10-Q 1 frg-20220924.htm 10-Q frg-20220924
0001528930false12/312022Q300015289302021-12-262022-09-240001528930us-gaap:CommonStockMember2021-12-262022-09-240001528930us-gaap:SeriesAPreferredStockMember2021-12-262022-09-2400015289302022-10-31xbrli:shares0001528930us-gaap:ProductMember2022-06-262022-09-24iso4217:USD0001528930us-gaap:ProductMember2021-06-272021-09-250001528930us-gaap:ProductMember2021-12-262022-09-240001528930us-gaap:ProductMember2020-12-272021-09-250001528930us-gaap:ServiceMember2022-06-262022-09-240001528930us-gaap:ServiceMember2021-06-272021-09-250001528930us-gaap:ServiceMember2021-12-262022-09-240001528930us-gaap:ServiceMember2020-12-272021-09-250001528930frg:RentalMember2022-06-262022-09-240001528930frg:RentalMember2021-06-272021-09-250001528930frg:RentalMember2021-12-262022-09-240001528930frg:RentalMember2020-12-272021-09-2500015289302022-06-262022-09-2400015289302021-06-272021-09-2500015289302020-12-272021-09-25iso4217:USDxbrli:shares00015289302022-09-2400015289302021-12-250001528930us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2022-09-240001528930us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2021-12-250001528930us-gaap:CommonStockMember2021-12-250001528930us-gaap:CommonStockMember2022-09-240001528930us-gaap:CommonClassAMember2022-09-240001528930us-gaap:CommonClassAMember2021-12-250001528930frg:SpecialVotingPreferredStockMember2022-09-240001528930frg:SpecialVotingPreferredStockMember2021-12-250001528930us-gaap:CommonStockMember2022-06-250001528930us-gaap:PreferredStockMember2022-06-250001528930us-gaap:AdditionalPaidInCapitalMember2022-06-250001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-250001528930us-gaap:RetainedEarningsMember2022-06-250001528930us-gaap:ParentMember2022-06-250001528930us-gaap:RetainedEarningsMember2022-06-262022-09-240001528930us-gaap:ParentMember2022-06-262022-09-240001528930us-gaap:CommonStockMember2022-06-262022-09-240001528930us-gaap:AdditionalPaidInCapitalMember2022-06-262022-09-240001528930us-gaap:CommonStockMember2022-09-240001528930us-gaap:PreferredStockMember2022-09-240001528930us-gaap:AdditionalPaidInCapitalMember2022-09-240001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-240001528930us-gaap:RetainedEarningsMember2022-09-240001528930us-gaap:ParentMember2022-09-240001528930us-gaap:CommonStockMember2021-12-250001528930us-gaap:PreferredStockMember2021-12-250001528930us-gaap:AdditionalPaidInCapitalMember2021-12-250001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-250001528930us-gaap:RetainedEarningsMember2021-12-250001528930us-gaap:ParentMember2021-12-250001528930us-gaap:RetainedEarningsMember2021-12-262022-09-240001528930us-gaap:ParentMember2021-12-262022-09-240001528930us-gaap:CommonStockMember2021-12-262022-09-240001528930us-gaap:AdditionalPaidInCapitalMember2021-12-262022-09-240001528930us-gaap:CommonStockMember2021-06-260001528930us-gaap:PreferredStockMember2021-06-260001528930us-gaap:AdditionalPaidInCapitalMember2021-06-260001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-260001528930us-gaap:RetainedEarningsMember2021-06-260001528930us-gaap:ParentMember2021-06-260001528930us-gaap:RetainedEarningsMember2021-06-272021-09-250001528930us-gaap:ParentMember2021-06-272021-09-250001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-272021-09-250001528930us-gaap:CommonStockMember2021-06-272021-09-250001528930us-gaap:AdditionalPaidInCapitalMember2021-06-272021-09-250001528930us-gaap:CommonStockMemberus-gaap:RetainedEarningsMember2021-06-272021-09-250001528930us-gaap:CommonStockMemberus-gaap:ParentMember2021-06-272021-09-250001528930us-gaap:PreferredStockMemberus-gaap:RetainedEarningsMember2021-06-272021-09-250001528930us-gaap:PreferredStockMemberus-gaap:ParentMember2021-06-272021-09-250001528930us-gaap:CommonStockMember2021-09-250001528930us-gaap:PreferredStockMember2021-09-250001528930us-gaap:AdditionalPaidInCapitalMember2021-09-250001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-250001528930us-gaap:RetainedEarningsMember2021-09-250001528930us-gaap:ParentMember2021-09-250001528930us-gaap:CommonStockMember2020-12-260001528930us-gaap:PreferredStockMember2020-12-260001528930us-gaap:AdditionalPaidInCapitalMember2020-12-260001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-260001528930us-gaap:RetainedEarningsMember2020-12-260001528930us-gaap:ParentMember2020-12-260001528930us-gaap:RetainedEarningsMember2020-12-272021-09-250001528930us-gaap:ParentMember2020-12-272021-09-250001528930us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-272021-09-250001528930us-gaap:CommonStockMember2020-12-272021-09-250001528930us-gaap:AdditionalPaidInCapitalMember2020-12-272021-09-250001528930us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2020-12-272021-09-250001528930us-gaap:SeriesAPreferredStockMemberus-gaap:AdditionalPaidInCapitalMember2020-12-272021-09-250001528930us-gaap:SeriesAPreferredStockMemberus-gaap:ParentMember2020-12-272021-09-250001528930us-gaap:CommonStockMemberus-gaap:RetainedEarningsMember2020-12-272021-09-250001528930us-gaap:CommonStockMemberus-gaap:ParentMember2020-12-272021-09-250001528930us-gaap:PreferredStockMemberus-gaap:RetainedEarningsMember2020-12-272021-09-250001528930us-gaap:PreferredStockMemberus-gaap:ParentMember2020-12-272021-09-2500015289302020-12-2600015289302021-09-250001528930frg:BadcockMember2021-03-102021-03-100001528930frg:PetSuppliesPlusMember2021-03-272021-03-270001528930frg:BadcockMember2021-12-262022-09-240001528930frg:BadcockMember2021-11-220001528930frg:BadcockMember2021-12-262022-09-240001528930frg:FurnitureFixturesAndEquipmentMemberfrg:BadcockMember2021-11-220001528930us-gaap:BuildingAndBuildingImprovementsMemberfrg:BadcockMember2021-11-220001528930us-gaap:LandAndLandImprovementsMemberfrg:BadcockMember2021-11-220001528930us-gaap:LeaseholdImprovementsMemberfrg:BadcockMember2021-11-220001528930us-gaap:ConstructionInProgressMemberfrg:BadcockMember2021-11-220001528930frg:SylvanLearningMember2022-09-240001528930frg:SylvanMember2021-09-270001528930frg:SylvanMember2021-09-272021-09-2700015289302021-09-270001528930frg:FranchiseAgreementsMemberfrg:SylvanMember2021-09-272021-09-270001528930frg:ProprietaryContentMemberfrg:SylvanMember2021-09-272021-09-270001528930frg:PetSuppliesPlusMember2022-02-222022-02-220001528930us-gaap:FairValueAdjustmentToInventoryMember2022-09-240001528930us-gaap:AcquisitionRelatedCostsMember2021-12-262022-09-240001528930us-gaap:DiscontinuedOperationsHeldforsaleMemberfrg:LibertyTaxSegmentMember2021-02-210001528930us-gaap:DiscontinuedOperationsHeldforsaleMemberfrg:LibertyTaxSegmentMember2021-02-212021-02-210001528930us-gaap:DiscontinuedOperationsHeldforsaleMemberfrg:LibertyTaxMember2021-06-272021-09-250001528930us-gaap:DiscontinuedOperationsHeldforsaleMemberfrg:LibertyTaxMember2020-12-272021-09-250001528930frg:BadcockMember2022-03-272022-06-250001528930us-gaap:OtherCurrentAssetsMember2022-09-240001528930us-gaap:OtherNoncurrentAssetsMember2022-09-240001528930frg:VitaminShoppeMember2021-12-250001528930frg:PetSuppliesPlusMember2021-12-250001528930frg:AmericanFreightMember2021-12-250001528930frg:BuddysMember2021-12-250001528930frg:SylvanLearningMember2021-12-250001528930frg:VitaminShoppeMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMember2021-12-262022-09-240001528930frg:AmericanFreightMember2021-12-262022-09-240001528930frg:BuddysMember2021-12-262022-09-240001528930frg:SylvanLearningMember2021-12-262022-09-240001528930frg:VitaminShoppeMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMember2022-06-262022-09-240001528930frg:AmericanFreightMember2022-06-262022-09-240001528930frg:BuddysMember2022-06-262022-09-240001528930frg:SylvanMember2022-06-262022-09-240001528930frg:VitaminShoppeMember2022-09-240001528930frg:PetSuppliesPlusMember2022-09-240001528930frg:AmericanFreightMember2022-09-240001528930frg:BuddysMember2022-09-240001528930frg:SylvanLearningMember2022-09-240001528930us-gaap:TradeNamesMember2022-09-240001528930us-gaap:NoncompeteAgreementsMember2022-09-240001528930frg:FranchiseAgreementsMember2022-09-240001528930us-gaap:CustomerContractsMember2022-09-240001528930frg:ReacquiredRightsMember2022-09-240001528930us-gaap:TradeNamesMember2021-12-250001528930us-gaap:NoncompeteAgreementsMember2021-12-250001528930us-gaap:CustomerContractsMember2021-12-250001528930frg:ReacquiredRightsMember2021-12-250001528930frg:VitaminShoppeMemberus-gaap:RetailMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:RetailMember2022-06-262022-09-240001528930us-gaap:RetailMemberfrg:BadcockMember2022-06-262022-09-240001528930us-gaap:RetailMemberfrg:AmericanFreightMember2022-06-262022-09-240001528930us-gaap:RetailMemberfrg:BuddysMember2022-06-262022-09-240001528930us-gaap:RetailMemberfrg:SylvanMember2022-06-262022-09-240001528930us-gaap:RetailMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberfrg:WholesaleMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberfrg:WholesaleMember2022-06-262022-09-240001528930frg:WholesaleMemberfrg:BadcockMember2022-06-262022-09-240001528930frg:WholesaleMemberfrg:AmericanFreightMember2022-06-262022-09-240001528930frg:WholesaleMemberfrg:BuddysMember2022-06-262022-09-240001528930frg:SylvanMemberfrg:WholesaleMember2022-06-262022-09-240001528930frg:WholesaleMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:ProductMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:ProductMember2022-06-262022-09-240001528930frg:BadcockMemberus-gaap:ProductMember2022-06-262022-09-240001528930frg:AmericanFreightMemberus-gaap:ProductMember2022-06-262022-09-240001528930us-gaap:ProductMemberfrg:BuddysMember2022-06-262022-09-240001528930frg:SylvanMemberus-gaap:ProductMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberfrg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberfrg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:BadcockMemberfrg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:AmericanFreightMemberfrg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:BuddysMemberfrg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:SylvanMemberfrg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:RoyaltiesandAdvertisingMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:FinancialServiceMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:FinancialServiceMember2022-06-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:BadcockMember2022-06-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:AmericanFreightMember2022-06-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:BuddysMember2022-06-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:SylvanMember2022-06-262022-09-240001528930us-gaap:FinancialServiceMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMember2022-06-262022-09-240001528930frg:BadcockMember2022-06-262022-09-240001528930frg:AmericanFreightMember2022-06-262022-09-240001528930frg:BuddysMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:MembershipMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:MembershipMember2022-06-262022-09-240001528930us-gaap:MembershipMemberfrg:BadcockMember2022-06-262022-09-240001528930us-gaap:MembershipMemberfrg:AmericanFreightMember2022-06-262022-09-240001528930us-gaap:MembershipMemberfrg:BuddysMember2022-06-262022-09-240001528930us-gaap:MembershipMemberfrg:SylvanMember2022-06-262022-09-240001528930us-gaap:MembershipMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:VitaminShoppeMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:PetSuppliesPlusMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:BadcockMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:AmericanFreightMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:BuddysMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:SylvanMember2022-06-262022-09-240001528930us-gaap:ServiceOtherMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:ServiceMember2022-06-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:ServiceMember2022-06-262022-09-240001528930us-gaap:ServiceMemberfrg:BadcockMember2022-06-262022-09-240001528930us-gaap:ServiceMemberfrg:AmericanFreightMember2022-06-262022-09-240001528930us-gaap:ServiceMemberfrg:BuddysMember2022-06-262022-09-240001528930frg:SylvanMemberus-gaap:ServiceMember2022-06-262022-09-240001528930frg:VitaminShoppeMember2022-06-262022-09-240001528930frg:SylvanMember2022-06-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:RetailMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:RetailMember2021-12-262022-09-240001528930us-gaap:RetailMemberfrg:BadcockMember2021-12-262022-09-240001528930us-gaap:RetailMemberfrg:AmericanFreightMember2021-12-262022-09-240001528930us-gaap:RetailMemberfrg:BuddysMember2021-12-262022-09-240001528930us-gaap:RetailMemberfrg:SylvanMember2021-12-262022-09-240001528930us-gaap:RetailMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberfrg:WholesaleMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberfrg:WholesaleMember2021-12-262022-09-240001528930frg:WholesaleMemberfrg:BadcockMember2021-12-262022-09-240001528930frg:WholesaleMemberfrg:AmericanFreightMember2021-12-262022-09-240001528930frg:WholesaleMemberfrg:BuddysMember2021-12-262022-09-240001528930frg:SylvanMemberfrg:WholesaleMember2021-12-262022-09-240001528930frg:WholesaleMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:ProductMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:ProductMember2021-12-262022-09-240001528930frg:BadcockMemberus-gaap:ProductMember2021-12-262022-09-240001528930frg:AmericanFreightMemberus-gaap:ProductMember2021-12-262022-09-240001528930us-gaap:ProductMemberfrg:BuddysMember2021-12-262022-09-240001528930frg:SylvanMemberus-gaap:ProductMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberfrg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberfrg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:BadcockMemberfrg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:AmericanFreightMemberfrg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:BuddysMemberfrg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:SylvanMemberfrg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:RoyaltiesandAdvertisingMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:FinancialServiceMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:FinancialServiceMember2021-12-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:BadcockMember2021-12-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:AmericanFreightMember2021-12-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:BuddysMember2021-12-262022-09-240001528930us-gaap:FinancialServiceMemberfrg:SylvanMember2021-12-262022-09-240001528930us-gaap:FinancialServiceMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMember2021-12-262022-09-240001528930frg:AmericanFreightMember2021-12-262022-09-240001528930frg:BuddysMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:MembershipMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:MembershipMember2021-12-262022-09-240001528930us-gaap:MembershipMemberfrg:BadcockMember2021-12-262022-09-240001528930us-gaap:MembershipMemberfrg:AmericanFreightMember2021-12-262022-09-240001528930us-gaap:MembershipMemberfrg:BuddysMember2021-12-262022-09-240001528930us-gaap:MembershipMemberfrg:SylvanMember2021-12-262022-09-240001528930us-gaap:MembershipMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:VitaminShoppeMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:PetSuppliesPlusMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:BadcockMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:AmericanFreightMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:BuddysMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMemberfrg:SylvanMember2021-12-262022-09-240001528930us-gaap:ServiceOtherMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:ServiceMember2021-12-262022-09-240001528930frg:PetSuppliesPlusMemberus-gaap:ServiceMember2021-12-262022-09-240001528930us-gaap:ServiceMemberfrg:BadcockMember2021-12-262022-09-240001528930us-gaap:ServiceMemberfrg:AmericanFreightMember2021-12-262022-09-240001528930us-gaap:ServiceMemberfrg:BuddysMember2021-12-262022-09-240001528930frg:SylvanMemberus-gaap:ServiceMember2021-12-262022-09-240001528930frg:VitaminShoppeMember2021-12-262022-09-240001528930frg:SylvanMember2021-12-262022-09-240001528930frg:VitaminShoppeMemberus-gaap:RetailMember2021-06-272021-09-250001528930frg:PetSuppliesPlusMemberus-gaap:RetailMember2021-06-272021-09-250001528930us-gaap:RetailMemberfrg:AmericanFreightMember2021-06-272021-09-250001528930us-gaap:RetailMemberfrg:BuddysMember2021-06-272021-09-250001528930frg:ConsolidatedMemberus-gaap:RetailMember2021-06-272021-09-250001528930frg:PetSuppliesPlusMemberfrg:WholesaleMember2021-06-272021-09-250001528930frg:WholesaleMemberfrg:AmericanFreightMember2021-06-272021-09-250001528930frg:ConsolidatedMemberfrg:WholesaleMember2021-06-272021-09-250001528930frg:VitaminShoppeMemberus-gaap:ProductMember2021-06-272021-09-250001528930frg:PetSuppliesPlusMemberus-gaap:ProductMember2021-06-272021-09-250001528930frg:AmericanFreightMemberus-gaap:ProductMember2021-06-272021-09-250001528930us-gaap:ProductMemberfrg:BuddysMember2021-06-272021-09-250001528930frg:ConsolidatedMemberus-gaap:ProductMember2021-06-272021-09-250001528930frg:VitaminShoppeMemberfrg:RoyaltiesandAdvertisingMember2021-06-272021-09-250001528930frg:PetSuppliesPlusMemberfrg:RoyaltiesandAdvertisingMember2021-06-272021-09-250001528930frg:AmericanFreightMemberfrg:RoyaltiesandAdvertisingMember2021-06-272021-09-250001528930frg:BuddysMemberfrg:RoyaltiesandAdvertisingMember2021-06-272021-09-250001528930frg:ConsolidatedMemberfrg:RoyaltiesandAdvertisingMember2021-06-272021-09-250001528930us-gaap:FinancialServiceMemberfrg:AmericanFreightMember2021-06-272021-09-250001528930us-gaap:FinancialServiceMember2021-06-272021-09-250001528930frg:PetSuppliesPlusMember2021-06-272021-09-250001528930frg:AmericanFreightMember2021-06-272021-09-250001528930frg:ConsolidatedMember2021-06-272021-09-250001528930us-gaap:MembershipMemberfrg:AmericanFreightMember2021-06-272021-09-250001528930us-gaap:MembershipMemberfrg:BuddysMember2021-06-272021-09-250001528930frg:ConsolidatedMemberus-gaap:MembershipMember2021-06-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:VitaminShoppeMember2021-06-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:PetSuppliesPlusMember2021-06-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:AmericanFreightMember2021-06-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:BuddysMember2021-06-272021-09-250001528930frg:ConsolidatedMemberus-gaap:ServiceOtherMember2021-06-272021-09-250001528930frg:VitaminShoppeMemberus-gaap:ServiceMember2021-06-272021-09-250001528930frg:PetSuppliesPlusMemberus-gaap:ServiceMember2021-06-272021-09-250001528930us-gaap:ServiceMemberfrg:AmericanFreightMember2021-06-272021-09-250001528930us-gaap:ServiceMemberfrg:BuddysMember2021-06-272021-09-250001528930frg:ConsolidatedMemberus-gaap:ServiceMember2021-06-272021-09-250001528930frg:VitaminShoppeMember2021-06-272021-09-250001528930frg:BuddysMember2021-06-272021-09-250001528930frg:VitaminShoppeMemberus-gaap:RetailMember2020-12-272021-09-250001528930frg:PetSuppliesPlusMemberus-gaap:RetailMember2020-12-272021-09-250001528930us-gaap:RetailMemberfrg:AmericanFreightMember2020-12-272021-09-250001528930us-gaap:RetailMemberfrg:BuddysMember2020-12-272021-09-250001528930frg:ConsolidatedMemberus-gaap:RetailMember2020-12-272021-09-250001528930frg:PetSuppliesPlusMemberfrg:WholesaleMember2020-12-272021-09-250001528930frg:WholesaleMemberfrg:AmericanFreightMember2020-12-272021-09-250001528930frg:ConsolidatedMemberfrg:WholesaleMember2020-12-272021-09-250001528930frg:VitaminShoppeMemberus-gaap:ProductMember2020-12-272021-09-250001528930frg:PetSuppliesPlusMemberus-gaap:ProductMember2020-12-272021-09-250001528930frg:AmericanFreightMemberus-gaap:ProductMember2020-12-272021-09-250001528930us-gaap:ProductMemberfrg:BuddysMember2020-12-272021-09-250001528930frg:ConsolidatedMemberus-gaap:ProductMember2020-12-272021-09-250001528930frg:VitaminShoppeMemberfrg:RoyaltiesandAdvertisingMember2020-12-272021-09-250001528930frg:PetSuppliesPlusMemberfrg:RoyaltiesandAdvertisingMember2020-12-272021-09-250001528930frg:AmericanFreightMemberfrg:RoyaltiesandAdvertisingMember2020-12-272021-09-250001528930frg:BuddysMemberfrg:RoyaltiesandAdvertisingMember2020-12-272021-09-250001528930frg:ConsolidatedMemberfrg:RoyaltiesandAdvertisingMember2020-12-272021-09-250001528930us-gaap:FinancialServiceMemberfrg:AmericanFreightMember2020-12-272021-09-250001528930us-gaap:FinancialServiceMember2020-12-272021-09-250001528930frg:PetSuppliesPlusMember2020-12-272021-09-250001528930frg:AmericanFreightMember2020-12-272021-09-250001528930frg:ConsolidatedMember2020-12-272021-09-250001528930us-gaap:MembershipMemberfrg:AmericanFreightMember2020-12-272021-09-250001528930us-gaap:MembershipMemberfrg:BuddysMember2020-12-272021-09-250001528930frg:ConsolidatedMemberus-gaap:MembershipMember2020-12-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:VitaminShoppeMember2020-12-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:PetSuppliesPlusMember2020-12-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:AmericanFreightMember2020-12-272021-09-250001528930us-gaap:ServiceOtherMemberfrg:BuddysMember2020-12-272021-09-250001528930frg:ConsolidatedMemberus-gaap:ServiceOtherMember2020-12-272021-09-250001528930frg:VitaminShoppeMemberus-gaap:ServiceMember2020-12-272021-09-250001528930frg:PetSuppliesPlusMemberus-gaap:ServiceMember2020-12-272021-09-250001528930us-gaap:ServiceMemberfrg:AmericanFreightMember2020-12-272021-09-250001528930us-gaap:ServiceMemberfrg:BuddysMember2020-12-272021-09-250001528930frg:ConsolidatedMemberus-gaap:ServiceMember2020-12-272021-09-250001528930frg:VitaminShoppeMember2020-12-272021-09-250001528930frg:BuddysMember2020-12-272021-09-250001528930frg:CustomerDepositMember2022-09-240001528930frg:CustomerDepositMember2021-09-250001528930frg:GiftCardsAndLoyaltyProgramsMember2022-09-240001528930frg:GiftCardsAndLoyaltyProgramsMember2021-09-250001528930frg:FranchiseFeesMember2022-09-240001528930frg:FranchiseFeesMember2021-12-250001528930frg:SeniorSecuredNotesFirstLienCreditAgreementMemberfrg:TermLoanMember2022-09-240001528930frg:SeniorSecuredNotesFirstLienCreditAgreementMemberfrg:TermLoanMember2021-12-250001528930frg:TermLoanMemberus-gaap:SeniorLienMember2022-09-240001528930frg:TermLoanMemberus-gaap:SeniorLienMember2021-12-250001528930frg:SeniorSecuredNotesFirstLienCreditAgreementMemberfrg:BadcockFirstLienTermLoanMember2022-09-240001528930frg:SeniorSecuredNotesFirstLienCreditAgreementMemberfrg:BadcockFirstLienTermLoanMember2021-12-250001528930frg:TermLoanMemberfrg:SeniorSecuredNotesSecondLienCreditAgreementMember2022-09-240001528930frg:TermLoanMemberfrg:SeniorSecuredNotesSecondLienCreditAgreementMember2021-12-250001528930frg:TermLoanMember2022-09-240001528930frg:TermLoanMember2021-12-250001528930us-gaap:RevolvingCreditFacilityMember2022-09-240001528930us-gaap:RevolvingCreditFacilityMember2021-12-250001528930frg:FinanceLeaseLiabilityMember2022-09-240001528930frg:FinanceLeaseLiabilityMember2021-12-250001528930frg:ThirdAmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-09-240001528930frg:ThirdAmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:RevolvingCreditFacilityMember2021-12-262022-09-240001528930us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:SeniorSubordinatedNotesMemberus-gaap:LongTermDebtMember2021-12-262022-09-24xbrli:pure0001528930us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2022-09-240001528930us-gaap:ShortTermDebtMember2021-12-262022-09-2400015289302019-07-102019-07-100001528930us-gaap:CommonClassAMember2022-06-262022-09-240001528930us-gaap:CommonClassAMember2021-06-272021-09-250001528930us-gaap:CommonClassAMember2021-12-262022-09-240001528930us-gaap:CommonClassAMember2020-12-272021-09-250001528930us-gaap:RestrictedStockUnitsRSUMember2022-09-240001528930us-gaap:RestrictedStockUnitsRSUMember2021-12-250001528930us-gaap:RestrictedStockUnitsRSUMember2021-12-262022-09-240001528930us-gaap:PerformanceSharesMember2022-09-240001528930us-gaap:PerformanceSharesMember2021-12-250001528930us-gaap:PerformanceSharesMember2021-12-262022-09-240001528930frg:MegaGrantMember2022-09-240001528930frg:MegaGrantMemberus-gaap:PerformanceSharesMember2021-12-250001528930frg:MegaGrantMemberus-gaap:PerformanceSharesMember2022-06-262022-09-240001528930frg:MegaGrantMemberus-gaap:PerformanceSharesMember2022-09-240001528930frg:StockOptionPlanMember2022-09-240001528930frg:StockOptionPlanMember2021-09-250001528930frg:StockOptionPlanMember2022-06-262022-09-240001528930us-gaap:EmployeeStockOptionMember2021-12-262022-09-240001528930us-gaap:EmployeeStockOptionMember2022-09-240001528930us-gaap:EmployeeStockOptionMemberfrg:ExercisePriceRangeOneMember2022-09-240001528930us-gaap:EmployeeStockOptionMemberfrg:ExercisePriceRangeOneMember2021-12-262022-09-240001528930us-gaap:EmployeeStockOptionMemberfrg:ExercisePriceRangeTwoMember2022-09-240001528930us-gaap:EmployeeStockOptionMemberfrg:ExercisePriceRangeTwoMember2021-12-262022-09-240001528930us-gaap:RestrictedStockUnitsRSUMemberus-gaap:AccountsPayableAndAccruedLiabilitiesMember2022-09-240001528930frg:StockawardsexpenseMemberus-gaap:AccountsPayableAndAccruedLiabilitiesMember2022-06-262022-09-2400015289302022-05-180001528930frg:VintageRTOL.P.ownershipMember2022-09-240001528930frg:PaymenttoNoncontrollingHoldersMember2019-12-292020-06-270001528930frg:BadcockMember2021-06-272021-09-250001528930frg:BadcockMember2020-12-272021-09-250001528930frg:SylvanLearningMember2022-06-262022-09-240001528930frg:SylvanLearningMember2021-06-272021-09-250001528930frg:SylvanLearningMember2021-12-262022-09-240001528930frg:SylvanLearningMember2020-12-272021-09-250001528930us-gaap:OperatingSegmentsMember2022-06-262022-09-240001528930us-gaap:OperatingSegmentsMember2021-06-272021-09-250001528930us-gaap:OperatingSegmentsMember2021-12-262022-09-240001528930us-gaap:OperatingSegmentsMember2020-12-272021-09-250001528930frg:OverheadMember2022-06-262022-09-240001528930frg:OverheadMember2021-06-272021-09-250001528930frg:OverheadMember2021-12-262022-09-240001528930frg:OverheadMember2020-12-272021-09-250001528930frg:BadcockMember2022-09-240001528930frg:BadcockMember2021-12-250001528930us-gaap:OperatingSegmentsMember2022-09-240001528930us-gaap:OperatingSegmentsMember2021-12-250001528930us-gaap:CorporateNonSegmentMember2022-09-240001528930us-gaap:CorporateNonSegmentMember2021-12-25

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
FORM 10-Q
 
☒   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended September 24, 2022
 
OR
 
 ☐        Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from             to            
 
Commission File Number 001-35588
 
Franchise Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 27-3561876
(State of incorporation) (IRS employer identification no.)
 
109 Innovation Court, Suite J
Delaware, Ohio 43015
(Address of principal executive offices)
(740) 363-2222
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareFRGNASDAQ Global Market
7.50% Series A Cumulative Preferred Stock, par value $0.01 per share and liquidation preference of $25.00 per shareFRGAPNASDAQ Global Market
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ☒Accelerated filer ☐
Non-accelerated filer ☐Smaller reporting company☐
 Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

The number of shares outstanding of the registrant's common stock, par value $0.01 value per share, as of October 31, 2022 was 38,205,831 shares.



FRANCHISE GROUP, INC. AND SUBSIDIARIES
 
Form 10-Q for the Quarterly Period Ended September 24, 2022
 
Table of Contents
 
  Page Number
   
   
 
 
 
 
   
   


PART I. FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS (UNAUDITED)
1

FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)

 Three Months EndedNine Months Ended
 (In thousands, except share count and per share data)September 24, 2022September 25, 2021September 24, 2022September 25, 2021
Revenues: 
Product$922,887 $782,608 $2,854,060 $2,172,193 
Service and other121,738 37,891 405,666 114,659 
Rental6,851 8,327 22,217 26,077 
Total revenues1,051,476 828,826 3,281,943 2,312,929 
Operating expenses:  
Cost of revenue:
   Product604,969 485,682 1,822,334 1,347,673 
   Service and other8,878 8,737 26,273 10,076 
   Rental2,637 2,930 8,239 8,869 
Total cost of revenue616,484 497,349 1,856,846 1,366,618 
Selling, general, and administrative expenses390,999 276,714 1,173,633 780,416 
Goodwill impairment70,000 — 70,000 — 
Total operating expenses1,077,483 774,063 3,100,479 2,147,034 
Income (loss) from operations(26,007)54,763 181,464 165,895 
Other expense:  
Bargain purchase gain— — 3,514 — 
Gain on sale-leaseback transactions, net9,371 — 59,225 — 
Other, net(11,278)(13,090)(20,400)(49,816)
Interest expense, net(61,236)(21,194)(242,402)(91,494)
Income (loss) from continuing operations before income taxes(89,150)20,479 (18,599)24,585 
Income tax expense (benefit)32,013 (15,519)49,263 (15,600)
Income (loss) from continuing operations(121,163)35,998 (67,862)40,185 
Income from discontinued operations, net of tax— 128,072 — 176,434 
Net income (loss) attributable to Franchise Group, Inc.$(121,163)$164,070 $(67,862)$216,619 
Income (loss) per share from continuing operations:
Basic$(3.09)$0.84 $(1.85)$0.84 
Diluted(3.09)0.83 (1.85)0.83 
Net income per share:  
Basic$(3.09)$4.02 $(1.85)$5.23 
Diluted(3.09)3.96 (1.85)5.14 
Weighted-average shares outstanding:
Basic39,941,287 40,229,232 40,201,666 40,171,458 
Diluted39,941,287 40,973,736 40,201,666 40,931,423 

See accompanying notes to condensed consolidated financial statements.
2

FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

 Three Months EndedNine Months Ended
(In thousands)September 24, 2022September 25, 2021September 24, 2022September 25, 2021
Net income (loss)$(121,163)$164,070 $(67,862)$216,619 
Other comprehensive income (loss)
Unrealized (gain) loss on interest rate swap agreement, net of taxes of $0, $0, $0, and $13, respectively— — — 45 
Foreign currency translation adjustment— — — 381 
Forward contracts related to foreign currency exchange rates— — — — 
Reclassification of unrealized loss on interest rate swap agreement and foreign currency translation adjustments realized upon disposal of business— 973 — 973 
Other comprehensive income— 973 — 1,399 
Comprehensive income (loss)$(121,163)$165,043 $(67,862)$218,018 
 
 See accompanying notes to condensed consolidated financial statements.
3

FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share count and per share data)September 24, 2022December 25, 2021
Assets
Current assets:
Cash and cash equivalents$72,931 $292,714 
Current receivables, net 143,240 118,698 
Current securitized receivables, net341,083 369,567 
Inventories, net792,055 673,170 
Current assets held for sale8,816 — 
Other current assets27,128 24,063 
Total current assets1,385,253 1,478,212 
Property, plant, and equipment, net226,980 449,886 
Non-current receivables, net10,249 11,755 
Non-current securitized receivables, net44,801 47,252 
Goodwill738,083 806,536 
Intangible assets, net119,377 127,951 
Tradenames222,703 222,687 
Operating lease right-of-use assets884,197 714,741 
Investment in equity securities13,261 35,249 
Other non-current assets21,382 18,902 
Total assets$3,666,286 $3,913,171 
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations$392,772 $486,170 
Current operating lease liabilities178,622 173,101 
Accounts payable and accrued expenses 401,757 410,552 
Other current liabilities37,672 50,833 
Total current liabilities1,010,823 1,120,656 
Long-term obligations, excluding current installments1,286,351 1,383,725 
Non-current operating lease liabilities 719,672 557,071 
Other non-current liabilities 103,683 88,888 
Total liabilities3,120,529 3,150,340 
Stockholders' equity:
Common stock, $0.01 par value per share, 180,000,000 shares authorized, 38,162,700 and 40,296,688 shares issued and outstanding at September 24, 2022 and December 25, 2021, respectively
382 403 
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized, and 4,541,125 shares issued and outstanding at September 24, 2022 and December 25, 2021, respectively
45 45 
Additional paid-in capital410,914 475,396 
Retained earnings134,416 286,987 
Total equity545,757 762,831 
Total liabilities and equity$3,666,286 $3,913,171 

See accompanying notes to condensed consolidated financial statements.
4

FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)  
Three Months Ended September 24, 2022
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at June 25, 202240,359 $404 4,541 $45 $486,059 $— $282,346 $768,854 
Net loss— — — — — — (121,163)(121,163)
Exercise of stock options21 — — — (528)— — (528)
Stock-based compensation expense, net10 — — — 3,237 — — 3,237 
Common dividend declared ($0.625 per share)— — — — — — (24,639)(24,639)
Preferred dividend declared ($0.469 per share)— — — — — — (2,128)(2,128)
Repurchase of common stock(2,227)(22)— — (77,854)— — (77,876)
Balance at September 24, 202238,163 $382 4,541 $45 $410,914 $— $134,416 $545,757 

Nine Months Ended September 24, 2022
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at December 25, 202140,297 $403 4,541 $45 $475,396 $— $286,987 $762,831 
Net income— — — — — — (67,862)(67,862)
Exercise of stock options36 — — — (348)— — (348)
Stock-based compensation expense, net57 1 — — 13,720 — — 13,721 
Common dividend declared ($0.625 per share)— — — — — — (78,323)(78,323)
Preferred dividend declared ($0.469 per share)— — — — — — (6,386)(6,386)
Repurchase of stock(2,227)(22)— — (77,854)— — (77,876)
Balance at September 24, 202238,163 $382 4,541 $45 $410,914 $— $134,416 $545,757 


5

FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

Three Months Ended September 25, 2021
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at June 26, 202140,208 $402 4,541 $45 $467,351 $(973)$21,170 $487,995 
Net income— — — — — — 164,070 164,070 
Total other comprehensive income— — — — — 973 — 973 
Stock-based compensation expense, net29 — — — 4,054 — — 4,054 
Common dividend declared ($0.375 per share)— — — — — — (15,482)(15,482)
Preferred dividend declared ($0.469 per share)— — — — — — (2,128)(2,128)
Balance at September 25, 202140,237 $402 4,541 $45 $471,405 $— $167,630 $639,482 

Nine Months Ended September 25, 2021
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at December 26, 202040,092 $401 1,250 $13 $382,383 $(1,399)$3,769 $385,167 
Net income— — — — — — 216,619 216,619 
Total other comprehensive income— — — — — 1,399 — 1,399 
Exercise of stock options36 — — — 385 — — 385 
Stock-based compensation expense, net109 1 — — 9,127 — — 9,128 
Issuance of Series A Preferred Stock— — 3,291 32 79,510 — — 79,542 
Common dividend declared ($0.375 per share)— — — — — — (46,372)(46,372)
Preferred dividend declared ($0.469 per share)— — — — — — (6,386)(6,386)
Balance at September 25, 202140,237 $402 4,541 $45 $471,405 $— $167,630 $639,482 

See accompanying notes to condensed consolidated financial statements.
6


FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended
(In thousands)September 24, 2022September 25, 2021
Operating Activities 
Net income (loss)$(67,862)$216,619 
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
Provision for doubtful accounts97,575 2,010 
Goodwill impairment70,000 — 
Depreciation, amortization, and impairment charges62,381 50,127 
Amortization of deferred financing costs and prepayment penalties15,069 72,316 
Amortization of securitized debt discount71,446 — 
Stock-based compensation expense14,147 9,561 
Change in fair value of investment22,138 (13,089)
Gain on sale-leaseback, bargain purchases, and sales of Company-owned stores, net(65,254)(177,067)
Other non-cash items(2,265)(391)
Changes in operating assets and liabilities(264,550)(44,646)
Net cash provided by (used in) operating activities(47,175)115,440 
Investing Activities 
Purchases of property, plant, and equipment(39,127)(37,957)
Proceeds from sale of property, plant, and equipment268,239 3,384 
Acquisition of business, net of cash and restricted cash acquired(3,753)(462,821)
Divestiture of business, net of cash and restricted cash sold— 179,471 
Issuance of operating loans to franchisees— (17,749)
Payments received on operating loans to franchisees— 23,103 
Net cash provided by (used in) investing activities225,359 (312,569)
Financing Activities 
Dividends paid(82,019)(50,016)
Issuance of long-term debt and other obligations568,319 1,306,724 
Repayment of long-term debt and other obligations(802,268)(1,042,256)
Issuance of common stock83 — 
Issuance of preferred stock— 79,542 
Payments for repurchase of common stock(77,876)— 
Principal payments of finance lease obligations(2,009)— 
Payment for debt issue costs and prepayment penalty on extinguishment(1,339)(88,014)
Other stock compensation transactions(858)(47)
Net cash provided by (used in) financing activities(397,967)205,933 
Effect of exchange rate changes on cash, net— 34 
Net increase (decrease) in cash equivalents and restricted cash(219,783)8,838 
Cash, cash equivalents and restricted cash at beginning of period292,714 151,502 
Cash, cash equivalents and restricted cash at end of period$72,931 $160,340 
Supplemental Cash Flow Disclosure 
Cash paid for taxes, net of refunds$63,921 $39,618 
Cash paid for interest63,072 79,074 
Accrued capital expenditures 4,528 3,496 
Non-cash proceeds from divestiture of Liberty Tax— 59,680 
Capital expenditures funded by finance lease liabilities— 1,211 
See accompanying notes to condensed consolidated financial statements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Statements of Cash Flows.
(In thousands)September 24, 2022September 25, 2021
Cash and cash equivalents$72,931 $159,972 
Restricted cash included in other non-current assets— 368 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows$72,931 $160,340 

Amounts included in other non-current assets represent those required to be set aside by a contractual agreement with an insurer for the payment of specific workers’ compensation claims.
7

FRANCHISE GROUP, INC. AND SUBSIDIARIES
 
Notes to Unaudited Condensed Consolidated Financial Statements
 
September 24, 2022 and September 25, 2021
 
(1) Basis of Presentation
 
Unless otherwise stated, references to the "Company," "we," "us," and "our" in this Quarterly Report on Form 10-Q (this "Quarterly Report") refer to Franchise Group, Inc. and its direct and indirect subsidiaries on a consolidated basis. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the Company's Form 10-K for the year ended December 25, 2021 that was filed with the Securities and Exchange Commission (“SEC”) on February 23, 2022 (the “Form 10-K”).

In the opinion of management, all adjustments (including those of a normal recurring nature) necessary for a fair presentation of such condensed consolidated financial statements in accordance with GAAP have been recorded. The December 25, 2021 balance sheet information was derived from the audited financial statements as of that date.

Repurchases of Common Stock

The Company's repurchases shares of its common stock through open market transactions. During the nine months ended September 24, 2022, all purchases of common stock under the Company's stock repurchase program were made at prices that exceeded the par value of the repurchased common stock, and the portions of the purchase prices that exceeded par value were charged to additional paid-in capital to the extent that an excess was present. Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to retained earnings. Refer to “Note 10. Equity & Stock Compensation Plans” in this Quarterly Report for additional information regarding share repurchases.

Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, "Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which changes how companies will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard replaces the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost (which generally will result in the earlier recognition of allowances for losses) and requires companies to record allowances for available-for-sale debt securities, rather than reduce the carrying amount. In addition, companies will have to disclose significantly more information, including information used to track credit quality by year of origination, for most financing receivables. The ASU should be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the standard is effective. The ASU is effective for the Company for the fiscal year beginning January 1, 2023. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This standard eliminates Step 2 from the goodwill impairment test. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company early adopted the ASU in the quarter ended September 24, 2022. Refer to "Note 5. Goodwill and Intangible Assets" for the calculation of the Company's impairment test after the adoption of ASU 2017-04.

The London Interbank Offered Rate ("LIBOR") is scheduled to be discontinued on June 30, 2023. In an effort to address the various challenges created by such discontinuance, the FASB issued an amendment to existing guidance, ASU No. 2020-04 "Reference Rate Reform." The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g. loans, debt securities, derivatives, borrowings) necessitated by the reference rate reform. It also provides option expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. As further described in "Note 7. Long-Term Obligations", the Company entered into an amendment to a debt agreement which changed the reference rate from LIBOR to Secured Overnight Financing Rate ("SOFR"). The adoption of ASU 2020-04 did not result in a material impact to the Company's financial results or disclosures.
8


(2) Acquisitions

The Company continually looks to diversify and grow its portfolio of brands through acquisitions. On September 27, 2021, the Company completed its acquisition (the "Sylvan Acquisition") of Sylvan Learning ("Sylvan"), and on November 22, 2021, the Company completed its acquisition (the "Badcock Acquisition" and, together with the Sylvan Acquisition "the “Acquisitions”) of W.S. Badcock Corporation ("Badcock").

Badcock Acquisition

On November 22, 2021, the Company completed the Badcock Acquisition. The preliminary fair value of the consideration transferred at the acquisition date was $548.8 million. For the nine months ended September 24, 2022, $0.8 million of acquisition fees had been incurred that are recorded in selling, general and administrative expenses.

The table below summarizes the unaudited preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Badcock Acquisition on November 22, 2021. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in an adjustment to the preliminary values presented below. In the nine months ended September 24, 2022, the preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed were adjusted, which resulted in an increase to the bargain purchase gain of $3.5 million. The increase was primarily due to the valuation of the property, plant, and equipment partially offset by an increase in other long-term liabilities for deferred taxes. The Company expects to complete the purchase price allocation as soon as reasonably possible but not to exceed one year from the date of completion of the Badcock Acquisition.
(In thousands)
Preliminary
November 22, 2021
Cash and cash equivalents$23,413 
Inventories, net130,045 
Accounts receivable411,268 
Other current assets5,023 
Property, plant, and equipment238,865 
Operating lease right-of-use assets55,626 
Other non-current assets2,506 
Total assets866,746 
Current operating lease liabilities12,070 
Accounts payable and accrued expenses71,436 
Other current liabilities18,942 
Current installments of long-term obligations5,261 
Long-term obligations, excluding current installments7,247 
Non-current operating lease liabilities39,599 
Other long-term liabilities27,849 
Total liabilities182,404 
Bargain purchase gain(135,557)
Consideration transferred$548,785 

Operating lease right-of-use assets of $55.6 million and operating and lease liabilities of $51.7 million, consist of leases for retail store locations, warehouses and office equipment.

Property, plant, and equipment consists of fixtures and equipment of $93.0 million, buildings and building improvements of $98.0 million, land and land improvements of $33.4 million, leasehold improvements of $23.7 million, and construction in progress of $1.4 million.

During the nine months ended September 24, 2022, the preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed were adjusted, which resulted in a $3.5 million increase to the bargain purchase gain for a
9

cumulative bargain purchase gain of $135.6 million. The adjustment is classified as "Bargain purchase gain" on the Consolidated Statements of Operations. The Company believes the seller in the Badcock Acquisition was willing to accept a bargain purchase price in return for the Company's ability to act more quickly, partially due to the Company's access to capital to complete the transaction, and with greater certainty than any other prospective acquirer. Additionally, the Company believes the seller in the Badcock Acquisition was motivated to complete the transaction as part of an overall repositioning of its business. Upon completion of this reassessment, the Company concluded that recording a bargain purchase gain with respect to the Badcock Acquisition was appropriate and required under GAAP. The tax impact related to the bargain purchase gain was non-taxable and impacted the Company's effective tax rate for the period.

Sylvan Acquisition

On September 27, 2021, the Company completed the Sylvan Acquisition. The fair value of the consideration transferred at the acquisition date was $82.9 million.

The table below summarizes the fair values of the identifiable assets acquired and liabilities assumed in the Sylvan Acquisition on September 27, 2021.
(In thousands)September 27, 2021
Cash and cash equivalents$4,364 
Other current assets3,592 
Property, plant, and equipment26,324 
Goodwill19,406 
Tradenames24,987 
Operating lease right-of-use assets2,874 
Other intangible assets19,412 
Other non-current assets185 
Total assets101,144 
Current operating lease liabilities891 
Accounts payable and accrued expenses6,072 
Non-current operating lease liabilities1,984 
Other long-term liabilities9,320 
Total liabilities18,267 
Consideration transferred$82,877 

Other intangible assets consists of the franchise agreements of $18.3 million and proprietary content of $1.1 million.
Property, plant and equipment consists of fixtures and equipment of $0.3 million, leasehold improvements of $0.7 million, and software and electronic content of $25.3 million.

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. The goodwill recognized is attributable to operational synergies in the expected franchise models and growth opportunities. None of the acquired goodwill is deductible for tax purposes.

Pet Supplies Plus Acquisition

On March 10, 2021, the Company completed its acquisition of Pet Supplies Plus. Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. The goodwill recognized is attributable to operational synergies in the expected franchise models and growth opportunities. All of the acquired goodwill is deductible for tax purposes.
10



Wag N' Wash Acquisition

On February 22, 2022, the Company's Pet Supplies Plus segment completed the acquisition of Wag N' Wash, an emerging natural pet food, self-wash, and grooming franchise, for an all cash purchase price of $0.9 million, and five of the Wag N' Wash stores were subsequently sold to a franchisee for $0.6 million. The components of the purchase price allocation are not presented herein due to the immateriality of the transaction to the Company overall.

Pro forma financial information
The following unaudited consolidated pro forma summary has been prepared by adjusting the Company's historical data to give effect to the Acquisitions as if they had occurred on January 1, 2020.
Pro forma (Unaudited)
Three Months EndedNine Months Ended
(In thousands)September 24, 2022September 25, 2021September 24, 2022September 25, 2021
Revenue$1,051,475 $1,071,394 $3,281,943 $3,216,259 
Net income (loss)(121,163)77,870 (70,470)198,575 
Basic net income (loss) per share$(3.09)$1.88 $(1.91)$4.78 
Diluted net income (loss) per share$(3.09)$1.85 $(1.91)$4.70 

These unaudited pro forma results include adjustments such as inventory step-up, amortization of acquired intangible assets, depreciation of acquired property, equipment, and software and interest expense on debt financing in connection with the Acquisitions. Material, nonrecurring pro forma adjustments directly attributable to the Acquisitions include:

•Acquired inventory step-up to its fair value of $2.3 million is assumed to be recorded in the first quarter of 2020 and therefore removed from the nine months ended September 25, 2021.

•Acquisition transaction related costs of $4.9 million that were incurred during the nine months ended September 25, 2021 are assumed to have occurred on the pro forma close date of January 1, 2020, and recognized as if incurred in the first quarter of 2020.

The unaudited consolidated pro forma financial information was prepared in accordance with GAAP and is not necessarily indicative of the results of operations that would have occurred if the Acquisitions had been completed on the date indicated, nor is it indicative of the future operating results of the Company.

The unaudited pro forma results do not reflect events that either have occurred or may occur after the Acquisitions, including, but not limited to, the anticipated realization of operating synergies in subsequent periods. They also do not give effect to certain charges that the Company expects to incur in connection with the acquisition, including, but not limited to, additional professional fees and employee integration.




(3) Divestitures

Liberty Tax Divestiture
On July 2, 2021, the Company completed the sale of its Liberty Tax business (the "Liberty Transaction") to NextPoint Acquisition Corp. ("NextPoint") and received total consideration of approximately $255.3 million, consisting of approximately $181.2 million in cash and approximately $74.1 million in proportionate voting shares of NextPoint recorded as an investment in equity securities in "Investment in equity securities" on the Condensed Consolidated Balance Sheets. As a result of the Liberty Transaction, the financial position and results of operations of the Liberty Tax business are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for the three and nine months ended September 25, 2021.
11



The following is a Condensed Consolidated Statement of Operations for the Liberty Tax business. The amounts are included in "Income (loss) from discontinued operations, net of tax" in the Company's Condensed Consolidated Statements of Operations.
 Three Months EndedNine Months Ended
 (In thousands)September 25, 2021September 25, 2021
Revenue$493 $107,486 
Selling, general, and administrative expenses6,886 64,672 
Income from operations(6,393)42,814 
Other expense:
Gain on sale of discontinued operations173,699 173,699 
Other(3)165 
Interest expense, net(3)(4)
Income before income taxes167,300 216,674 
Income tax expense39,228 40,240 
Net income attributable to discontinued operations$128,072 $176,434 

The following is the operating and investing activities for the Liberty Tax business. These amounts are included in the Company's Condensed Consolidated Statement of Cash Flows.
Nine Months Ended
(In thousands)September 25, 2021
Cash flows provided by operating activities from discontinued operations$39,334 
Cash flows provided by investing activities from discontinued operations$173,633 

Assets Held for Sale
As of September 24, 2022, the Company's Badcock segment was negotiating sale transactions for certain non-operating properties that it expects to sell within one year. The net book value of the properties of $8.8 million is classified as "Current assets held for sale" on the Condensed Consolidated Balance Sheets.

Sale-Leaseback Transactions
In the nine months ended September 24, 2022, the Company's Badcock segment sold a number of its retail locations, distribution centers, and its corporate headquarters for a total of $265.8 million, resulting in a net gain of $59.2 million, comprised of $64.7 million of gains and $5.5 million of losses. The corporate headquarters was sold in the three months ended September 24, 2022 for a total of $23.5 million, resulting in a net gain of $9.4 million, comprised of $10.6 million in gains and $1.2 million in losses. Contemporaneously with these sales, the Company entered into lease agreements pursuant to which the Company leased back the retail locations, distribution centers, and corporate headquarters, all of which are being accounted for as operating leases. The net gain has been recognized as "Gain on sale-leaseback transactions" on the Consolidated Statements of Operations for the three and nine months ended September 24, 2022.
12



(4) Accounts and Notes Receivable

Current and non-current receivables as of September 24, 2022 and December 25, 2021 are presented in the Condensed Consolidated Balance Sheets as follows:

(In thousands)September 24, 2022December 25, 2021
Accounts receivable$101,485 $86,087 
Notes receivable1,160 1,735 
Income tax receivable41,811 32,448 
Allowance for doubtful accounts(1,216)(1,572)