Vitamin Shoppe Owner Franchise Group Files for Bankruptcy
Holding company Franchise Group Inc., also known as FRG, is filing for Chapter 11 bankruptcy protection as significant losses and internal instability pushed the company beyond its limits, reports RetailWire. FRG is the parent company of well-known brands such as The Vitamin Shoppe, Pet Supplies Plus, and Buddy’s Home Furnishings. According to court documents filed in Delaware, FRG owes about $2 billion to creditors. Reportedly, the company is negotiating with lenders on a deal to exchange the debts for an equity stake in a new, restructured FRG. In addition, a $250 million financing deal is supposedly also in the works with the lender group that holds the majority of FRG’s debt. The purported agreement could inject some needed funds and allow the struggling company to operate and retain commitments to employees, customers, vendors and franchise owners.
Total Retail's Take: The Franchise Group has been embroiled in turmoil for some time. Earlier this year, former CEO Brian Kahn stepped down just months after a leveraged buyout aided by B. Riley Financial Inc., as regulators looked into his ties to the collapse of a hedge fund. Kahn's role as a money manager for Prophecy Asset Management spurred allegations by some investors that he improperly used the hedge fund to gain control of Franchise Group.
Meanwhile, FRG’s profitability was taking a hit as its brands were struggling and debt was piling up. FRG successfully offloaded Sylvan Learning in February, yet the potential sell-off of other brands suffered due to the criminal case involving Kahn.
Unfortunately, FRG's discount home appliances brand American Freight isn't part of the company's turnaround plan. All of American Freight's locations will close, including its online store.
"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, FRG's president and CEO.
- People:
- Andrew Laurence
- Brian Kahn
Kristina Stidham is the digital content director at Total Retail and sister brands Women in Retail Leadership Circle and Women Leading Travel & Hospitality at NAPCO Media. She is passionate about digital media and handles video, podcast and virtual event production for all brands. You can often find her at WIRLC, TR, WLT&H or industry events with her camera and podcasting equipment—or at home on Zoom—recording interviews with thought leaders and business executives.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her family and two pet guinea pigs, and travel to new places.
