares of Class A Common Stock of Twin Hospitality to our common stockholders, and Twin Hospitality began trading as a standalone publicly traded company listed on NASDAQ under the symbol "TWNP". The Company retained the remaining shares of Twin Hospitality outstanding immediately following the distribution.
Removed
All other entities were permitted to defer adoption of ASU 2016-13, and its related amendments, until fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of an SRC and adopted the deferral period for ASU 2016-13.
Added
On November 21, 2024, the Company modified the terms of the outstanding notes issued by FB Resid pursuant to an Omnibus Amendment executed with the noteholders as well as with the Company’s other whole business securitization subsidiaries, FAT Brands Royalty I, LLC, FAT Brands GFG Royalty I, LLC, Twin Hospitality I, LLC (f/k/a FAT Brands Twin Peaks I, LLC) and FAT Brands Fazoli’s Native I, LLC (the “Existing Issuers”).
Removed
The guidance requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption, if applicable. The Company adopted ASU No. 2016-13 for the fiscal year beginning December 26, 2022.
Added
The Omnibus Amendment amended the treatment of “Excess Amounts” under the Company’s current securitization transactions, other than Twin Hospitality I, LLC, upon (i) the occurrence of an Event of Default under the FB Resid Indenture or (ii) if the Controlling Class Representative (currently 3|5|2 Capital ABS Master Fund LP) has notified the FB Resid Trustee that certain Excess Amounts are required to satisfy clauses (i) through (xiii) of the Priority of Payments on the next applicable Monthly Allocation Date under the FB Resid Indenture.
Removed
The adoption did not require an adjustment to retained earnings and did not have an effect on the Company's condensed consolidated financial statements. 38 Table of Contents Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
Added
In such event, all such Excess Amounts must be deposited into a segregated account to be included in Retained Collections and deposited in the Collection Account under the FB Resid Indenture for application in accordance with the waterfall of payments under Section 5.10 of the FB Resid Indenture.
Removed
The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition.
Added
The Omnibus Amendment also amended the FB Resid Indenture to provide that with respect to (i) any Mandatory Prepayment Amount and/or (ii) from and after the occurrence of any Event of Default (as such terms are defined in the FB Resid Indenture), payments of interest and principal with respect to the Class A-1 Notes and the Class A-2 Notes shall be made in accordance with the Applicable Class A Payment Priority (defined in the Omnibus Amendment), and no amounts may be paid on the Class A-1B Notes or Class A-2B Notes until amounts then due and owing to the Class A-1A Notes and the Class A-2A Notes shall have been paid in full in cash.
Removed
Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Item 15 of Part IV of this Annual Report on Form 10-K. ITEM 9.
Added
In addition, under the Omnibus Amendment, the Company and FB Resid agreed not to permit (i) any equity interests of any Existing Issuer to be sold, transferred or disposed, other than the transactions contemplated by the Twin Peaks Listing Event, or (ii) any Specified Additional Issuance (as defined in the FB Resid Indenture).
Removed
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements with accountants on any matter of accounting principles or practices, or financial statement disclosure required to be reported under this item.
Added
In addition, the Omnibus Amendment added a new Event of Default under the FB Resid Indenture if the Issuer should fail, by July 31, 2026, to have prepaid or 36 Table of Contents purchased at least $20,000,000 of Class A-1A Notes and Class A-2A Notes held by the Controlling Class Representative or its managed funds.
Added
Also under the Omnibus Amendment, the Company agreed not to sell or otherwise dispose of any of its equity interests of Twin Hospitality until Twin Hospitality has used at least $75,000,000 of aggregate Qualified Equity Offering Proceeds (as defined in the Omnibus Amendment) or other proceeds to prepay the new Notes issued under the TWNP Indenture.

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Other FAT 10-K year-over-year comparisons