Felon goes round licking small fried item (7)
I believe the answer is:
crouton
'small fried item' is the definition.
(piece of fried bread)
'felon goes round licking' is the wordplay.
'felon' becomes 'con' (abbreviation for 'convict').
'goes round' means one lot of letters goes inside another.
'licking' becomes 'rout' (both can mean a decisive defeat).
'con' going around 'rout' is 'CROUTON'.
(Other definitions for crouton that I've seen before include "Small piece of toasted bread in soup or salad" , "Piece of fried bread for garnishing" , "Small cube of toasted bread" , "fried food" , "little bit of bread" .)