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Good Morning Wolf Pack,

This week's newsletter covers the FAT Brands bankruptcy sale, the latest regulatory fallout at Xponential Fitness, and a 61-unit development deal at KidStrong that shows exactly what great multi-unit operators look like.

Enjoy!

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FROM THE WOLF DEN

FAT Brands, the 18-brand franchisor behind Twin Peaks, Fatburger, Fazoli's, and Johnny Rockets, has formally launched an asset sale process, accepting qualified bids through April 24. Indications of interest are due April 3, a court auction is scheduled for April 28, and a sale hearing is set for May 1.

The company filed for Chapter 11 bankruptcy in January alongside Twin Hospitality Group (the spinoff housing Twin Peaks and Smokey Bones), weighed down by approximately $1.4 billion in securitized debt it couldn't service. CEO Andy Wiederhorn, who built FAT Brands through nine acquisitions in 18 months between 2020 and 2022, has been barred by the court from participating in or reviewing any bids. A group of creditors had previously sought to suspend him, alleging he sold 9 million shares of Twin Peaks equity to White Lion Capital without court approval.

The company entered the process with just $2.1 million in unrestricted cash on hand. Nasdaq delisted both entities in February. The special committee overseeing the sale says it has already reached out to 120 potential buyers.

Xponential Fitness announced it will pay close to $40 million in total settlements — $17 million to the Federal Trade Commission and $22.75 million to more than 500 current and former franchisees. The FTC investigation, which dates to July 2024, related to alleged violations of the Franchise Rule and unfair or deceptive acts. Xponential did not admit liability.

The settlements come as the company works to stabilize after a turbulent stretch that included the ouster of founder and former CEO Anthony Geisler, an SEC investigation (since closed), and a probe by the U.S. Attorney's Office for the Central District of California that remains ongoing. The company has already divested several brands including CycleBar, Row House, and Rumble Boxing, shedding them to Extraordinary Brands.

Systemwide same-store sales fell 4.3% in Q4 2025, and the company closed 140 units for the year against 341 gross openings. Its global studio count now stands at 3,097. New CEO Mike Nuzzo, appointed last August, acknowledged on the Q4 earnings call that "marketing and lead management missteps" weighed on membership growth, and said 2026 investment will focus on new member acquisition at the local level.

Youth fitness and wellness concept KidStrong inked its largest development deal to date — a 61-unit agreement with New York-based operator Joe Pedatella, who already runs 16 locations across Connecticut, New Jersey, and New York. The deal makes Pedatella the brand's largest franchisee and commits him to at least four openings per year, with growth targeted across CT, DE, MD, NJ, and NY.

Pedatella entered the KidStrong system in 2021 after being drawn to the brand's focus on childhood development. He credits his growth to three priorities: building a strong leadership team, developing consistent systems, and being disciplined about site selection. The average unit volume across his portfolio sits just above $1 million, above the brand's disclosed AUV of $714,183 for units open at least two years.

KidStrong has 180 locations nationwide and is targeting 55–60 new openings in 2026. Co-founders Matt Sharp and Lincoln Brown described Pedatella as functioning like a member of the senior leadership team. He's expected to be responsible for roughly seven of this year's new openings.

EXTRA SAUCE 💥

FAT Brands Creditors Previously Sought to Suspend CEO Wiederhorn Creditors alleged Wiederhorn sold millions of shares of Twin Peaks equity without court approval, calling it a pattern of treating company assets as his own.

Subway Franchisees Expand Into Golden Chick With 13-Unit Houston Deal Brothers Raj and Karan Korpal, who already operate three Golden Chick locations in Beaumont, TX, signed on for 13 more, 10 of which will be in the Houston metro.

Jersey Mike's Operators Sign Deal to Bring Mike's Red Tacos to Minnesota 825 Ventures, which operates nearly two dozen Jersey Mike's in Minnesota, is adding the Mexican category by partnering with San Diego-based emerging concept Mike's Red Tacos.

Starbird Signs 36-Unit Texas Deal With Mac Haik Restaurant Group California-based premium chicken concept Starbird is pushing hard into new markets including Denver, Chicago, the Pacific Northwest, and now Texas with this major multi-unit commitment.

A Place At Home Acquired by Switzerland-Based Dovida in International Expansion Play The acquisition marks Dovida's entry into its seventh international market, with plans to double A Place At Home from its current 55 locations to 100+ units over the next two to three years.

Freddy's Largest Franchisee Surpasses 130 Locations With Midwestern Acquisition JRI Hospitality, based in Salina, Kansas, acquired another Midwest Freddy's franchisee to push its portfolio past 130 units and extend its regional footprint.

Social Media Food Critic Keith Lee Takes Investment Stake in Brooklyn Dumpling Shop The viral food reviewer joins the brand's growing roster of notable investors — another signal that influencer-to-operator crossover deals are becoming a legitimate growth strategy.

New PE Owner for Vast Coworking as Franchisees Acquire Four More Dallas Locations Kevin and Giedre Priddy, who operate seven Venture X units, are acquiring and converting four Dallas companies as Vast Coworking Group changes private equity hands.

Schlotzsky's Deli Undergoes Major Rebrand with Smaller Prototype After 55 Years The sandwich chain is rolling out a smaller-footprint store model as part of a broader effort to modernize and reposition the 55-year-old brand for future franchise growth.

California Assembly Introduces Bill to Regulate How Franchisors Can Spend Franchise Fees Proposed legislation would require that fees collected by franchisors only be used for purposes explicitly described in the franchise agreement, which is a potentially significant shift for brand fund accountability.

Sport Clips Revamps Growth Strategy After Consecutive Unit Count Declines Under new franchise leadership, the men's hair salon brand is laying out a revised roadmap to reverse a declining store count, leaning on franchisee support and targeted development initiatives.

Jiffy Lube Sold for $1.3B as Tennis Star Partners With The Picklr The $1.3B Jiffy Lube sale is the week's biggest transaction headline, while The Picklr's celebrity athlete partnership adds another sports name to the growing pickleball franchise category.

WOLF BITES

• U.S. Business Applications hit a record 532,319 in January 2026 📋
• Chip startup Frore hit unicorn status at $1.64B after pivoting to AI chip cooling tech 🦄
• Trump extends deadline for Iran to reopen Strait of Hormuz ⏳
• Cuba restores power to Havana after second grid collapse in a week ⚡
• 1 in 3 Americans plan to start a business in the next 12 months 📈
• Ryan Gosling’s sci-fi epic Project Hail Mary scores biggest box office opening of the year with $80.5m 🎬
• Hawaii's worst flooding in 20 years threatens dam and prompts evacuations 🌊
• 85% of Small Businesses now use AI in some form 🤖

That’s it for this edition of The Wolf Report. Feel free to reply with any questions or feedback. Thanks and see you Thursday!

— The Wolf

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