Round Table Pizza Franchisees Probe Fat Brands' Marketing Funds, Transfers
A group of Round Table Pizza franchisees has launched an investigation into Fat Brands' handling of marketing funds and transfers to the parent company. This comes after a missed vendor payment left the chain without advertising for several months this year.
The investigation, led by the Round Table Owners Association, aims to scrutinise the use of the ad fund from 2022 to 2024. Franchisees suspect misuse of these funds, with some alleging that money was used for a company convention and that ad fund dollars were reclassified as revenues to boost rebates.
Fat Brands, which bought the parent company of Round Table Pizza in 2021, has declined to comment on franchisee matters or pending litigation. However, the company maintains that it adheres to Generally Accepted Accounting Principles in its financial reporting. Since the acquisition, the company has amassed $1.2 billion in long-term debt, reflecting its aggressive buying spree.
Transfers from Round Table to Fat Brands and other affiliates totalled nearly $57 million over four years, representing the majority of the franchise revenue. These transfers were described as permanent, reflecting the complete transfer of ownership and operational control.
The investigation into Fat Brands' use of marketing funds and transfers continues. Round Table Pizza, with 391 locations primarily on the West Coast, has seen more closures than openings in the past five years. The franchisees hope that their investigation will shed light on the company's financial practices and ensure the long-term health of the Round Table Pizza brand.
