Fazoli's Franchise Cost & 2025 FDD Data
48/100
Middle tier
48 this brand51 Quick-Service Restaurants medianlikely 44–52 (high confidence)
Higher is better · an editorial assessment, not investment advice
#1,869 of 3,069 graded brands
Why a C: Helped by scale, legal record and transparency. Held back by unit economics and unit growth. See all six factors
- Total investment
- $1.6M – $2.6M
- Avg net sales
- $1.3M
- “Franchised Restaurants (Traditional + Non-Traditional) - Total”, 136 outlets; not profit
- SBA charge-off
- 12.0%
1 in 8 SBA 7(a) loans to Fazoli's owners charged off (3 of 25 resolved loans, approved since FY1991); Quick-Service Restaurants median 17.6%.
Data from the FDD filing + SBA 7(a) records. Analysis by FranchiseVerdict · Methodology · Website · Report an error · Franchisor? Claim this listing
Fazoli's is a fast-casual franchise serving Italian-American pasta, sandwiches, and its signature breadsticks. Franchisees run restaurants with counter service and drive-thru, managing food prep, staffing, and costs.
FranchiseVerdict summary · 2025 FDD
Per the 2025 FDD, a Fazoli's franchise requires a total initial investment of $1.6M – $2.6M, including a $50K franchise fee. Once open, the ongoing royalty is 5.0%. Per the 2025 FDD, average net sales were $1.3M (Item 19 group “Franchised Restaurants (Traditional + Non-Traditional) - Total”, 136 outlets; net sales, not profit). SBA 7(a) loans show a 12.0% charge-off rate on 25 resolved loans. Verdict grade: C (Middle tier), an editorial assessment, not investment advice.
Sources: 2025 FDD · SBA 7(a) loan records (FOIA) · What one unit could make and lose →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium (issued 12 to 24 months ago; a newer filing is likely on file)
Evidence for the headline figures: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored8 of 8 headline figures on this page cite a page of the filing.
Overview
Quick verdict · vs Quick-Service Restaurants median
Top edge: green = better than the Quick-Service Restaurants median by more than 10%, red = worse by more than 10%, gray = within 10% or no benchmark. Source: FDD filings + SBA 7(a).
Data from public FDD filings and SBA records. Methodology
Bottom line
- RETURNSAverage net sales of $1.3M/year (outlet median $1.2M; Item 19 group “Franchised Restaurants (Traditional + Non-Traditional) - Total”, 136 outlets; net sales, not profit).
- GROWTHIn the latest Item 20 year, the number of franchised outlets fell by 11 (3 opened, 14 closed).
- FLAGItem 4 discloses a bankruptcy of an officer or of a company an officer ran, not of the franchisor. Review Item 4 for details.
AT STAKEOne unit at the Item 7 midpoint: $277K a year in payments on assumed SBA 7(a)-style terms.You put in about $428K of your own cash and personally guarantee a $1.7M loan. Assumptions are labeled in Sales; not investment advice.See what one unit could make and lose
Things to check before you sign (2)
- Net -11 franchised outlets in 2024 (Item 20, outlet counts). Ask owners why outlets closed.
- The franchisor keeps the right to compete inside your territory (Item 12, territory).
SBA charge-off rate 12.0%, below the 17.6% category median; the score uses fixed ranges, not the median, and takes 6 points for it (see Why a C). Checked and clear: no auditor doubt that the franchisor can keep operating, no pending lawsuit naming the franchisor, no jury-trial waiver, no supplier rebates to the franchisor, no rule that the owner must run it personally and the full filing on file, and an Item 19 average from 136 units.
What to do next
Step 1: Read the FDD itself.
Free: read the 2025 filing on this site, page by page. The franchisor must also give you its current FDD at least 14 days before you sign or pay. Or look it up in a state registry (Wisconsin, Minnesota, California). What to read first.
Step 2: Talk to current and former owners.
Free: Item 20 of the FDD lists every current owner and those who left last year, most with a phone number. Questions to ask.
Shortcut: the Fazoli's owner list as a CSV, in the Contacts section.
Step 3: Talk to an SBA lender.
Free: the SBA's Lender Match, or the lenders already lending to this brand in the SBA section. Ask what you would personally guarantee and what the monthly payment would be. If you plan to use retirement savings, ask a CPA about the rules for that first.
Step 4: Have a franchise attorney review the FDD and agreement.
Free: your state bar's lawyer referral service can name franchise lawyers, and many offer a short first consultation. Bring the checks listed above.
Research steps, not investment or legal advice.
Can you afford it, and what does the money buy?
Entry cost (the Item 7 midpoint) is 4.4× the Quick-Service Restaurants median ($487K).
Source: FDD 2025 · Items 5–7 (fees and startup costs)
Do you qualify? The filing states no minimum net worth or liquid capital. Ask Fazoli's Franchising Systems, LLC (Item 1: 2470 Palumbo Drive, Lexington, Kentucky 40509-1117) and your lender what they require, and keep living costs for the first year outside the deal.
Full Item 7 breakdown12 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Franchise Fee (See Note 1) | $50K | $50K | |
| Site Preparation (See Note 2a) | $270K | $485K | |
| Architectural Services (See Note 3) | $25K | $75K | |
| Cost of the Building (See Note 4a) | $865K | $1.3M | |
| Furniture, Fixtures, and Equipment (See Note 5a) | $270K | $470K | |
| Information System and related technology (See Note 6) | $47K | $59K | |
| Training Expenses (See Note 7) | $10K | $35K | |
| Inventory & Uniforms (See Note 8) | $15K | $30K | |
| Security Deposits, Utilities and Insurance (See Note 9) | $5K | $27K | |
| Trade Area Analysis, Sales Projection and Sales Impact Report (see Item 8) | $15K | $15K | |
| Pre-opening and Opening Advertising (See Note 10) | $15K | $15K | |
| Additional Funds- 3 Months (See Note 11) | $60K | $120K | |
| Total initial investment | $1.6M | $2.6M |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. The total row is the total as printed in Item 7; the lines above add to $1,647,000 to $2,641,000, $9,000 at most from the printed total, which is the figure shown. Actual costs may fall outside this range depending on market and build-out scope.
Item 6 · what you pay once you are open
Ongoing fees
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 4.0% of gross sales |
| Technology feeBrand Technology System Support Services Currently the fees will range from $2,600 - $3,950 depending on the options that are chosen | $2,600–$3,950 |
| Training feeAdditional training charge listed in Item 6 | $10,000 |
| Transfer fee | $25,000 |
| Renewal fee | $25,000 |
| Total fee loadabove the Quick-Service Restaurants median of 7.0% (heavy) | 9.0% of sales |
What do units actually make?
Average net sales are 38% above the Quick-Service Restaurants median ($950K).
Source: FDD 2025 · Item 19 (sales and earnings)
Items 6 (other fees), 7 (startup costs) and 19 (sales and earnings) · assumptions labeled
What you could make and lose: one unit
What one Fazoli's unit would ask of you, from the filing's Item 7 total and labeled assumptions.
Average net sales are $1.3M (FDD Item 19, p.73), and the royalty and ad fund take about $118K of that a year (Item 6). This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners. So this box does not estimate a profit. To cover the loan payment alone, one unit has to clear $277K a year after its food, labor, rent and other costs and the franchisor's fees.
How these figures are worked out
- Loan (assumption): 80% of the $2.1M Item 7 midpoint is a $1.7M loan, paid over 10 years at 10.5%: $277K a year. SBA 7(a)-style terms on a long-term rate; your lender sets yours. Fazoli's' past SBA 7(a) loans averaged 6.2% at approval; 7(a) rates move with the prime rate, so 10.5% is a current-rate assumption, not this brand's history.
What you put at risk
Your own cash in: about $428K Assumption (the part the loan does not cover of the $2.1M Item 7 midpoint), plus whatever anything Item 7 leaves out (its notes say what). The loan is $1.7M.
Personal guarantee. SBA 7(a) loans require a personal guarantee from anyone who owns 20% or more of the business. If the unit cannot pay, the lender can collect from you personally, which can include your savings and your home. The worst case is losing the cash you put in and still owing the rest of the loan.
Gross sales are not profit, and none of these figures is take-home pay until tax and every operating cost are paid. The assumptions are ours, not the filing's. Not investment advice.
Returns modelOne unit · several units · editable
One unit
One unit: what is left after the loan payment
Gross sales, minus the franchisor's fees and the operating costs, is the unit's EBITDA (earnings before interest, taxes, depreciation and amortization). Minus an assumed loan payment, that is what is left for you, before tax. Gross sales are not profit.
This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners. Invested capital is the Item 7 total, which already includes its working-capital (additional funds) line.
Returns model · one unit
What would one Fazoli's unit leave you each year after the loan payment?
Item 19: $1,312,096 average for 136 outlets (Franchised Restaurants (Traditional + Non-Traditional) - Total). Use a figure for outlets like yours if yours differ.
Gross sales, not profit: the costs below decide what is left.
This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners.
Illustrative category typicals, not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Item 7 midpoint of $1.6M to $2.6M
Item 7's $60K to $120K additional funds are already in the total
Left after the loan payment · per year
The unit's EBITDA minus the assumed loan payment. Before tax, depreciation and any cost your inputs leave out (insurance, accounting and legal, licenses, technology fees): not take-home pay.
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies COGS, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
Loan of $1.7M at 10.5% over 10 years, an assumption, not a quote. Return and payback are before tax, depreciation and the costs above. The loan usually needs your personal guarantee.
Buying several existing units? The acquisition scenario
Buying several units
What buying a few existing units could return
Prices an existing operator of a few units off the single-unit EBITDA above, after shared services, and finances it with an SBA 7(a) loan, a conventional loan and a seller note. It shows the yearly return on your cash (IRR), whether year-1 earnings cover the loan payments (DSCR) and how the price is paid for. It starts at 5 units; every deal term is an assumption you can change, and none is from the FDD.
Not modelled yet
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies COGS, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
This scenario starts from a per-unit EBITDA. Fill in the operating costs in the one-unit model above and it runs on that figure, or take it to the full ROI workbench, where the multi-unit and acquisition models accept your own per-unit economics.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD · filed by Fazoli's Franchising Systems, LLC
Financial performance
- Range (low → high)
- $484K→$2.6M2025 FDD Item 19, p.73
- Cohort dispersion (min → max)
- Transparency
- 9 / 10
- vs category median 4 / 10 (more detail than most)
Percentile ranks within Quick-Service Restaurants
Each rank is among the Quick-Service Restaurants brands that report that figure (the count is under each bar).
Item 19 · 8 groups · FDD p.71
Item 19 by group
The 2025 filing reports net sales for 8 groups of outlets. The headline average on this page is the “Franchised Restaurants (Traditional + Non-Traditional) - Total” group (136).
| Group | n | Average | Median |
|---|---|---|---|
| Company-Owned Traditional Restaurants - Total | 56 | $1.4M | $1.3M |
| Company-Owned Traditional - Upper ThirdTop 33% by sales of Company-Owned Traditional Restaurants - Total | 19 | $1.8M | $1.8M |
| Company-Owned Traditional - Mid ThirdMiddle 33% by sales of Company-Owned Traditional Restaurants - Total | 19 | $1.3M | $1.3M |
| Company-Owned Traditional - Lower ThirdBottom 33% by sales of Company-Owned Traditional Restaurants - Total | 18 | $973K | $979K |
| Franchised Restaurants (Traditional + Non-Traditional) - Totalheadline above | 136 | $1.3M | $1.2M |
| Franchised Restaurants - Upper Third | 45 | $1.8M | $1.7M |
| Franchised Restaurants - Mid Third | 45 | $1.2M | $1.2M |
| Franchised Restaurants - Lower Third | 46 | $897K | $926K |
Costs and restaurant cash flow, as the filing prints them
The filing's “Restaurant Cash Flow” is before debt service and depreciation; after royalty, ad fund and rent. Gross sales are not profit, and this line is not take-home pay: what it leaves out still has to be paid.
The cost lines for 4 groups (FDD p.71)
| Line, as the filing names it | Company-Owned Traditional Restaurants - Totaln=56 | Company-Owned Traditional - Upper Thirdn=19 | Company-Owned Traditional - Mid Thirdn=19 | Company-Owned Traditional - Lower Thirdn=18 |
|---|---|---|---|---|
| Average net sales | $1.4M | $1.8M | $1.3M | $973K |
| Average Cost of Goods Sold | 26.90%$364K | 26.40%$470K | 27.00%$349K | 27.60%$268K |
| Average Direct Labor Costs | 32.90%$446K | 29.60%$527K | 32.60%$423K | 39.50%$385K |
| Other Operating Expenses | 17.20%$234K | 14.90%$265K | 17.60%$228K | 21.20%$206K |
| Occupancy Expenses | 9.20%$125K | 7.50%$133K | 9.80%$127K | 11.90%$116K |
| Imputed Royalties and Advertising Fees | 9.00%$122K | 9.00%$160K | 9.00%$117K | 9.00%$88K |
| Restaurant Cash Flow | 4.80%$65K | 12.60%$224K | 4.00%$51K | -9.20%$-90K |
Average gross sales are only 0.6x the investment midpoint, so recouping the initial outlay is likely to take years even at strong margins. Gross sales are not profit.
vs Quick-Service Restaurants medians
How Fazoli's compares
Category median of published Quick-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Who are you contracting with?
Fazoli's Franchising Systems, LLC, owned by Fazoli's Group, Inc.
Item 1 (the franchisor) · who you're contracting with
The franchisor
Corporate structure & franchisor financials
- Legal entity
- Fazoli's Franchising Systems, LLC
- Parent company
- Fazoli's Group, Inc.
- FDD Item 1, page 10 of the 2025 FDD
- Ultimate parent
- FAT Brands, Inc.
- Predecessor
- Fazoli's Systems, Inc.
- Prior franchisor entity
- CEO title
- Chief Executive Officer
- Taylor Wiederhorn
- Incorporated in
- DE
- HQ
- 2470 Palumbo Drive, Lexington, Kentucky 40509-1117
- Auditor
- Macias Gini & O'Connell LLP
- Audited financials
Same owner · FDD Item 1
13 other brands on this site name FAT Brands, Inc. as parent or ultimate parent in their own FDD.
- Buffalo’s Cafe (grade B)
- Elevation Burger (grade C)
- Fatburger (grade D)
- Great American Cookies (grade C)
- HOT DOG ON A STICK Satellite (grade C)
- Hot Dog On A Stick (grade A)
- Hurricane Grill & Wings / Hurricane Burgers Tacos Wings (grade B)
- Johnny Rockets (grade D)
- Marble Slab Creamery (grade C)
- Native Grill and Wings (grade B)
- Pretzelmaker (grade B)
- Round Table Pizza (grade B)
- Twin Peaks (grade A)
Portfolio: FAT Brands
Grouped by the owner's name as each filing prints it (this page: the 2025 FDD). Spelling variants of the same group may be listed apart; a brand is never grouped with an owner its filing does not name.
Overview
About
- CEO
- Taylor Wiederhorn
- Franchised outlets in
- 26 states and territories
- Item 20 Table 3, at year end
- States and territories listed
- 26
- registered or offered in, as the filing lists them (DC and territories included); not where units may open
Is the system healthy?
-12 franchised outlets over the two years to 2024 (151 to 139, -7.9% in total, -4.1% a year compounded).
Source: FDD 2025 · Item 20 (outlets opened, closed and transferred)
Item 20 (outlet counts) · unit dynamics
The growth chart
- Company-owned
- 56
- Corporate units in the system
- % franchised
- 71%
- vs corporate-owned
Last fiscal year · Item 20 rates and pipeline
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 3
- 1 for every 65 open outlets · Item 20 Table 5
- Projected new
- 4
- Franchisor's next-year forecast
- Termination rate
- 1.4%
- Franchisor-initiated terminations
Item 20 · franchised units at year end
Franchised units fell from 151 in 2022 to 139 in 2024
Axis does not start at zero.
Source and method
Item 20 (outlet counts) Table 3 · franchised outlets at year end
Where current outlets are
Franchised outlets at year end by state, as the filing's Item 20 Table 3 counts them. Not a list of where the franchisor may sell new units.
Current outlets (count on the tile) · 26 statesNo current outlet
139 franchised outlets at year end in 26 states (Item 20 Table 3).
Registration-law states
States whose laws require the FDD to be filed, as the filing lists them; not where units may open.
- Hawaii
- Illinois
- Indiana
- Michigan
- Minnesota
- New York
- North Dakota
- Rhode Island
- South Dakota
- Virginia
- Wisconsin
The states this FDD names in its state registration list or state addenda. It is not a count of where units operate.
Government records
SBA loan data
Lenders charged off 12.0% of 25 resolved SBA 7(a) loans, below the 17.6% category median. 7(a) is the SBA's main small-business loan; a resolved loan was paid in full or charged off.
- Loans on file
- 40
- SBA 7(a) loans matched to this brand, incl. those still being repaid
- Loan volume
- $27.6M
- Average loan
- $690K
- loan volume divided by loans
- Charge-off rate
- 12.0%
- 3 of 25 resolved loans
- Paid in full
- 88.0%
- of resolved loans
- Recent-loan charge-off
- Too early to judge
- only 2 recent loans have been resolved
- Lenders
- 13
- Average interest rate
- 6.2%
- Jobs reported
- 765
- Lender concentration
- 18%
- top lender's share
Cumulative: every 7(a) loan matched to this brand in the SBA’s FOIA files, approved FY1991 onward. Historical lending data, not predictive of future performance. Lenders, interest rate, jobs and lender concentration cover only the 17 non-cancelled loans approved FY2014 to FY2023. How SBA charge-off rates are calculated
Benchmark: the median Quick-Service Restaurants brand charges off 17.6% (175 brands with a published rate, same cumulative window and source). This brand is 5.6 points below it.
Borrower mix: of 13 loans with a business-age entry, 12 recorded an age: 8 (67%) went to startups or businesses under two years old and 4 (33%) to established businesses or ownership changes; 1 was marked unanswered.
The approval-year breakdown covers 10 of the 25 resolved loans and 1 of the 3 charge-offs (FY1995 to FY2018).
SBA 7(a) · charge-off rate by approval year
Fazoli's charge-off rate by loan approval year
None of these 3 approval years has 10 or more resolved loans, too few to draw a trend. Each year’s numbers are in the table below.
Show the numbers by year
| Year | Resolved | Charged off | Rate |
|---|---|---|---|
| 1995 | 4 | 0 | Too few |
| 2002 | 3 | 0 | Too few |
| 2018 | 3 | 1 | Too few |
Source and method
Explore lender portfolios on Bank Reports or regional data on State Reports.
Full SBA lending reportlenders · charge-off rate · trend
Lender network · SBA 7(a)
SBA Lending Report
Lender, state and yearly detail for Fazoli's from SBA 7(a) FOIA loan records.
The tables below cover the 17 non-cancelled loans approved FY2014 to FY2023, the window this report’s lender, state and yearly detail is built from. The headline charge-off rate comes from the full loan file (40 loans, cumulative from fiscal 1991; the rate counts only loans that have finished), so the two can differ.
- Average SBA guarantee
- 76%
- Average interest rate
- 6.2%
- Lender concentration
- 18%
- Jobs reported
- 765
- among the 17 non-cancelled loans approved FY2014 to FY2023
Top 10 SBA lenders by loan count
| Loans | Volume | Charge-off |
|---|---|---|
| Gulf Coast Bank and Trust Company | ||
| 3 | $1.2M | Too few0 resolved |
| The Huntington National Bank | ||
| 2 | $625K | Too few0 resolved |
| Columbia Bank | ||
| 2 | $769K | Too few2 resolved |
| Horizon Bank | ||
| 1 | $250K | Too few1 resolved |
| Bank of Franklin County | ||
| 1 | $618K | Too few1 resolved |
| PNC Bank, National Association | ||
| 1 | $1.3M | Too few1 resolved |
| First-Citizens Bank & Trust Company | ||
| 1 | $1.4M | Too few0 resolved |
| TD Bank, National Association | ||
| 1 | $820K | Too few1 resolved |
| First Federal Bank | ||
| 1 | $2.5M | Too few0 resolved |
| Community Trust Bank, Inc. | ||
| 1 | $1.1M | Too few0 resolved |
A lender’s rate counts only its resolved loans, the loans that have finished (paid in full or charged off); a 0.0% often means few of its loans have finished. Under 10 resolved loans, the rate reads “Too few”.
Charge-off rate by state (top 10 by loans)
| State | Loans | Charged off | Rate |
|---|---|---|---|
| FL Florida | 4 | 0 | Too few1 resolved |
| TX Texas | 4 | 0 | Too few1 resolved |
| GA Georgia | 2 | 0 | Too few1 resolved |
| OR Oregon | 2 | 1 | Too few2 resolved |
| IL Illinois | 1 | 0 | Too few0 resolved |
| IN Indiana | 1 | 1 | Too few1 resolved |
| KY Kentucky | 1 | 0 | Too few0 resolved |
| MI Michigan | 1 | 0 | Too few0 resolved |
| MO Missouri | 1 | 0 | Too few1 resolved |
Rate: charged-off loans over resolved loans (paid in full plus charged off), shown from 10 resolved loans. "Too few": under 10 resolved. The Loans column counts every approval in the window, including loans still being repaid.
SBA 7(a) loans approved per year
Borrower profile
The SBA's own business-age labels (7)
Industry context
Most of this brand’s borrowers recorded NAICS 722513 (Limited-Service Restaurants) on their loans. Across every SBA 7(a) loan in that industry code, all approval years, franchised businesses charged off 10.8% (6,442 resolved loans) and independent businesses 10.0% (5,874 resolved loans). Franchising does not lower the rate in every industry.
Source: SBA 7(a) FOIA loan-level data, matched to the brand by FranchiseVerdict.
What are the risks?
Main risk in the grade: unit economics, then unit growth. The reasons are below.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Verdict grade + FDD Items 3 (litigation), 4 (bankruptcy), 8 (required suppliers), 16 (what you may sell), 21 (audited financials)
Risk and legal
Grade C: Middle tier, 48/100 (category median 51); the full grade is at the top of the page.
How the grade is built
Fazoli's: declining unit count, pending litigation against franchisor, razor-thin franchisee margins, and unprotected territories create substantial downside risk despite reasonable average unit volumes.
Why a C, factor by factor
- Financial health NeutralAudited financials; no going-concern doubt; statements are the parent's, so this stays near neutral
- Unit economics Weighs on it, weakest dimensionAvg net sales $1.3M on a $2.1M investment midpoint, 0.6x (net sales, not profit)
- Unit growth Weighs on it-12 franchised outlets over the two years to 2024 (151 to 139, -7.9% in total, -4.1% a year compounded); turnover 7.2%
- Scale Helps139 franchised units, +56 company-owned (195 in all); franchising since 2006
- Legal HelpsNo litigation naming the franchisor in Item 3; a bankruptcy disclosed in Item 4 (an officer's)
- Transparency HelpsItem 19 discloses financial performance; audited financials
- Adjustments after the six dimensions (-5 points)SBA loan record: the SBA charge-off rate (12.0% on 25 resolved loans) is between 10% and 20%, a range the score counts against a brand, so it took 6 points off. The score uses fixed ranges, not the category median, so a rate below its category median can still cost points.Rounding: the score is kept as a whole number, which moved it by 1 point.
From the six scored dimensions, an editorial assessment, not investment advice. How the score is built
Litigation (Item 3)
Subject: the franchisor is a named party (defendant).
1 pending securities class action (Kates v. FAT Brands, 2024); 2 concluded: FAT Brands securities class action (settled $3M, dismissed 2023) and Virginia SCC franchise registration violation (affiliate FBNA, settled 2023)
Bankruptcy (Item 4)
Subject: an officer. An officer’s own bankruptcy or a company an officer ran, not the franchisor’s
FAT Brands and subsidiaries including Fazoli's Franchising Systems, LLC filed voluntary Chapter 11 petitions January 25, 2026 in U.S. Bankruptcy Court for the Southern District of Texas, Case No. 26-90278 (ARP) for FFS LLC
Audited financials (Item 21)
Yes · Macias Gini & O'Connell LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Item 21 audited statements (Exhibit B, FYE Dec 31 2024/2023/2022) are referenced but the audited statement text and CPA auditor name are not present in this extract. Figures shown are from the UNAUDITED interim statements included in the text: Balance Sheet as of July 27, 2025, and Consolidated Statement of Operations for the period 4/28/25-7/27/25 (a ~3-month quarter, not full year). franchisor_net_worth is a member's DEFICIT of $4,373,847 (negative). total_revenue $2,556,491 = royalties $1,812,642 + franchise fees $116,702 + advertising fees $627,147; net loss $546,162. Full-year audited revenue not available in text.
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results; the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
Ask what the franchisor earns on the supplies it sells you or the rebates it takes (Item 8).
- Franchisor sells you products: Yes
- Franchisor takes supplier rebates: No
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Notes from the filing review · not the score inputs
- 01MINORSystem declining at -7.3% YoY with only 195 units; indicates shrinking franchise base and weakening brand momentum
- 02MINORPending putative investor class action against parent and officers creates uncertainty about franchisor financial stability and management credibility
- 03MINORUnprotected territory exposes franchisees to cannibalization; franchisor can place competing units in your service area
Severity inferred from the FDD text · not a regulatory classification
Litigation case detail3 matters · Item 3
Litigation cases
Parent, affiliates, master franchisor and subfranchisor
Pending (1)
Mitchell Kates v. FAT Brands, Inc., Andrew Wiederhorn, Kenneth J. Kuick and Robert G. Rosen
pendingBrought by a third party · FAT Brands, Inc. (FAT) · filed 2024-06-07 · U.S. District Court for the Central District of California · 2:24-cv-04775-MWF-MAA
“… (United States District Court for the Central District of California, Case No. 2:24-cv-04775- MWF-MAA).”Page 19 of the 2025 FDD, Item 3
Concluded (2)
In re FAT Brands Inc. Securities Litigation (consolidated Robert J. Matthews, et al. v. FAT Brands, Inc., et al., and the Chipman action)
settledBrought by the franchisor · FAT Brands, Inc. · filed 2022-03-18 · U.S. District Court for the Central District of California · 2:22-cv-01820
“Robert J. Matthews, et al., v. FAT Brands, Inc., Andrew Wiederhorn, Ron Roe, Rebecca Hershinger and Ken Kuick (United States District Court for the Central District of California, Case No. 2:22-cv-01820).”Page 19 of the 2025 FDD, Item 3
Outcome: “In August 2022, after mediation the parties agreed to settle the litigation. Pursuant to the settlement, FAT agreed to pay on behalf of the defendants $2,500,000 in cash and $500,000 in Class A common stock of FAT to the class plaintiffs, the plaintiffs released all claims against the defendants, and the case was dismissed with prejudice in February 2023.”
Commonwealth of Virginia ex rel. State Corporation Commission v. Fatburger North America, Inc.
settledGovernment or regulatory action · Fatburger North America, Inc. (FBNA) · Virginia State Corporation Commission, Division of Securities and Retail Franchising · SEC-2022-00034
“… (Case No. SEC-2022-00034, Settlement Order entered Jul. 12, 2023, Final Order entered Oct. 23, 2023).”Page 20 of the 2025 FDD, Item 3
Outcome: “to pay $27,000 to the Commonwealth of Virginia; and (3) not to violate the Virginia franchise law in the future. On July 12, 2023, the Virginia State Corporation Commission entered a settlement order with FNBA.”
Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.
What are you signing up for?
Ongoing fees run about 9.0% of sales (royalty + ad fund), before your own operating costs.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12 (territory), 15 (owner participation) and 17 (renewal, termination and disputes)
Contract and territory detail
| Allowed renewals | 2 |
|---|---|
| Protected territory | No |
| Exclusive territory | No |
| Online sales rights | Reserved by franchisor |
| Franchisor can compete | Yes |
| Who runs it (Item 15) | A manager may run it |
| Non-compete (years) | 2 years |
| Non-compete (miles) | 5 mi |
| Right of first refusal | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Curable defaults | 4 |
| Mandatory arbitration | Yes |
| Arbitration location | Kentucky |
| Jury trial waiver | No |
| Governing law | KY |
Items 10 (financing), 11 (training and support)
Training and operations
- Classroom training
- 71 hrs
- On-the-job training
- 214 hrs
- Training location
- Company Certified Training Restaurant
- Ongoing training
- Optional
- Time to open
- 9 mo
- From signing to launch
- Site selection
- Franchisee selects, franchisor must approve
- Franchisor financing
- Not offered
- Item 10
- POS system
- Brink POS
- Operating tech stack
Items 5 (initial fees) & 11 (training and support)
Franchisor support
Item 20 (outlet counts) · call current owners
Franchisee contacts
Who can you call before you sign?
13 current outlets listed, run by 4 franchisee companies
Each record has the franchisee (company or owner name as the filing prints it), phone number and state. No cities. 22 records: 13 current outlets + 9 former owners (terminated, transferred, not renewed or otherwise left). From the filing's Item 20 (the outlet list); the FDD itself is the free source. Our list covers 13 of the 139 franchised outlets Item 20 counts at year end; the owner exhibit prints the rest without a usable phone number, or omits them.
For your own due-diligence calls only. Not for telemarketing, marketing lists, or automated or prerecorded calls or texts.
One-time · CSV download · full refund within 7 days if the data does not match the FDD. Some numbers, especially for former owners, may be outdated.
Frequently asked questions
How much does it cost to open a Fazoli's franchise?
Per the 2025 FDD, the total investment to open a Fazoli's franchise ranges from $1.6M to $2.6M, with an initial franchise fee of $50K. This is the Item 7 total in the Franchise Disclosure Document (FDD): the startup costs the franchisor lists, such as build-out, equipment, inventory and working capital. It usually leaves out buying land or a building; Item 7's notes say what is excluded.
What do Fazoli's franchise owners earn?
According to Item 19 of the Fazoli's FDD, average net sales were $1.3M (Item 19 group “Franchised Restaurants (Traditional + Non-Traditional) - Total”, 136 outlets; net sales, not profit). The median is $1.2M. Reported as net sales, not gross sales. What an owner keeps depends on location, operating costs and management.
Who owns Fazoli's?
Fazoli's is franchised by Fazoli's Franchising Systems, LLC. Its parent company is Fazoli's Group, Inc.. The ultimate parent named in the FDD is FAT Brands, Inc.. Source: FDD Item 1, 2025 filing.
What is Item 19 in the Fazoli's FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Fazoli's FDD and qualifies whose outlets they describe.
What is Fazoli's' franchise failure rate?
There is no published franchise failure rate. What is measurable is Fazoli's' SBA charge-off rate: 12.0% on 25 resolved loans. Put plainly: 1 in 8 SBA 7(a) loans to Fazoli's owners charged off (3 of 25 resolved loans, approved since FY1991). The SBA charge-off rate is the share of a brand's resolved SBA 7(a) loans to its franchisees that the SBA wrote off, including purchased guarantees. Resolved means paid in full or charged off; active loans are excluded because their outcome is not yet known. It is a lending outcome, not a count of closed businesses. A franchisee can repay and close, or default and keep trading.
How many Fazoli's franchise locations are there?
Per the 2025 FDD, Fazoli's has 139 franchised units and 56 company-owned (195 in all). In the latest year, the number of franchised outlets fell by 11 (3 opened, 14 closed).
Is Fazoli's a good franchise to buy?
FranchiseVerdict gives Fazoli's a C Verdict grade (Middle tier) with a verdict score of 48 out of 100 (higher is better), an editorial assessment, not investment advice. Helped by scale, legal record and transparency. Held back by unit economics (avg net sales $1.3M on a $2.1M investment midpoint, 0.6x: net sales, not profit) and unit growth (-12 franchised outlets over the two years to 2024: 151 to 139, -7.9% in total, -4.1% a year compounded). The “Why a C” section on this page lists all six dimensions and any adjustment. Speak with current franchisees before making any investment decision.
Other Quick-Service Restaurants franchises
Similar investment first, then by grade
This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.