When Andrew Wiederhorn stepped down last May as chief executive of the restaurant company he founded, it was under a raft of questions.

In 2021 the U.S. Attorney’s office in California and the Securities and Exchange Commission launched an investigation into Wiederhorn and his company, Fat Brands Inc. He remains as the chair of the company.

“I will continue to support the growth and evolution of Fat Brands, including championing our talented executive team, which has over the past five years taken the company from two brands to 17 restaurant brands with…systemwide sales of $2.2 billion annually,” Wiederhorn said in a statement at the time.

Please give us an overview of your franchise operation. For example, how did your company get started? How many franchisees do you have now?

The creation of Fat Brands Inc. dates back to 2003 when I entered the restaurant franchising space, purchasing the iconic Los Angeles burger chain, Fatburger. Despite being a household name on the West Coast, the brand needed a refresh. From renegotiating leases/supplier agreements to expanding overseas where capital was more readily available, we were able to turn the brand around to a leading global burger player with over 200 locations worldwide. This experience then led to the purchase of Buffalo’s Cafe in 2011. From there, we decided to create a spinoff of the fast casual model of Buffalo’s, Buffalo’s Express, to pair with Fatburger, which has been an extremely popular model with our franchisees. In 2017, Fat Brands Inc. went public to aid in further growth for the current portfolio brands, and to fuel our expansion via acquisitions.

Over the last seven years, we have acquired 15 brands: Round Table Pizza, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses. Currently, we franchise and own approximately 2,300 units worldwide (40 countries and 48 states).

What are the financial requirements for potential franchisees?

Our start-up costs range from $349,000 to $5.1 million.

What do you think are the advantages of owning a franchise? What do you emphasize to prospective franchisees about the business they are about to enter?

The franchise model is a model that continues to stand the test of time. It provides the opportunity for aspiring entrepreneurs to launch their own businesses but with a safety net. Unlike a traditional small business, they have an experienced corporate support team that is working hand-in-hand with them to help them find success. This spans departments such as operations, marketing, public relations, legal, etc. I also think the franchise model truly shined during the pandemic. It was an extremely challenging time for everyone, but the franchise support structure helped businesses stay afloat-whether that was helping a franchisee renegotiate a lease, devising a local store marketing plan, or providing them with Covid support resources, these actions all played a role in keeping restaurant doors open.

Another advantage we have as a restaurant franchising company is our significant scale and global presence, which gives us significant purchasing power (approximately $600 million). Our scalable platform also provides us with the opportunity to synergistically incorporate new concepts with minimal incremental corporate overhead. Both benefit our franchisees as they get lower cost of goods and because of our platform and synergies, more dollars are available to boost awareness and visibility to elevate their stores. 

When you are seeking new franchisees, what qualities do you look for, other than the financial thresholds they must meet?

We are looking for franchisees that want to grow with us. Fat Brands is very growth-oriented, and we want to find operators who see the value in diversifying their portfolio with our brands. With that comes franchisees who understand the restaurant industry and have the proper experience to scale on their end.

California’s new Fast Recovery Act ended up creating a fast-food council that has some ability to set wages across the industry and make workplace recommendations. Wages will soon go to $20 an hour. What’s your assessment of the effect of this new regulation? For example, will it impede or boost the growth of franchising in California? Any other effects?

Everyone wants their employees to make more money, but everyone must realize there is a cost, and some of that cost will be passed onto the consumer. This law applies to big and small businesses and is important for everyone. It will have an impact on how employees shop the market – if big companies have to pay this rate, small mom and pops will have to pay just to keep up. In turn, this forces the wage up across the sector.

Currently, we have low unemployment, but it won’t last forever. We do not want to create a situation where it is unaffordable to stay in business. This, in turn, would trickle down to everyone, including landlords, who are already hurting. Traditionally, California has had a higher wage than the majority of the states that we operate in, so while there will be an impact, it will be easier to navigate.

What do you believe is the future of franchising in California? 

California continues to be a key growth market for many of our brands such as Fatburger, Round Table Pizza, and Hot Dog on a Stick. We do not see anything slowing franchise growth down in the state. There will always be challenges, for example, product shortages or rising commodity costs; it just comes down to your team and the direction you take.