Did B Riley Recommend You Invest In Franchise Group, Inc. (FRG)

Silver Law Group is representing investors in Franchise Group, Inc (FRG) through B Riley Wealth Management based on investor allegations that B Riley failed to disclose known negative information about FRG and conflicts of interest between FRG principal Brian Kahn and B Riley’s CEO.

Franchise Group, Inc., (FRG) the parent company of Vitamin Shoppe and other retailers, has filed for Chapter 11 Bankruptcy. The filing comes after months of issues with its backing company, B. Riley, Financial, Inc. Filed in Delaware, the company has nearly $2 billion in debts.

In a statement, the company said that it had reached a deal with the lenders that hold most of its older debts. These supporting lenders agreed to exchange the first lien debt for 100% of equity in the new and reorganized company. The deal, and the entire proposal, must be approved by the bankruptcy judge.

Franchise still owns and operates:

• Vitamin Shoppe, an online and brick-and-mortar retailer of health and wellness
• Buddy’s Home Furnishings, a rent-to-own home furnishing store
• Pet Supplies Plus, a full-service pet supply company
• Wag N’ Wash, a self-service pet bathing and grooming store

The company owns and operates a total of 2,200 locations that are either run by the company or in conjunction with franchise or developer agreements, primarily in the US.

As part of its proposed restructuring plan under Chapter 11, FRG is also closing one of its retailers, American Freight, a discount furniture store with locations in 41 states. FRG also sold Sylvan Learning Centers to Unleashed Brands in February of 2024.

The B. Riley/Franchise Group, Inc. Relationship

Based in Los Angeles, B. Riley is an investment and brokerage firm. In 2023, B. Riley, and its founder and then-CEO, Brian Kahn, arranged the deal for Franchise. According to news reports, shortly after the deal, Kahn stepped down as CEO amid a criminal investigation in his part of a securities fraud case related to the demise of defunct hedge fund Prophecy Asset Management. Kahn denied any involvement in the Prophecy case and indicated that he, too, was defrauded in the company’s downfall.

Kahn created Franchise through a series of acquisitions backed by B. Riley, which had a 31% stake in Franchise. B. Riley loaned Kahn $200 million with his stake in Franchise as the collateral. Arrangements for the Franchise deal were also assisted by Tokyo-based lender Nomura Holdings, Inc., by providing a term loan of $500 million to B. Riley. Nomura received shares in Franchise, as well as the loan and other assets as the collateral, according to Bloomberg.

In an email to employees, B. Riley co-founder and Chairman Bryant Riley indicated that Franchise’s bankruptcy was due to a “confluence of events” that includes the decline in consumer spending at the company’s various businesses, the investigation in Kahn’s activities and the events surrounding Prophecy.

Did You Invest With Franchise Group or B. Riley?  

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.