5/14/2024 – A Bad Week For Franchise Exec’s

1) Xponential Fitness Removes CEO

Anthony Geisler, who founded multi-brand platform company Xponential Fitness in 2017 and has served as CEO since, was removed from his position and suspended indefinitely effective immediately, the company announced Friday.

Xponential said it received notice May 7 of a probe by the U.S. Attorney’s Office. In December it disclosed an investigation by the U.S. Securities and Exchange Commission, and the company is facing multiple class action lawsuits alleging it defrauded its investors by making “materially false and misleading statements and omissions regarding Xponential’s business, financial results and prospects.”

TLDR…many franchisees have had to close locations (losing hundreds of thousands of dollars or worse in the process).Brands like Pure Barre, CycleBar, Row House, and Rumble have been hit hardest. 
This executive switch was a long time coming.

2) FAT Brands Chairman Charged

Andy Wiederhorn, the chairman of Fatburger parent company FAT Brands, was charged Friday with a number of federal offenses including misappropriating $27 million from the company for personal expenses and using it to “fund his lavish lifestyle.”

The U.S. Securities and Exchange Commission alleges Wiederhorn, 58, used shareholder funds to pay for private jets, first class airfare, luxury vacations, rent, mortgage payments and nearly $700,000 in shopping and jewelry. The fraudulent scheme stripped FAT Brands of 40 percent of its revenue, “often leaving the company with insufficient cash to pay its own bills,” according to a complaint filed May 10 by the SEC.

Fat Brands owns franchises such as Marble Slab Creamery, Johnny Rockets, Great American Cookies, Hot Dog on a Stick, Fazoli’s, and more. 

If I was a franchisee, I would be livid to hear this. 40% of revenue is an insane amount of cash that could’ve been reinvested into the organization and improve operations and brand awareness. 

Delight Restaurant Group Buys 65 Wendy’s Stores in Eastern U.S.
Rich and Andrew Krumholz have bought portfolios that required a lot of effort to turn around, but their April acquisition of 65 Wendy’s stores is the opposite.

“Our primary goal is to keep operations at these restaurants running as smoothly as possible with minimal changes for the employees and customers,” Managing Partner Rich Krumholz said.

The brothers run Delight Restaurant Group, which operates 226 Wendy’s and Taco Bell units. Delight purchased 65 stores from Primary Aim LLC in Pennsylvania, Ohio and West Virginia.

Marco’s Pizza Targets U.S., International Expansion : Marco’s Pizza has ambitious growth goals. According to the company, it has the potential to open another 4,000 or so locations, adding to its 1,200 existing stores in 34 states, Puerto Rico and the Bahamas.

Bringing the brand a smidge closer to that goal are a master franchise deal signed in Mexico City, a 15-unit deal in the Midwest and a four-unit agreement in Idaho.

Dave’s Hot Chicken Signs Seven-Unit Agreement for St. Louis
Dave’s Hot Chicken announced today that it has signed a multi-unit agreement for seven locations across St. Louis with established entrepreneur, Raj Patel, and his company, The Hari Group.

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