The SEC informed FAT Brands earlier this month that civil charges may be coming against chairman Andrew Wiederhorn and one former and current officer of the company.
The group received a “Wells Notice,” which is a letter the SEC sends to companies when it concludes an investigation. The message shares that the agency may bring civil action and allows the targeted company to respond as to why action should not be brought against it. A Wells Notice is neither a formal charge of wrongdoing nor a determination that the recipient violated any law.
“FAT Brands has been cooperating with the government in its investigation related to events that occurred in 2020 and before,” the company said in a statement. “The company does not believe it committed any wrongdoing, and plans to submit a rigorous response to the Wells Notice.”
In early 2022, reports came out that Wiederhorn was facing a federal investigation tied to criminal accusations against him and his family, including securities fraud and money laundering. Search warrant records show the home of Wiederhorn’s son Thayer and his daughter-in-law was raided in December 2021. While the U.S. Attorney’s Office stated FAT Brands itself isn’t under investigation, Wiederhorn maintained his innocence.
He said the investigation came forth due to a shareholder lawsuit alleging impropriety in the merger between FAT Brands and Wiederhorn’s firm Fog Cutter Capital Group in late 2020. The complaint contends Wiederhorn received millions in loans from Fog Cutter, which got the money by borrowing funds from FAT Brands. Fog Cutter forgave the loans to Wiederhorn, but still owed money to FAT Brands. According to the lawsuit, Wiederhorn orchestrated the merger of Fog Cutter and FAT Brands to eliminate that debt.
Wiederhorn, who previously served prison time over federal tax charges, criticized media coverage for inaccuracies and said his “personal history” played into government officials looking into the allegations raised by the shareholders. He asserted all transactions were transparently handled with professional oversight.
In March 2023, Wiederhorn announced that he would step down as CEO so that he wouldn’t be a distraction to the company, but remained as chairman of the board. Ken Kuick and Rob Rosen were revealed as co-CEOs in May 2023. Also, the company rearranged its board of directors. The majority of the board was replaced with a new group that includes three of Wiederhorn’s children–Mason, Taylor, and Thayer Wiederhorn–and their grandfather, Donald Berchtold.
FAT Brands owns 18 restaurant brands: Round 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.
It franchises and owns approximately 2,300 units worldwide. Last year, FAT Brands opened 125 new shops and added more than 200 locations to its 1,200-unit development pipeline. the company is projecting 150 openings for 2024.
FAT Brands’ primary focus as of late has been on ways to reduce debt, including organic growth, a Twin Peaks IPO, and expansion of its pretzel and cookie dough factory in Atlanta.
