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Nov 06, 2024

Pet Supplies Plus owner Franchise Group files for bankruptcy | Crain's Detroit Business

Jay Davis is a reporter covering restaurants, retail and small business issues for Crain’s Detroit Business. Prior to joining Crain’s in 2020, Jay held roles covering prep sports, local government,

Jay Davis is a reporter covering restaurants, retail and small business issues for Crain’s Detroit Business. Prior to joining Crain’s in 2020, Jay held roles covering prep sports, local government, and education.

Livonia-based Pet Supplies Plus will forge on despite a bankruptcy filing by its parent company.

Franchise Group Inc. — the owner of The Vitamin Shoppe, Buddy’s Home Furnishings, American Freight, Pet Supplies Plus and Wag N’ Wash — on Sunday filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for Delaware, listing almost $2 billion in debt, according to the court filing.

Franchisee-owned locations are not included in the filing.

As part of the restructuring, Deleware, Ohio-based Franchise Group plans to suspend operations of its furniture, mattress and appliance store chain American Freight, which has 16 Michigan locations. Store closing sales will start Tuesday, the company said.

Franchise Group has been at the center of turmoil surrounding Los Angeles-based B. Riley Financial Inc., the investment and brokerage firm that helped arrange a $2.8 billion buyout of FRG last year.

The company said it has entered into a restructuring support agreement with the holders of about 80% of its debt. Under a proposal, which must be approved by a bankruptcy judge, lenders have agreed to swap out first lien debt for 100% of the equity in the reorganized business.

FRG said Sunday that the first lien lender group agreed to provide the company with $250 million in Chapter 11 financing. The financing, along with cash already on hand, will provide the business “with ample liquidity to maintain operations across its businesses and fulfill go-forward commitments to employees, customers, vendors, franchise partners, and other stakeholders,” according to the statement.

Pet Supplies Plus CEO Chris Rowland told Crain’s that the company remains strong and well-positioned for success. Pet Supplies Plus has more than 734 stores in 41 U.S. states, including 60 in Michigan. It acquired natural pet food, self-wash and grooming franchise Wag N’ Wash in 2022. Wag N’ Wash has 28 U.S. stores, including locations in Ann Arbor and Rochester.

Rowland said Pet Supplies Plus executives were aware of a possible Franchise Group bankruptcy filing for about a month. He said Pet Supplies Plus and Wag N’ Wash will not lay off any staff or close any stores as a result of the filing.

“Everything remains business as usual for Pet Supplies Plus and Wag N’ Wash stores, both now and moving forward,” Rowland said. “Franchisees, corporate employees, vendors and customers are not impacted in any way. All stores remain open for business and will continue to serve customers as usual ... This includes honoring gift cards, store credits, special offers, and promotions, such as their rewards program.”

Franchise Group Inc. acquired Pet Supplies Plus in 2021 for $700 million from New York-based private equity group Sentinel Capital Partners, which brought Pet Supplies Plus under its umbrella in 2018.

The two pet supplies companies combined have about $1 billion in annual sales. They expect that to grow by mid-single digits in 2025, Rowland said. Pet Supplies Plus is on track to open 35 stores this year and has more than 30 new franchise agreements so far this year.

The growing pet supplies business, founded in 1988 in Redford, in April moved into a 40,000-square-foot new headquarters space at 17410 College Parkway in Livonia. The new headquarters is about 25%-30% larger than its previous home at 17191 N. Laurel Park Dr., Rowland said.

— Bloomberg contributed to this report.

Jay Davis is a reporter covering restaurants, retail and small business issues for Crain’s Detroit Business. Prior to joining Crain’s in 2020, Jay held roles covering prep sports, local government, and education.