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Dive Brief:
Seven months after filing for Chapter 11, Franchise Group on Friday emerged as a streamlined operation with reduced debt and increased liquidity, per a press release from the company. Its reorganization plan was confirmed by the court on June 2, with the support of creditors and key business partners.
The restructured entity now operates just Pet Supplies Plus and Buddy’s Home Furnishings, which will be owned by a new parent company, Fusion Parent. Franchise Group CEO Andy Laurence leads Fusion Parent, along with the rest of the Franchise Group team, per a company spokesperson.
Franchise Group sold The Vitamin Shoppe to private equity and shut down its American Freight banner during the bankruptcy period.
Dive Insight:
Without the constraints of bankruptcy, and minus two of its banners, Franchise Group is now able to better service the franchisees, vendors and customers of its core businesses, per the release.
“While Franchise Group had some solid businesses, its main issue was that it carried too much debt,” Neil Saunders, GlobalData Managing Director, said in an email. “The sale of The Vitamin Shoppe and the winding down of American Freight – which had faced a massive slump in demand – helped to stabilize things. The two businesses which now constitute the group, Pet Supplies Plus and Buddy’s, have better prospects. However, both face tough competition and need to do more to stand out and differentiate, especially in a tightening economy.”
As a smaller company, Franchise Group will focus on the success of Pet Supplies Plus and Buddy’s, which currently have 200 signed franchise agreements for new stores. Pet Supplies Plus already runs 229 corporate-owned stores and 525 franchised locations, while Buddy’s operates 30 corporate-owned stores and 300 franchised locations.
Under the new structure, Pet Supplies Plus and Buddy’s will be led by a board consisting of five directors. They include, among others, Chris Rowland, CEO of Pet Supplies Plus; West Marine CEO Chuck Rubin; and Tim Johnson, former CFO of Victoria’s Secret & Co. There have been no leadership changes at Pet Supplies Plus or Buddy’s, a spokesperson said.
Franchise Group was originally formed in 2019 through a merger of Liberty Tax and Buddy’s Home Furnishings. The company, which just a few years ago made a bid to acquire Kohl’s, at one time also owned and operated The Vitamin Shoppe, Sylvan Learning and W.S. Badcock. The Vitamin Shoppe, which officially came under new management in May, is now led by former CEO Sharon Leite, who returned to the brand after a two-year absence.
