Franchise Group has filed for Chapter 11 bankruptcy as part of a restructuring agreement with its primary lenders that will allow its three strongest banners — Pet Supplies Plus, The Vitamin Shoppe and Buddy’s Home Furnishings — to remain in operation. However, large durable goods retailer American Freight will be shut down as part of the restructuring, with closing sales beginning Nov. 5 at its 365 locations and online.
Notably, the franchised locations of Pet Supplies Plus, The Vitamin Shoppe and Buddy’s Home Furnishings are not part of the bankruptcy proceeding. Currently, Franchise Group operates approximately 220 of the 620 Pet Supplies Plus stores across the U.S. and 35 of the 320 Buddy’s Home stores around the country. The Vitamin Shoppe is a more recent entrant to the world of franchising, having opened its first new franchise location in February 2023. The total number of Vitamin Shoppe franchises currently in operation was not immediately available, but the bulk of that chain’s more than 700 stores are still operated directly by Franchise Group.
After going public in 2019, the same year it acquired The Vitamin Shoppe and Sears Outlet brands, Franchise Group was taken private again by a consortium of financial partners in May 2023. In 2022, the company attempted to buy Kohl’s, but that deal fizzled out.
The company’s Chapter 11 filing will facilitate a new restructuring support agreement (RSA) with the holders of approximately 80% of the company’s first lien debt. Under the proposed agreement, that first lien debt would be converted into equity in the reorganized company. To support the restructuring, the first lien lender group also has committed $250 million in debtor-in-possession financing, which will provide the liquidity needed to maintain operations for Pet Supplies Plus, The Vitamin Shoppe and Buddy’s Home Furnishings.
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“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus, The Vitamin Shoppe and Buddy’s Home Furnishings to realize their full potential,” said Andrew Laurence, President and CEO of Franchise Group in a statement. “Each of these businesses has a demonstrated value proposition and provides great products and services to customers, which they will continue to do seamlessly during this process. Strengthening FRG’s balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories.”
