KBRA assigns preliminary ratings to two classes of notes from FOCUS Brands Funding LLC, Series 2022-1 (Focus 2022-1), a whole business securitization (WBS).

Focus 2022-1 represents FOCUS Brands Funding LLC's (Focus' or the Company's) third securitization after Series 2017-1 and Series 2018-1 from the same trust, and all three series share in the same collateral pool. In conjunction with the issuance of Series 2022-1, KBRA anticipates affirming the ratings on the Co-Issuers' outstanding Series 2017-1 Class A-2-II Notes and Series 2018-1 Class A-2-I Notes (the Existing Notes, and, together with the Series 2022-1 Notes, the Notes) and withdrawing the ratings on Issuer’s Series 2017-1 Class A-1 and Class A-2-I-B Notes. The ratings are consistent with the results of our cash flow analysis following the addition of the Series 2022-1 Notes.

The Company is the franchisor and operator of branded locations under the brands Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s Deli, Moe’s Southwest Grill and Schlotzsky’s. The collateral includes existing and future franchise and development agreements, existing and future company-operated location royalties, licensing fees, certain vendor payments and fees, intellectual property, and related revenues. The Co-Issuers are issuing two classes of notes totaling $610 million (the Notes). The proceeds from the offered Notes will be used to refinance the Co-Issuers' outstanding Series 2017-1 Class A-2-I-B Notes, pay certain transaction expenses, and general corporate purposes, which may include a distribution to shareholders. The Class 2017-1 Class A-1 Notes are currently undrawn and will be replaced by the Series 2022-1 Class A-1 Notes.

As of March 27, 2022, the Focus restaurant system included 6,367 total locations with annual system-wide sales of approximately $3.7 billion. The transaction relates to royalties from 6,292 franchise locations and 75 company-operated restaurants, representing approximately 98.8% and 1.2% of total store locations, respectively. Approximately 74.2% of the locations are in the U.S. and the remainder are located across 59 countries.

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Related Publications

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Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

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Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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