Twin Hospitality Group Inc.

As of December 29, 2024, we operated 55 company-owned Smokey Bones restaurants across 16 states throughout the eastern United States. One Smokey Bones restaurant is currently being converted to a company-owned Twin Peaks restaurant. All of our company-owned Smokey Bones restaurants are on leased facilities with remaining terms ranging from 6 months to 23.0 years.

We believe that our existing facilities are in good operating condition and adequate to meet our current and foreseeable needs. Additional information related to our operating leases are disclosed in Note 7.

• Historical AUV levels may not be indicative of future results of any new company-owned restaurant or franchised restaurant.
• An impairment in the carrying value of our goodwill or other intangible assets could adversely affect our business, results of operations, and financial condition.
• We have experienced and continue to experience inflationary conditions with respect to the cost for food, labor, construction and utilities, and we may not be able to increase prices or implement operational improvements sufficient to fully offset inflationary pressures on such costs, which may adversely impact our revenues and results of operations.
• Interruptions in the supply, or shortages, of food products or other supplies delivered to our company-owned restaurants and franchised restaurants could adversely affect our business, results of operations, and financial condition.
• Macroeconomic conditions could adversely affect our ability to increase sales at existing restaurants or open new restaurants.
• Food safety, foodborne illness, and other health concerns may have a material adverse effect on our business.
• Our expansion into international markets exposes us to a number of risks that may differ in each country where we have franchised restaurants.
• Opening new restaurants in existing markets may negatively affect sales at existing restaurants.
• We may be unable to realize the anticipated benefits of the Smokey Bones Acquisition.
• Failure to protect our service marks or other intellectual property could harm our business.
• We and our franchisees rely on computer systems to process transactions and manage our businesses, and a disruption or a failure of such systems or technology could harm our ability to effectively manage our businesses.
• If we or our franchisees are unable to protect their customers’ credit card data and other personal information, we and our franchisees could be exposed to data loss, litigation and liability, and our reputation could be significantly harmed.
• We are exposed to the risk of natural disasters, unusual weather conditions, pandemic outbreaks, political events, and terrorism that could disrupt business and result in lower sales and increased operating costs and capital expenditures.
• Climate change and the shift to more sustainable business practices could negatively affect our business or damage our reputation.
• A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may in the future disrupt the markets we operate in or otherwise impact our restaurants, which could materially affect our business, results of operations and financial condition for an extended period of time.
• Risks Related to our Indebtedness
• We have significant outstanding indebtedness under the Twin Securitization Notes, which will require that we generate sufficient cash flow to satisfy the payment and other obligations under the terms of our indebtedness and will expose us to the risk of default and other remedies thereunder.
• Risks Related to Regulatory Matters and Legal Proceedings
• Changes in, or noncompliance with, applicable laws and governmental regulations may adversely affect our business operations, financial condition, and/or growth prospects.
• A broader standard for determining joint employer status recently adopted by the National Labor Relations Board may adversely affect our business operations and increase our liabilities resulting from actions by our franchisees.
• Legislation and regulations requiring the display and provision of nutritional information for our menu offerings, new information or attitudes regarding diet and health, and/or adverse opinions about the health effects of consuming our menu offerings, could affect customer preferences and negatively impact our business and results of operations.
• Compliance with environmental, health and safety laws and regulations may negatively affect our business.
• Failure to comply with antibribery or anticorruption laws could adversely affect our business operations.
• New or revised tax regulations could have an adverse effect in our financial results.
• Restaurant companies have been the target of class action lawsuits and other proceedings alleging, among other things, violations of federal and state workplace and employment laws. Proceedings of this nature are costly, divert management attention and, if successful, could result in our payment of substantial damages or settlement costs.
• Our business activities subject us to litigation risk that could affect us adversely by subjecting us to significant money damages and other remedies or by increasing our litigation expense.
• We may engage in litigation with our franchisees.
• Litigation with respect to intellectual property, if decided against us, may result in competing uses or require adoption of new, non-infringing intellectual property, which may in turn adversely affect sales and revenues.
• Risks Related to our Organizational Structure
• The dual class structure of our Common Stock has the effect of concentrating voting control with FAT Brands, as FAT Brands owns all of the shares of our Class B Common Stock and, as of immediately following the Spin-Off which was effected on January 29, 2025, controls approximately 98.6% of the total voting power of the outstanding shares of our Common Stock. This limits or precludes the ability of our other stockholders to influence matters requiring stockholder approval.
• We are a “controlled company” within the meaning of the corporate governance standards of Nasdaq, and as a result, we qualify for exemptions from certain corporate governance requirements. We do not currently rely on any of these exemptions, but there can be no assurance that we will not rely on these exemptions in the future.
• In order to preserve the ability for FAT Brands to distribute its shares of our Common Stock on a tax-free basis for U.S. federal income tax purposes, we may be prevented from pursuing opportunities to raise capital, to effectuate acquisitions, or to provide equity incentives to our directors, officers and employees, which could hurt our ability to grow.
• If FAT Brands pursues the Potential FAT Brands Distribution and there is later a determination that such distribution is taxable for U.S. federal income tax purposes, we could incur significant liabilities.
• If FAT Brands pursues the Potential FAT Brands Distribution, we may be subject to significant restrictions, including with respect to our ability to engage in certain corporate transactions for a two-year period following such distribution, in order to avoid triggering significant tax-related liabilities.
• The arrangements we made with FAT Brands in connection with the Reorganization and the Spin-Off may not be adequate and could harm our operations, thereby adversely affecting our business, results of operations, and financial condition.
• Our inability to maintain a strong relationship with FAT Brands, or to resolve favorably any disputes that may arise between us and FAT Brands, could result in a significant reduction of our revenue.
• Our business and that of FAT Brands overlap, and FAT Brands is not prohibited from competing with us, which could reduce our market share.
• The historical financial statements and information of the Twin Group as a consolidated group of subsidiaries of FAT Brands may not be representative of our results as an independent public company.
• FAT Brands faces risks related to pending government charges and is a party to stockholder litigation, and third parties may seek to hold us responsible for liabilities of FAT Brands, which could cause us to incur additional expenses and result in a decrease in our income.
• Certain of our directors are also directors of FAT Brands, and own stock and stock options of FAT Brands, which could cause conflicts of interest that could result in us not acting on opportunities we otherwise may have.
• We are a holding company with no operations, and, as such, we depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments, if any.
• Under the Master Separation and Distribution Agreement and the Tax Matters Agreement, FAT Brands has agreed to indemnify us for certain liabilities, and we have agreed to indemnify FAT Brands for certain liabilities. If we are required to pay under these indemnities to FAT Brands, our financial position could be negatively impacted. The FAT Brands indemnity may not be sufficient to hold us harmless from the full amount of liabilities for which FAT Brands will be allocated responsibility, and FAT Brands may not be able to satisfy its indemnification obligations in the future.
• Certain members of our management team have limited recent experience managing a public company, and our current resources may not be sufficient to fulfill our public company obligations.
• Risks Related to our Class A Common Stock
• An active trading market for our Class A Common Stock may not be sustained and the market price of our Class A Common Stock may fluctuate significantly.
• We cannot predict the effect our dual class Common Stock structure may have on the market price of our Class A Common Stock.
• We do not expect to pay dividends in the foreseeable future.
• We are an “emerging growth company” and a “smaller reporting company” and comply with reduced reporting requirements applicable to emerging growth companies and smaller reporting companies, which may make our Class A Common Stock less attractive to investors.
• The issuance by us of additional equity securities may dilute your ownership and adversely affect the market price of our Class A Common Stock.
• The anti-takeover provisions in our Amended and Restated Certificate of Incorporation could prevent or delay a change in control of our company, even if such change in control would be beneficial to our stockholders.
• The provision of our Amended and Restated Certificate of Incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
• If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about us or our business, the market price and trading volume of our Class A Common Stock could decline.
• General Risk Factors
• Our liquidity could be adversely affected by adverse conditions in the financial markets or with respect to financial institutions.
• We will need to raise additional capital in the future, which may not be available on terms acceptable to us, or at all.
• We depend on key executive management.
• If we face labor shortages or increased labor costs, it could have a material adverse effect on our business, results of operations, and financial condition.
• Our and our franchisees’ operating costs are subject to increases in the wages and salaries of our staff.
• Our current insurance policies may not provide adequate levels of coverage against all claims, and we may incur losses in excess of insurance limits or uninsured losses.