Franchise News Highlights Papa Johns Expansion, FAT Brands’ Debt Default, And CPK’s New Owners
- Papa Johns operator Chris Patel acquired 85 units and plans to open 52 more by 2030.
- FAT Brands defaulted on $1.3 billion in debt and may file for bankruptcy to reorganize.
- California Pizza Kitchen will be sold to Consortium Brand Partners for under $300 million.
- Experts warn that low-cost franchises often carry hidden costs beyond the initial investment.
- Major moves include Hooters founders regaining control, a Freddy’s franchisee filing bankruptcy, and Stellar Service Brands selling Softroc.
Papa Johns announced Nov. 25 that Chris Patel of Pie Investments has taken over 85 restaurants in the Washington, D.C., and Baltimore areas. Patel is now one of the brand’s largest U.S. operators, with 150-plus stores. The deal also specifies that by 2030, Pie Investments will open 52 additional restaurants in those markets and in Philadelphia, QSR Magazine reported.
“Papa Johns leadership is empowering franchisees to drive success, with tools to elevate our operations and enhance our customer experience,” Patel said in a news release. The 85 units previously were joint holdings of Papa Johns and William Freitas, owner of Colonel’s Limited franchise group. Freitas is retiring.
Papa Johns leadership revealed in November that the brand would reduce its corporate ownership to less than 10% of the total restaurants within its system. As the third quarter closed, Papa Johns had 545 company-owned and 2,962 franchise locations, QSR magazine said.
FAT Brands Defaults on $1.3 Billion Debt
FAT Brands, an umbrella franchisor that owns Fatburger, Fazoli’s and Round Table Pizza, is leaning toward declaring bankruptcy in order to reorganize, Nation’s Restaurant News reported. RestaurantDive.com, which cited a Securities and Exchange Commission filing, said FAT Brands has defaulted on $1.3 billion in debt and its creditors called for immediate repayment in full.
For years, FAT Brands has financed growth and paid down debt largely through brand acquisitions, Nation’s Restaurant News stated. Those acquisitions have included Johnny Rockets in 2020; Twin Peaks, Fazoli’s and Native Grill & Wings in 2021; Smokey Bones in 2023; and the spinoff of Twin Peaks in January 2025, NRN said.
In addition, NRN said it had sent an internal memo to franchisees in which FAT Brands CEO Andy Wiederhorn stated: “We are in active, constructive discussions with bondholders to prudently reshape parts of our balance sheet. These negotiations are part of a broader effort to strengthen the company financially so we can keep investing behind our brands, accelerate development and support your business for the long term.”
California Pizza Kitchen Under New Ownership
A group of investors led by Consortium Brand Partners will buy California Pizza Kitchen for less than $300 million, according to Restaurant Business, which cited a Nov. 21 report by Reuters. Consortium’s portfolio includes consumer brands such as Outdoor Voices activewear and actress Reese Witherspoon’s Draper James. The buyer group also includes Eldridge Industries, which owns restaurant chains Le Pain Quotidien and Little Beet as part of its Convive Brands division.
California Pizza Kitchen has been owned by its lenders since filing for bankruptcy in 2020. The brand’s domestic sales declined 12.3% last year, Restaurant Business said. At the end of 2024, California Pizza Kitchen had 198 restaurants in operation; 131 of those are in the United States. It began franchising in late 2024.
The Hidden Costs Behind Low-Cost Franchise Opportunities
Look beyond the initial price tag on low-cost franchises, experts recommended in a CNBC article published Sunday. Brian Luciani, chief growth officer at SMB Franchise Advisors, told CNBC that there’s been “a significant rise in emerging franchise opportunities across sectors like pet services, tutoring, mobile car detailing, fitness coaching, home services and even wellness.” He said these brands are built on the premise of a lean business model, one that’s often home-based, while still providing a franchise support system.
“The headline investment number you see, typically $25,000 to $50,000, can be very appealing,” Luciani told CNBC, but franchisee candidates should dig deeper. They should examine the total cost of ownership: working capital, local marketing, licensing, insurance and the time investment required to scale to profitability, he said.
Two other experts made further points. Keith Miller, public affairs director for the American Association of Franchisees, told CNBC that most franchisors need 80 to 100 units to be self-sufficient on royalties. “Until then, they may need to sell a franchise this week to make payroll next week,” Miller said. “Selling to weak candidates and not having a solid base at the franchisor is a road map to failure for all involved.” Jenn Woodhull-Smith, who teaches franchising at North Carolina State University’s Poole College of Management and has owned a low-cost franchise, suggested looking for a brand with experience-based training.
Hooters Founders Take Back Control and Plan Major Upgrades
Original Hooters, the chain’s founding group, has teamed with franchise group Hoot Owl Restaurants LLC to own about 140 of the 198 domestic Hooters restaurants. The brand’s domestic restaurants and 60 international locations bring in some $700 million in annual system-wide sales.
In a news release, Original Hooters leadership outlined plans to focus on restaurant upgrades, superlative service, equipment enhancements and a streamlined menu built around higher-quality ingredients. The news release also stated that the 42-year-old brand will emphasize family and community through events, local partnerships, sponsorships and other initiatives.
Freddy’s Franchisee Declares Bankruptcy, Will Reorganize
M&M Custard, one of the largest franchisees of Freddy’s Frozen Custard and Steakburgers, filed for Chapter 11 bankruptcy protection in mid-November. M&M Custard operates 31 Freddy’s locations across Illinois, Indiana, Kansas, Kentucky, Missouri and Tennessee. It reported $5.2 million in assets against $27.7 million in liabilities owed to more than 100 creditors, according to Entrepreneur magazine.
In court documents, CEO Eric Cole called his company’s 11 Chicago stores a “toxic asset” that were a financial drain on M&M’s entire portfolio. M&M Custard had purchased six Chicago stores in 2021 for $1 million and aimed to dominate that market; it committed to develop 13 additional Freddy’s units. USA Today quoted Cole as saying that M&M Custard will be successfully reorganized with the underperforming Chicago stores severed from its portfolio.
Stellar Service Brands Sells Softroc to Courtney Harmon
The residential and commercial services company Stellar Service Brands on Nov. 20 announced that it had completed the sale of its subsidiary Softroc, which provides poured-in-place rubber safety surfaces, to Courtney Harmon. Before the sale, Harmon had served as president of Softroc franchise network and bluefrog Plumbing + Drain for Stellar Service Brands.
Restoration & Remediation online magazine reported that Harmon also purchased The Driveway Co., a service line offered under the Softroc brand that maintains and repairs concrete, as part of the deal.
