10-Q

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 April 1, 2023

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 class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	FRG	NASDAQ Global Market
7.50% Series A Cumulative Preferred Stock, par value $0.01 per share and liquidation preference of $25.00 per share	FRGAP	NASDAQ 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 May 5, 2023 was 35,172,623 shares.

FRANCHISE GROUP, INC. AND SUBSIDIARIES

Form 10-Q for the Quarterly Period Ended April 1, 2023

Table of Contents

		Page Number
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
Signatures		32

PART I. FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS (UNAUDITED)

1

FRANCHISE GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended
(In thousands, except share count and per share data)	April 1, 2023		March 26, 2022
Revenues:
Product	$	976,808	$	979,164
Service and other	120,567		148,282
Rental	7,446		8,024
Total revenues	1,104,821		1,135,470
Operating expenses:
Cost of revenue:
Product	656,904		616,585
Service and other	9,579		8,663
Rental	2,626		2,861
Total cost of revenue	669,109		628,109
Selling, general, and administrative expenses	387,241		376,995
Goodwill impairment	75,000		—
Total operating expenses	1,131,350		1,005,104
Income (loss) from operations	(26,529)		130,366
Other expense:
Bargain purchase gain	—		(67)
Other, net	(1,834)		(21,977)
Interest expense, net	(87,129)		(92,327)
Income (loss) from operations before income taxes	(115,492)		15,995
Income tax expense (benefit)	(7,175)		3,678
Net income (loss) attributable to Franchise Group, Inc.	(108,317)		12,317
Other comprehensive income (loss)	—		—
Comprehensive income (loss)	$	(108,317)	$	12,317
Net income (loss) per share:
Basic	$	(3.16)	$	0.25
Diluted	(3.16)		0.25
Weighted-average shares outstanding:
Basic	35,002,174		40,307,412
Diluted	35,002,174		41,107,793

See accompanying notes to condensed consolidated financial statements.

2

FRANCHISE GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share count and per share data)	April 1, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	98,266	$	80,783
Current receivables, net of allowance for credit losses of $(3,038) and $(4,106), respectively	151,723		170,162
Current securitized receivables, net of allowance for credit losses of $(71,148) and $(57,095), respectively	290,367		292,913
Inventories, net	759,891		736,841
Current assets held for sale	7,633		8,528
Other current assets	29,610		27,272
Total current assets	1,337,490		1,316,499
Property, plant, and equipment, net	234,705		223,718
Non-current receivables, net of allowance for credit losses of $(1,064) and $(892), respectively	11,202		11,735
Non-current securitized receivables, net of allowance for credit losses of $(9,418) and $(7,705), respectively	38,437		39,527
Goodwill	663,466		737,402
Intangible assets, net	114,000		116,799
Tradenames	222,703		222,703
Operating lease right-of-use assets	910,269		890,949
Investment in equity securities	9,758		11,587
Other non-current assets	65,232		59,493
Total assets	$	3,607,262	$	3,630,412
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of long-term obligations, net	$	11,771	$	6,935
Current installments of debt secured by accounts receivable, net	412,862		340,021
Current operating lease liabilities	179,246		179,519
Accounts payable and accrued expenses	415,665		376,895
Other current liabilities	40,983		40,541
Total current liabilities	1,060,527		943,911
Long-term obligations, excluding current installments	1,394,320		1,374,479
Non-current liabilities debt secured by accounts receivable, net	68,163		107,448
Non-current operating lease liabilities	741,174		720,474
Other non-current liabilities	65,431		62,720
Total liabilities	3,329,615		3,209,032
Stockholders’ equity:
Common stock, $0.01 par value per share, 180,000,000 shares authorized, 35,148,564 and 34,925,733 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectively	351		349
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized, and 4,541,125 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectively	45		45
Additional paid-in capital	310,160		311,069
Retained earnings (deficit)	(32,909)		109,917
Total equity	277,647		421,380
Total liabilities and equity	$	3,607,262	$	3,630,412

See accompanying notes to condensed consolidated financial statements.

3

FRANCHISE GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

 

	Three Months Ended April 1, 2023
(In thousands)	Common stock shares	Common stock		Preferred stock shares	Preferred stock		Additional paid-in-capital		Retained earnings (deficit)		Total Franchise Group equity
Balance at December 31, 2022	34,926	$	349	4,541	$	45	$	311,069	$	109,917	$	421,380
Cumulative effect of adopted accounting standards, net	—	—		—	—		—		(9,978)		(9,978)
Net loss	—	—		—	—		—		(108,317)		(108,317)
Exercise of stock options	15	1		—	—		130		—		131
Stock-based compensation, net	208	1		—	—		(1,039)		—		(1,038)
Common dividend declared ($0.625 per share)	—	—		—	—		—		(22,403)		(22,403)
Preferred dividend declared ($0.469 per share)	—	—		—	—		—		(2,128)		(2,128)
Balance at April 1, 2023	35,149	$	351	4,541	$	45	$	310,160	$	(32,909)	$	277,647

	Three Months Ended March 26, 2022
(In thousands)	Common stock shares	Common stock		Preferred stock shares	Preferred stock		Additional paid-in-capital		Retained earnings		Total Franchise Group equity
Balance at December 25, 2021	40,297	$	403	4,541	$	45	$	475,396	$	286,987	$	762,831
Net income	—	—		—	—		—		12,317		12,317
Exercise of stock options	15	—		—	—		180		—		180
Stock-based compensation, net	41	1		—	—		5,028		—		5,029
Issuance of common stock	1	—		—	—		24		—		24
Common dividend declared ($0.625 per share)	—	—		—	—		—		(26,567)		(26,567)
Preferred dividend declared ($0.469 per share)	—	—		—	—		—		(2,128)		(2,128)
Balance at March 26, 2022	40,354	$	404	4,541	$	45	$	480,628	$	270,609	$	751,686

4

FRANCHISE GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Operating Activities
Net income (loss)	$	(108,317)	$	12,317
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses for accounts receivable	20,327		15,103
Depreciation, amortization, and impairment charges	21,851		22,033
Goodwill impairment	75,000		—
Amortization of deferred financing costs	2,830		6,379
Securitized financing costs	27,000		29,801
Stock-based compensation expense	2,719		5,447
Change in fair value of investment	1,830		23,723
Gain on bargain purchases and sales of Company-owned stores	—		(2,206)
Other non-cash items	(42)		(2,227)
Changes in operating assets and liabilities	(23,511)		(101,227)
Net cash provided by operating activities	19,687		9,143
Investing Activities
Purchases of property, plant, and equipment	(14,219)		(9,752)
Proceeds from sale of property, plant, and equipment	1,166		2,554
Acquisition of business, net of cash and restricted cash acquired	(3,682)		(3,930)
Net cash (used in) investing activities	(16,735)		(11,128)
Financing Activities
Dividends paid	(25,698)		(27,315)
Issuance of long-term debt and other obligations	415,000		67,000
Repayment of long-term debt and other obligations	(387,585)		(182,096)
Proceeds from secured debt obligations	132,151		57,358
Repayment of secured debt obligations	(97,210)		(55,096)
Principal payments of finance lease obligations	(1,207)		(768)
Payment for debt issue costs	(17,393)		—
Cash paid for taxes on exercises/vesting of stock-based compensation, net	(3,626)		(215)
Net cash provided by (used in) financing activities	14,432		(141,132)
Net increase (decrease) in cash equivalents and restricted cash	17,384		(143,117)
Cash, cash equivalents and restricted cash at beginning of period	81,250		292,714
Cash, cash equivalents and restricted cash at end of period	$	98,634	$	149,597
Supplemental Cash Flow Disclosure
Cash paid for taxes, net of refunds	$	1,562	$	274
Cash paid for interest	30,847		21,424
Cash paid for interest on secured debt	23,757		16,830
Accrued capital expenditures	2,229		3,177
Capital expenditures funded by finance lease liabilities	12,741		—

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)	April 1, 2023		March 26, 2022
Cash and cash equivalents	$	98,266	$	149,597
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	$	98,634	$	149,597

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.

5

FRANCHISE GROUP, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

(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 31, 2022 that was filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (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 31, 2022 balance sheet information was derived from the audited financial statements as of that date.

Reclassifications

Certain prior year amounts within the footnotes have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which changes how companies 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.

Effective January 1, 2023, the Company adopted ASU 2016-13 and applied a cumulative-effect adjustment to retained earnings. The Company has reviewed its entire portfolio of assets recognized on the balance sheet as of December 31, 2022 and identified customer receivables and securitized receivables as the materially impacted assets within the scope of ASC 326. Upon adoption of ASC 326 the Company recorded a net decrease to retained earnings of $10.0 million as of January 1, 2023. Prior period amounts were not adjusted and will continue to be reported under the previous accounting standards.

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as a result of the adoption of ASC 326 were as follows:

	Impact of Adoption of ASC 326
(In thousands)	Balance at December 31, 2022		Adjustments due to ASC 326		Balance at January 1, 2023
Assets
Current receivables, net	$	170,162	$	(654)	$	169,508
Current securitized receivables, net	292,913		(11,619)		281,294
Non-current securitized receivables, net	39,527		(1,568)		37,959
Deferred income taxes	38,528		3,863		42,391
Stockholders’ Equity
Retained earnings	$	109,917	$	(9,978)	$	99,939

6

(2) Acquisitions

The Company continually looks to diversify and grow its portfolio of brands through acquisitions. On February 28, 2023, the Company’s Pet Supplies Plus segment acquired 20 stores through bankruptcy proceedings of a third party for approximately $3.7 million. The components of the preliminary purchase price allocation are not presented herein due to the immateriality of the transaction to the Company overall. The Company’s Pet Supplies Plus segment subsequently franchised 12 of the 20 acquired stores.

(3) Accounts and Notes Receivable

Current and non-current receivables as of April 1, 2023 and December 31, 2022 are presented in the Condensed Consolidated Balance Sheets as follows:

(In thousands)	April 1, 2023		December 31, 2022
Trade accounts receivable	$	30,916	$	40,165
Customer accounts receivable	26,266		56,639
Franchisee accounts receivable	58,795		46,778
Notes receivable	2,211		2,361
Income tax receivable	36,573		28,325
Allowance for credit losses	(3,038)		(4,106)
Current receivables, net	151,723		170,162
Notes receivable, non-current	12,266		12,627
Allowance for credit losses, non-current	(1,064)		(892)
Non-current receivables, net	11,202		11,735
Total receivables	$	162,925	$	181,897

Allowance for Credit Losses

The adequacy of the allowance for credit losses is assessed on a quarterly basis and adjusted as deemed necessary. Receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for credit losses. Expected credit losses for trade and franchisee accounts receivable are immaterial. Notes receivable are due from the Company’s franchisees and are collateralized by the underlying franchise. The debtors’ ability to repay the notes is dependent upon both the performance of the franchisee’s industry as a whole and the individual franchise areas.

Activity in the allowance for credit losses for trade, customer, and franchisee accounts receivable and notes receivable for the three months ended April 1, 2023 and March 26, 2022 were as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Balance at beginning of period	$	4,998	$	6,192
Cumulative effect of adopted accounting standards	654		—
Provision for credit loss expense (benefit)	(1,541)		(669)
Write-offs, net of recoveries	(9)		—
Balance at end of period	$	4,102	$	5,523

7

Past due amounts are primarily attributable to trade and franchisee accounts receivable that have been generated over the past year and are past due by 1-30 days. The delinquency distribution of accounts and notes receivable past due at April 1, 2023 were as follows:

	April 1, 2023
(In thousands)	Past due		Current		Total receivables
Accounts receivable	$	8,311	$	107,666	$	115,977
Notes receivable	—		14,417		14,417
Total accounts and notes receivable	$	8,311	$	122,083	$	130,394

(4) Securitized Accounts Receivable

In order to monetize its customer credit receivables portfolio, the Company's Badcock Home Furniture & more (“Badcock”) segment sells beneficial interests in customer revolving lines of credit pursuant to securitization transactions. The Company securitized an additional $133.4 million of its customer credit receivables portfolio during the three months ended April 1, 2023. For additional details regarding these securitizations, refer to “Note 5 – Securitized Accounts Receivable” in the Form 10-K.

When securitized receivables are delinquent for approximately one year, the estimated uncollectible amount from the customer is written off and the corresponding securitized accounts receivable is reduced. Financial instruments that could potentially subject the Company to concentrations of credit risk consist of accounts receivable with its customers. The Company manages such risk by managing the customer accounts receivable portfolio using delinquency as a key credit quality indicator. Management believes the allowance is adequate to cover the Company’s credit loss exposure. Due to their non-recourse nature, the Company will record a gain on extinguishment for any debt secured by uncollectible accounts receivable in the future when the debt meets the extinguishment requirements in accordance with ASC 470, “Debt”.

Activity in the allowance for credit losses on securitized accounts for the three months ended April 1, 2023 and March 26, 2022 was as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Balance at beginning of period	$	64,800	$	—
Cumulative effect of adopted accounting standards	13,187		—
Provision for credit loss expense	21,995		15,792
Write-offs, net of recoveries	(19,416)		(12,126)
Balance at end of period	$	80,566	$	3,666

Current amounts include receivables for customers who have made a payment in the past 30 days. Any customers who have not made a required payment within the last 30 days are considered past due. The following table presents the delinquency distribution of the carrying value of customer accounts receivable by year of origination as of April 1, 2023:

Delinquency Bucket	2023		2022		2021		Prior		Total
(in thousands)
Current	$	76,678	$	167,866	$	22,218	$	5,649	$	272,411
1-30	12,103		32,889		6,926		1,987		53,904
31-60	1,310		7,976		2,533		1,008		12,827
61-90	—		5,781		1,931		735		8,448
91+	—		41,224		28,222		11,532		80,977
Total	$	90,091	$	255,735	$	61,830	$	20,910	$	428,567

8

Servicing revenue, interest income and interest expense generated from securitized receivables for the three months ended April 1, 2023 and March 26, 2022 were as follows:

(In thousands)	April 1, 2023		March 26, 2022
Securitization servicing revenue	$	3,245	$	2,652
Interest income from securitization1	30,475		65,269
Interest expense, debt secured by accounts receivable	(48,125)		(65,299)

1 Includes interest income from Badcock customer receivables (refer to “Note 3 – Accounts and Notes Receivable”) and securitized receivables.

(5) Goodwill and Intangible Assets

The Company performs impairment tests for goodwill as of the end of July of each fiscal year and between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair values of the Company’s reporting units below their carrying values. As a result of the Company’s American Freight segment’s underperformance compared to projections for the three months ended April 1, 2023, as well as current macroeconomic conditions, the Company updated its long-term forecasts. The Company performed an interim goodwill impairment quantitative assessment as of April 1, 2023, and based on the results of the analysis, the Company recorded a non-cash goodwill impairment charge of $75.0 million, which was recorded in “Goodwill impairment” in the accompanying Condensed Consolidated Statements of Operations. Other than the American Freight segment’s accumulated goodwill impairment of $70.0 million as of December 31, 2022, no other reporting units had accumulated goodwill impairment losses recorded.

The estimated fair value of the Company’s American Freight reporting unit was calculated using a weighted-average of values determined from an income approach and a market approach. The income approach involves estimating the fair value of each reporting unit by discounting its estimated future cash flows using a discount rate that would be consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained from observed stock prices of public companies and recent merger and acquisition transaction data of comparable entities. In order to estimate the fair value of goodwill, management must make certain estimates and assumptions that affect the total fair value of the reporting unit including, among other things, an assessment of market conditions, projected cash flows, discount rates and growth rates. Management’s estimates of projected cash flows related to the reporting unit include, but are not limited to, future earnings of the reporting unit, assumptions about the use or disposition of assets included in the reporting unit, estimated remaining lives of those assets, and future expenditures necessary to maintain the assets’ existing service potential. The assumptions in the fair value measurement reflect the current market environment, industry-specific factors and company-specific factors.

Changes in the carrying amount of goodwill for the three months ended April 1, 2023 are as follows:

	Vitamin Shoppe		Pet Supplies Plus		American Freight		Buddy’s		Sylvan		Total
Balance as of December 31, 2022	$	1,277	$	336,791	$	300,829	$	79,099	$	19,406	$	737,402
Acquisitions	—		3,690		—		—		—		3,690
Goodwill impairment	—		—		(75,000)		—		—		(75,000)
Disposals and purchase accounting adjustments	—		(2,626)		—		—		—		(2,626)
Balance as of April 1, 2023	$	1,277	$	337,855	$	225,829	$	79,099	$	19,406	$	663,466

9

Components of intangible assets as of April 1, 2023 and December 31, 2022 were as follows:

	April 1, 2023
(In thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Indefinite lived tradenames	$	222,703	$	—	$	222,703
Intangible assets:
Franchise and dealer agreements	$	96,005	$	(16,218)	$	79,787
Customer contracts	42,528		(9,807)		32,721
Other intangible assets	2,374		(882)		1,492
Total intangible assets	$	140,907	$	(26,907)	$	114,000

	December 31, 2022
(In thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Indefinite lived tradenames	$	222,703	$	—	$	222,703
Intangible assets:
Franchise and dealer agreements	$	96,005	$	(14,348)	$	81,657
Customer contracts	42,484		(8,878)		33,606
Other intangible assets	2,313		(777)		1,536
Total intangible assets	$	140,802	$	(24,003)	$	116,799

(6) Revenue

For details regarding the principal activities from which the Company generates its revenue, refer to “Note 1 – Description of Business and Summary of Significant Accounting Policies Presentation” in the Form 10-K. For more detailed information regarding reportable segments, refer to “Note 13 – Segments” in this Quarterly Report. The following represents the disaggregated revenue by reportable segments for the three months ended April 1, 2023:

	Three Months Ended
	April 1, 2023
(In thousands)	Vitamin Shoppe		Pet Supplies Plus		Badcock		American Freight		Buddy’s		Sylvan		Consolidated
Retail sales	$	320,597	$	163,259	$	132,256	$	202,150	$	724	$	8	$	818,994
Wholesale sales	782		151,982		—		5,050		—		—		157,814
Total product revenue	321,379		315,241		132,256		207,200		724		8		976,808
Royalties and advertising fees	178		10,884		—		795		5,183		9,880		26,920
Financing revenue	—		—		498		9,927		—		—		10,425
Interest income	—		83		22,239		177		—		—		22,499
Interest income from amortization of original purchase discount	—		—		8,236		—		—		—		8,236
Warranty and damage revenue	—		—		12,305		10,588		1,563		—		24,456
Other revenues	145		7,863		11,753		7,874		52		344		28,031
Total service revenue	323		18,830		55,031		29,361		6,798		10,224		120,567
Rental revenue, net	—		—		—		—		7,446		—		7,446
Total rental revenue	—		—		—		—		7,446		—		7,446
Total revenue	$	321,702	$	334,071	$	187,287	$	236,561	$	14,968	$	10,232	$	1,104,821

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The following represents the disaggregated revenue by reportable segments for the three months ended March 26, 2022:

	Three Months Ended
	March 26, 2022
(In thousands)	Vitamin Shoppe		Pet Supplies Plus		Badcock		American Freight		Buddy’s		Sylvan		Consolidated
Retail sales	$	310,430	$	162,549	$	166,642	$	211,513	$	1,070	$	11	$	852,215
Wholesale sales	175		123,232		—		3,542		—		—		126,949
Total product revenue	310,605		285,781		166,642		215,055		1,070		11		979,164
Royalties and advertising fees	134		9,062		—		548		4,824		9,509		24,077
Financing revenue	—		—		—		8,175		—		—		8,175
Interest income	—		73		27,663		195		—		—		27,931
Interest income from amortization of original purchase discount	—		—		37,606		—		—		—		37,606
Warranty and damage revenue	—		—		13,546		11,479		1,604		—		26,629
Other revenues	214		6,298		10,802		5,964		63		523		23,864
Total service revenue	348		15,433		89,617		26,361		6,491		10,032		148,282
Rental revenue, net	—		—		—		—		8,024		—		8,024
Total rental revenue	—		—		—		—		8,024		—		8,024
Total revenue	$	310,953	$	301,214	$	256,259	$	241,416	$	15,585	$	10,043	$	1,135,470

Contract Balances

The following table provides information about receivables and contract liabilities (deferred revenue) from contracts with customers as of April 1, 2023 and December 31, 2022:

(In thousands)	April 1, 2023		December 31, 2022
Accounts receivable	$	115,977	$	143,582
Notes receivable	14,477		14,988
Customer deposits	$	21,663	$	20,816
Gift cards and loyalty programs	9,496		9,565
Deferred franchise fee revenue	23,642		22,175
Other deferred revenue	9,955		10,688
Total deferred revenue	$	64,756	$	63,244

Deferred revenue consists of (1) amounts received for merchandise of which customers have not yet taken possession, (2) gift card or store credits outstanding, and (3) loyalty reward program credits which are primarily recognized within one year following the revenue deferral. Deferred franchise fee revenue is recognized over the term of the agreement, which is between five and twenty years. The amount of revenue recognized in the period that was included in the contract liability balance at the beginning of the period is immaterial to the condensed consolidated financial statements.

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(7) Long-Term Obligations

For details regarding the Company’s long-term debt obligations, refer to “Note 10 – Long-Term Obligations” in the Form 10-K.

Long-term obligations at April 1, 2023 and December 31, 2022 were as follows:

(In thousands)	April 1, 2023		December 31, 2022
Term loans, net of debt issuance costs
First lien term loan, due March 10, 2026	$	1,064,470	$	779,777
Second lien term loan, due September 10, 2026	289,993		289,435
Total term loans, net of debt issuance costs	1,354,463		1,069,212
ABL Revolver	23,500		295,000
Other long-term obligations	5,061		6,147
Finance lease liabilities	23,067		11,055
Total long-term obligations	1,406,091		1,381,414
Less current installments	11,771		6,935
Total long-term obligations, net	$	1,394,320	$	1,374,479

First Lien Credit Agreement

On February 2, 2023, the Company entered into the Third Amendment to the First Lien Credit Agreement, which amends the First Lien Credit Agreement dated as of March 10, 2021 to provide for an incremental term loan facility in the principal amount of $300.0 million and change the reference rate under the First Lien Credit Agreement from LIBOR to SOFR. The net proceeds were used to repay certain amounts outstanding under the Company’s ABL Credit Agreement.

Compliance with Debt Covenants

The Company's revolving credit and long-term debt agreements impose restrictive covenants on it, including requirements to meet certain ratios. As of April 1, 2023, the Company was in compliance with all covenants under these agreements and, based on a continuation of current operating results, the Company expects to be in compliance for the next twelve months.

(8) Income Taxes

Overview

For the three months ended April 1, 2023 and March 26, 2022, the Company had an effective tax rate of 6.2% and 23.0%, respectively. The changes in the effective tax rate compared to the prior year are due to a current year projected pre-tax loss compared to prior year pre-tax income and a current year non-cash goodwill impairment charge that is nondeductible for tax purposes.

Tax Receivable Agreement

On July 10, 2019, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with the then-existing non-controlling interest holders (the “Buddy’s Members”) that provides for the payment by the Company to the Buddy’s Members of 40% of the cash savings, if any, in federal, state and local taxes that the Company realizes or is deemed to realize as a result of any increases in tax basis of the assets of Franchise Group New Holdco, LLC (“New Holdco”) resulting from future redemptions or exchanges of New Holdco units.

Payments will be made when such Tax Receivable Agreement related deductions actually reduce the Company’s income tax liability. No payments were made to the Buddy’s Members pursuant to the Tax Receivable Agreement during the three months ended April 1, 2023. Total amounts due under the Tax Receivable Agreement to the Buddy’s Members as of April 1, 2023 were $15.4 million, with $1.0 million in “Other current liabilities” and the remaining amount recorded in “Other non-current liabilities” in the accompanying Condensed Consolidated Balance Sheets. Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company has obtained an increase in its share of the tax basis in

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the net assets of New Holdco when the New Holdco units were redeemed or exchanged by the non-controlling interest holders and other qualifying transactions. The Company has treated the redemptions and exchanges of New Holdco units by the non-controlling interest holders as direct purchases of New Holdco units for U.S. federal income tax purposes. This increase in tax basis will reduce the amounts that it would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

(9) Net Income (Loss) Per Share

Diluted net income (loss) per share is computed using the weighted-average number of common stock and, if dilutive, the potential common stock outstanding during the period. Potential common stock consists of the incremental common stock issuable upon the exercise of stock options and vesting of restricted stock units. The dilutive effect of outstanding stock options and restricted stock units is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the calculations of basic and diluted net income (loss) per share:

	Three Months Ended
(In thousands, except for share and per share amounts)	April 1, 2023		March 26, 2022
Net income (loss) attributable to Franchise Group	$	(108,317)	$	12,317
Less: Preferred dividend declared	(2,128)		(2,128)
Adjusted net income (loss) available to Common Stockholders	$	(110,445)	$	10,189
Weighted-average common stock outstanding	35,002,174		40,307,412
Net dilutive effect of stock options and restricted stock	—		800,381
Weighted-average diluted shares outstanding	35,002,174		41,107,793
Net income (loss) per share:
Basic net income per share	$	(3.16)	$	0.25
Diluted net income per share	(3.16)		0.25

(10) Equity & Stock Compensation Plans

For a discussion of our stock-based compensation plans, refer to “Note 12 – Stock Compensation Plans” in the Form 10-K.

Restricted Stock Units

The Company has awarded service-based restricted stock units (the “RSUs”) to its non-employee directors, officers and certain employees. The Company recognizes expense based on the estimated fair value of the RSUs granted over the vesting period on a straight-line basis. The fair value of RSUs is determined using the Company’s closing stock price on the date of the grant. At April 1, 2023, unrecognized compensation costs related to the RSUs were $11.7 million. These costs are expected to be recognized through fiscal year 2024.

The following table summarizes the status of the RSUs as of and changes during the three months ended April 1, 2023:

	Number of RSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	273,302	$	36.39
Granted	284,818	27.89
Vested	(51,431)	28.23
Canceled	(500)	42.41
Balance as of April 1, 2023	506,189	$	32.43

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Performance Restricted Stock Units

The Company has awarded performance restricted stock units (the “PRSUs”) to its officers and certain employees. The Company recognizes expense based on the estimated fair value of the PRSUs granted over the vesting period on a straight-line basis. The fair value of PRSUs is determined using the Company’s closing stock price on the date of the grant. At April 1, 2023, unrecognized compensation costs related to the PRSUs were $5.9 million. These costs are expected to be recognized through fiscal year 2025.

The following table summarizes the status of the PRSUs as of and changes during the three months ended April 1, 2023:

	Number of PRSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	364,857	$	32.92
Granted	217,088	33.79
Adjusted for performance results achieved(1)	154,904	24.84
Vested	(282,256)	24.82
Canceled	(500)	42.41
Balance as of April 1, 2023	454,093	$	35.60

(1) Represents an adjustment for performance results achieved related to outstanding 2020 PRSU shares that reached 200% achievement in March 2023.

Market-Based Performance Restricted Stock Units

The Company has awarded market-based performance restricted stock units (the “MPRSUs”) to its officers and certain employees. The Company recognizes expense based on the estimated fair value of the MPRSUs granted over the vesting period on a straight-line basis. The fair value of MPRSUs is determined using a Monte Carlo simulation valuation model to calculate grant date fair value. Compensation expense is recognized over the requisite service period using the proportionate amount of the award’s fair value that has been earned through service to date. Under GAAP, compensation expense is not reversed if the award target is not achieved. At April 1, 2023, unrecognized compensation costs related to the MPRSUs were $8.0 million. These costs are expected to be recognized through fiscal year 2024.

The following table summarizes the status of the MPRSUs as of and changes during the three months ended April 1, 2023:

	Number of MPRSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	840,926	$	21.77
Granted	—	—
Vested	—	—
Canceled	(37,500)	19.97
Balance as of April 1, 2023	803,426	$	21.86

Stock Options

The Company has awarded stock options to its non-employee directors and officers. As of April 1, 2023, there were 239,564 stock options outstanding. During the three months ended April 1, 2023, there were no stock options granted, 15,000 stock options exercised, and no stock options forfeited. The weighted-average exercise price of stock options outstanding was $9.54 per share as of April 1, 2023. All outstanding stock options will expire in fiscal years 2023 and 2024.

At April 1, 2023, there were zero non-vested stock options outstanding and there was no remaining unrecognized compensation cost related to vested stock options.

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The following table summarizes information about stock options outstanding and exercisable at April 1, 2023:

	Options Outstanding and Exercisable
Range of exercise prices	Number	Weighted average exercise price		Weighted average remaining contractual life (in years)
$0.00 - $10.89	185,000	$	8.80	0.7
$10.90 - $12.01	54,564	11.97		0.7
	239,564	$	9.54

Stock Compensation Expense

The Company recorded $2.7 million and $5.4 million in stock-based compensation expense during the three months ended April 1, 2023 and March 26, 2022, respectively.

Long-Term Incentive Plans

The Company has long-term incentive plans at various operating companies which are recorded as liabilities. Upon vesting, the awards granted under these plans may be settled in cash or shares of the Company’s stock at the Company’s discretion. The total aggregate liability for these plans as of April 1, 2023 is $9.8 million, recorded in “Other non-current liabilities” on the Condensed Consolidated Balance Sheets. During the three months ended April 1, 2023, total expense recognized related to these plans was $1.8 million.

(11) Related Party Transactions

The Company considers any of its directors, executive officers or beneficial owners of more than 5% of its common stock, or any member of the immediate family of the foregoing persons, to be related parties.

Messrs. Kahn and Laurence

Brian Kahn and Vintage Capital Management, LLC and its affiliates (“Vintage”), in aggregate, held approximately 40.2% of the aggregate voting power of the Company through their ownership of common stock as of April 1, 2023. Brian Kahn and Andrew Laurence are principals of Vintage. Mr. Kahn is a member of the Board of Directors, President and Chief Executive Officer of the Company. Mr. Laurence is an Executive Vice President of the Company and served as a member of the Company’s Board of Directors until May 2021.

Buddy’s Franchises. Mr. Kahn’s brother-in-law owns eight Buddy’s franchises. All transactions between the Company’s Buddy’s segment and Mr. Kahn’s brother-in-law are conducted on a basis consistent with other franchisees.

Tax Receivable Agreement

Refer to “Note 8 – Income Taxes” for detail regarding the amounts due under the Tax Receivable Agreement to the Buddy’s Members.

(12) Commitments and Contingencies

In the ordinary course of operations, the Company may become a party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s business, financial condition, cash flows, or results of operations.

The Company is party to claims and lawsuits that are considered to be ordinary, routine litigation incidental to the business, including claims and lawsuits concerning the fees charged to customers for various products and services, relationships with franchisees, intellectual property disputes, employment matters, and contract disputes. Although the Company cannot provide assurance that it will ultimately prevail in each instance, it believes the amount, if any, it will be required to pay in the discharge of liabilities or settlements in these claims will not have a material adverse impact on its consolidated results of operations, financial position, or cash flows.

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Guarantees

The Company remains secondarily liable under various real estate leases that were assigned to franchisees who acquired Pet Supplies Plus or Vitamin Shoppe stores from the Company. In the event of the failure of an acquirer to pay lease payments, the Company could be obligated to pay the remaining lease payments which extend through 2033 and in aggregate are $30.3 million and $30.2 million as of April 1, 2023 and December 31, 2022, respectively. In certain cases, the Company could attempt to recover from the franchisees’ personal assets should the Company be required to pay remaining lease obligations.

If the Company is required to make payments under any of these guarantees, the Company could seek to recover those amounts from the franchisees or in some cases their affiliates. The Company believes that payment under any of these guarantees is remote as of April 1, 2023.

(13) Segments

The Company’s operations are conducted in six reportable business segments: Vitamin Shoppe, Pet Supplies Plus, Badcock, American Freight, Buddy’s, and Sylvan. The Company defines its segments as those operations which results its chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

The Vitamin Shoppe segment is an omnichannel specialty retailer and wellness lifestyle company with the mission of providing customers with the most trusted products, guidance, and services to help them become their best selves, however they define it. The Vitamin Shoppe segment offers one of the largest varieties of products among vitamin, mineral and supplement retailers. The broad product offering enables the company to provide customers with a depth of selection of products that may not be readily available at other specialty retailers or mass merchants, such as discount stores, supermarkets, drug stores and wholesale clubs. The Vitamin Shoppe continues to focus on improving the customer experience through the roll-out of initiatives including increasing customer engagement and personalization, redesigning the omnichannel experience (including in stores as well as through the internet and mobile devices), growing private brands and improving the effectiveness of pricing and promotions. Vitamin Shoppe is headquartered in Secaucus, New Jersey.

The Pet Supplies Plus segment is a leading omnichannel retail chain and franchisor of pet supplies and services. Pet Supplies Plus has a diversified revenue model comprised of Company-owned store revenue, franchise royalties and revenue generated by the wholesale distribution of products to its franchisees. Pet Supplies Plus offers a curated selection of premium brands, proprietary private labels and specialty products with retail price parity with online players. Additionally, Pet Supplies Plus offers grooming, pet wash and other services in most of its locations. The Pet Supplies Plus segment operates under the “Pet Supplies Plus” brand and is headquartered in Livonia, Michigan.

The Badcock segment is a retailer of furniture, appliances, bedding, electronics, home office equipment, accessories and seasonal items in a showroom format. Additionally, Badcock offers multiple and flexible payment solutions and credit options through its consumer financing services. The Badcock segment operates under the “Badcock Home Furniture & More” brand and is headquartered in Mulberry, Florida.

The American Freight segment is a retail chain offering in-store and online access to furniture, mattresses, new and out-of-box home appliances and home accessories at discount prices. American Freight buys direct from manufacturers and sells direct in warehouse-style stores. By cutting out the middleman and keeping its overhead costs low, American Freight can offer quality products at low prices. American Freight provides customers with multiple payment options providing access to high-quality products and brand name appliances that may otherwise remain aspirational to some of its customers.

American Freight also serves as a liquidation channel for major appliance vendors. American Freight operates specialty distribution centers that test every out-of-box appliance before it is offered for sale to customers. Customers typically are covered by the original manufacturer’s warranty and are offered the opportunity to purchase a full suite of extended-service plans and services. The American Freight segment operates under the “American Freight” brand and is headquartered in Delaware, Ohio.

The Buddy’s segment is a specialty retailer of high quality, name brand consumer electronic, residential furniture, appliances and household accessories through rent-to-own agreements. The rental transaction allows customers the opportunity to benefit from the use of high-quality products under flexible rental purchase agreements without long-term obligations. The Buddy’s segment operates under the “Buddy’s” brand and is headquartered in Orlando, Florida.

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The Sylvan segment is an established and growing franchisor of supplemental education for Pre-K-12 students and families. Sylvan addresses the full range of student needs with a broad variety of academic curriculums delivered in an omnichannel format. The Sylvan platform provides franchisees with the ability to provide a range of services, including on premises, virtually, at a satellite location, and in the home. Sylvan is headquartered in Hunt Valley, Maryland.

Refer to “Note 6 – Revenue” for total revenues by segment. Operating income (loss) by segment were as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Income (loss) from operations:
Vitamin Shoppe	$	27,194	$	35,354
Pet Supplies Plus	19,367		17,021
Badcock	14,742		70,230
American Freight	(86,630)		11,213
Buddy’s	3,740		4,065
Sylvan	1,151		948
Total Segments	(20,436)		138,831
Corporate	(6,093)		(8,465)
Consolidated income (loss) from operations	$	(26,529)	$	130,366

Total assets by segment were as follows:

(In thousands)	April 1, 2023		December 31, 2022
Total assets:
Vitamin Shoppe	$	623,453	$	625,543
Pet Supplies Plus	1,013,360		977,234
Badcock	748,927		789,727
American Freight	857,705		904,378
Buddy’s	134,692		135,192
Sylvan	86,856		90,361
Total Segments	3,464,993		3,522,435
Corporate	142,269		107,977
Consolidated total assets	$	3,607,262	$	3,630,412

(14) Subsequent Events

On May 9, 2023, the Board declared quarterly dividends of $0.46875 per share of Series A Preferred Stock. The dividends will be paid in cash on or about July 17, 2023 to holders of record of the Company's Series A Preferred Stock on the close of business on July 3, 2023.

On May 10, 2023, the Company announced that it has entered into a definitive agreement and plan of merger (the “Merger Agreement”) pursuant to which members of the senior management team of the Company led by Brian Kahn, the Company’s Chief Executive Officer (collectively with affiliates and related parties of the senior management team, the “Management Group”), have agreed to acquire approximately 64% of the Company’s issued and outstanding common stock that the Management Group does not presently own or control. Under the terms of the proposed merger, the Company’s common stockholders, other than the Management Group (the “Public Stockholders”), will receive $30.00 in cash for each share of the Company’s common stock they hold.

The proposed merger is anticipated to close in the second half of 2023, subject to satisfaction or waiver of the closing conditions, including approval by regulatory authorities and the Company’s stockholders, including approval by a majority of the shares of common stock of the Company not owned or controlled by the Management Group. Upon completion of the proposed merger, the Company will become a private company and will no longer be publicly listed or traded on NASDAQ.

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ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements concerning our business, operations, and financial performance and condition as well as our plans, objectives, and expectations for our business operations and financial performance and condition. Any statements contained herein that are not of historical facts may be deemed to be forward-looking statements. You can identify these statements by words such as “aim,” “anticipate,” “assume,” “believe,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. They are not guarantees of future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Additionally, other factors may cause actual results to differ materially from historical results or from any results expressed or implied by such forward-looking statements. Factors that may cause such differences include, but are not limited to, the risks described under “Item 1A-Risk Factors,” including:

•the risk that natural disasters, public health crises, political uprisings, uncertainty or unrest, or other catastrophic events could adversely affect our operations and financial results, including the impact of the COVID-19 pandemic on manufacturing operations and our supply chain, customer traffic and our operations in general;

•the possibility that any of the anticipated benefits of our acquisitions or dispositions will not be realized or will not be realized within the expected time period, our businesses and our acquisitions may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, or revenues following our acquisitions may be lower than expected or we are unable to sell non-core assets;

•our ability to identify and consummate attractive acquisitions on favorable terms;

•additional leverage incurred in connection with acquisitions or other capital expenditure initiatives;

•our inability to grow on a sustainable basis;

•changes in operating costs, including employee compensation and benefits and increased transportation costs and delays attributed to global supply chain challenges;

•higher inflation rates, which may result in reduced customer traffic or impact discretionary consumer spending;

•the seasonality of the products and services we provide in certain of our business segments;

•departures of key executives, senior management members or directors;

•our ability to attract additional talent to our teams;

•our ability to maintain an active trading market for our common stock on The Nasdaq Global Market (“Nasdaq”);

•the effect of regulation of the products and services that we offer, including changes in laws and regulations and the costs and administrative burdens associated with complying with such laws and regulations;

•our ability to develop and maintain relationships with our third-party product and service providers;

•our ability to offer merchandise and services that our customers demand;

•our ability to successfully manage our inventory levels and implement initiatives to improve inventory management and other capabilities;

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•competitive conditions in the retail industry and consumer services markets;

•the performance of our products within the prevailing industry;

•worldwide economic conditions and business uncertainty, the availability of consumer and commercial credit, higher debt capital costs, change in consumer confidence, tastes, preferences and spending, and changes in vendor relationships;

•the uncertainty of the future impact of the COVID-19 pandemic and public health measures on our business and results of operations;

•potential regulatory actions relating to the COVID-19 pandemic and the related government mitigation efforts on our business and our financial results;

•disruption of manufacturing, warehouse or distribution facilities or information systems;

•the continued reduction of our competitors promotional pricing on new-in-box appliances, potentially adversely impacting our sales of out-of-box appliances and associated margin;

•any potential non-compliance, fraud or other misconduct by our franchisees, dealers, or employees;

•our ability and the ability of our franchisees and dealers to comply with legal and regulatory requirements;

•failures by our franchisees, the franchisees’ employees, and our dealers to comply with their contractual obligations to us and with laws and regulations, to the extent these failures affect our reputation or subject us to legal risk;

•our ability to attract and retain new franchisees and dealers and the ability of our franchisees and dealers to open new stores and territories and operate them successfully;

•the availability of suitable store locations at appropriate lease terms;

•the ability of our franchisees and dealers to generate sufficient revenue to pay us royalties and fees;

•our ability to manage Company-owned stores;

•our exposure to litigation and any governmental investigations;

•our ability and our franchisees’ and dealers’ ability to protect customers’ personal information, including from a cyber-security incident;

•the impact of identity-theft concerns on customer attitudes toward our services;

•our ability to access the credit markets and satisfy our covenants to lenders;

•our operating subsidiary’s potential repurchase of certain finance receivables if certain representations and warranties about the quality and nature of such receivables are breached, which may negatively impact our results of operations, financial condition, and liquidity;

•a decline in the credit quality of our customers, a decrease in our credit sales, or other factors outside of our control, which could lead to a decrease in our product sales and profitability;

•our reliance on technology systems and electronic communications; and

•other factors, including the risk factors discussed in this Quarterly Report.

Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. These forward-looking statements speak only as of the date of this quarterly report. Unless required by law, we do not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. A potential investor or other vendor

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should, however, review the factors and risks we describe in the reports we will file from time to time with the U.S. Securities and Exchange Commission (“SEC”) after the date of this Quarterly Report.

Overview

We are an owner and operator of franchised and franchisable businesses that continually looks to grow our portfolio of brands while utilizing our operating and capital allocation philosophies to generate strong cash flows. We have a diversified and growing portfolio of highly recognized brands. Our asset-light business model is designed to generate consistent, recurring revenue and strong operating margins and requires limited maintenance capital expenditures. As a multi-brand operator, we continually look to diversify and grow our portfolio of brands either through acquisition or organic brand development. Our acquisition strategy typically targets businesses that are highly cash flow generative with compelling unit economics that can be scaled by adding franchise and company owned units, or that can be restructured to enhance performance and value to Franchise Group. We strive to create value for our stockholders by generating free cash flow and capital-efficient growth across economic cycles.

Our business lines include The Vitamin Shoppe (“Vitamin Shoppe”), Pet Supplies Plus, Badcock Home Furniture & more (“Badcock”), American Freight, Buddy’s Home Furnishings (“Buddy’s”), and Sylvan Learning (“Sylvan”). Refer to “Note 13 – Segments” in this Quarterly Report for additional information.

Our revenue is primarily derived from merchandise sales, rental revenue, and service revenues comprised of royalties and other required fees from our franchisees, dealers and financing programs.

In evaluating our performance, management focuses on Adjusted EBITDA as a measure of the cash flow from recurring operations from the businesses. Adjusted EBITDA represents net income (loss), before income taxes, interest expense, depreciation and amortization, and certain other items.

Impact of COVID-19

As of the date of this Quarterly Report, we have experienced some supply chain delays and disruptions, including adverse consequences to our supply chain function from decreased procurement volumes in connection with the COVID-19 pandemic. We believe that the lingering effects of the COVID-19 pandemic could negatively impact our business and financial results by weakening demand for our products and services, further disrupting our supply chain or affecting our ability to raise capital from financial institutions. As events continue to change, we are unable to accurately predict the impact that the COVID-19 pandemic will have on our results of operations due to uncertainties including, but not limited to, the impact of new subvariants and the public's or governments' response to the outbreak; however, we are actively managing our business to respond to the impact.

Results of Operations

The table below shows results of operations for the three months ended April 1, 2023 and March 26, 2022.

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	1,104,821	$	1,135,470	$	(30,649)	(2.7)	%
Income from operations	(26,529)		130,366		(156,895)		(120.3)	%
Net income	$	(108,317)	$	12,317	$	(120,634)	(979.4)	%

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Revenues. The table below sets forth the components and changes in our revenues for the three months ended April 1, 2023 and March 26, 2022.

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Product	$	976,808	$	979,164	$	(2,356)	(0.2)	%
Service and other	120,567		148,282		(27,715)		(18.7)	%
Rental	7,446		8,024		(578)		(7.2)	%
Total revenue	$	1,104,821	$	1,135,470	$	(30,649)	(2.7)	%

For the three months ended April 1, 2023, total revenues decreased $30.6 million, or (2.7)%, to $1,104.8 million compared to $1,135.5 million in the same period last year. This decrease was primarily due to a $69.0 million decrease in revenue at our Badcock segment and a $4.9 million decrease in revenue at our American Freight segment. These decreases were partially offset by a $32.9 million increase in revenue at our Pet Supplies Plus segment and a $10.7 million increase in revenue at our Vitamin Shoppe segment.

Operating expenses.    The following table details the amounts and changes in our operating expenses for the three months ended April 1, 2023 and March 26, 2022.

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Cost of revenue:
Product	$	656,904	$	616,585	$	40,319	6.5	%
Service and other	9,579		8,663		916		10.6	%
Rental	2,626		2,861		(235)		(8.2)	%
Total cost of revenue	669,109		628,109		41,000		6.5	%
Selling, general, and administrative expenses	387,241		376,995		10,246		2.7	%
Goodwill impairment expense	75,000		—		75,000		100.0	%
Total operating expenses	$	1,131,350	$	1,005,104	$	126,246	12.6	%

For the three months ended April 1, 2023, total operating expenses were $1,131.4 million compared to $1,005.1 million in the same period last year, representing an increase of $126.2 million, or 12.6%. This increase was primarily due to a $75.0 million non-cash goodwill impairment charge related to our American Freight segment, as further discussed in “Note 5 - Goodwill and Intangible Assets” in the Notes to the Consolidated Financial Statements in this Quarterly Report, a $30.5 million increase in operating expenses at our Pet Supplies Plus segment, an $18.9 million increase in operating expenses at our Vitamin Shoppe segment, and an $18.0 million increase in operating expenses at our American Freight segment. These increases were partially offset by a $13.5 million decrease in operating expenses at our Badcock segment.

Non-operating income (expense) increased $25.3 million for the three months ended April 1, 2023 due to the following:

Other. Other expense decreased $20.1 million for the three months ended April 1, 2023 compared to the same period last year primarily due to a $21.9 million decrease in the loss related to our investment in NextPoint Acquisition Corp. compared to the prior period.

Interest expense, net. Interest expense, net decreased $5.2 million for the three months ended April 1, 2023 due to a decrease of $17.2 million of interest expense related to the Badcock securitized receivables portfolio, partially offset by $11.1 million in additional interest expense related to the First and Second Lien Term Loans and revolving credit facility (the “ABL Revolver”).

Income tax benefit. Our effective tax rate, including discrete income tax items, was 6.2% and 23.0% for the three months ended April 1, 2023 and March 26, 2022, respectively. The changes in the effective tax rate for the three months ended April 1,

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2023 compared to the same period in the prior year are due to a current year projected pre-tax loss compared to prior year pre-tax income and a current year non-cash goodwill impairment charge that is nondeductible for tax purposes.

Segment Information

We, through our franchisees and Company-owned stores, operate a system of point of sale retail and rent-to-own locations. Our operations are conducted in six reporting business segments: Vitamin Shoppe, Badcock, Pet Supplies Plus, American Freight, Buddy’s, and Sylvan. Refer to “Note 13 – Segments” in this Quarterly Report for additional information.

Vitamin Shoppe

The following table summarizes the operating results of our Vitamin Shoppe segment:

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	321,702	$	310,953	$	10,749	3.5	%
Operating expenses	294,508		275,599		18,909		6.9	%
Segment income	$	27,194	$	35,354	$	(8,160)	(23.1)	%

Total revenue for the three months ended April 1, 2023 for our Vitamin Shoppe segment increased $10.7 million, or 3.5%, primarily attributable to higher average transaction values and increased store traffic compared to the prior year period.

Operating expenses for our Vitamin Shoppe segment increased $18.9 million, or 6.9%, for the three months ended April 1, 2023 as compared to the same period in the prior year. Cost of goods sold increased $13.8 million, primarily due to increased sales and higher merchandise costs associated with a shift in merchandise mix.

Pet Supplies Plus

The following table summarizes the operating results of our Pet Supplies Plus segment:

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	334,071	$	301,214	$	32,857	10.9	%
Operating expenses	314,704		284,193		30,511		10.7	%
Segment income	$	19,367	$	17,021	$	2,346	13.8	%

Total revenue for our Pet Supplies Plus segment increased $32.9 million, or 10.9%, for the three months ended April 1, 2023 as compared to the same period last year. Our Pet Supplies Plus segment opened 75 new stores since the prior year period, resulting in a $28.7 million increase in wholesale revenue.

Operating expenses for our Pet Supplies Plus segment increased $30.5 million, or 10.7%, for the three months ended April 1, 2023 as compared to the same period last year as cost of revenue increased at a rate comparable to revenue and higher merchandise costs.

Badcock

The following table summarizes the operating results of our Badcock segment:

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	187,287	$	256,259	$	(68,972)	(26.9)	%
Operating expenses	172,545		186,029		(13,484)		(7.2)	%
Segment income	$	14,742	$	70,230	$	(55,488)	(79.0)	%

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Total revenue for our Badcock segment decreased $69.0 million, or (26.9)%, for the three months ended April 1, 2023 as compared to the same period last year. The decrease was attributable to:

•A $34.4 million decrease in product revenue due to a weaker tax refund season than the prior year period, which resulted in decreased customer traffic.

•A $34.6 million decrease in service revenue, as the amortization of the accounts receivable discount included in service revenue was less than the prior year period ($8.2 million in the three months ended April 1, 2023 compared to $37.6 million in the three months ended March 26, 2022). The remaining decrease is due to the declining securitized accounts receivable balance.

Operating expenses for our Badcock segment decreased $13.5 million, or (7.2)%, for the three months ended April 1, 2023 as compared to the same period last year primarily due to the decrease in revenue partially offset by higher merchandise costs.

American Freight

The following table summarizes the operating results of our American Freight segment:

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	236,561	$	241,416	$	(4,855)	(2.0)	%
Operating expenses	323,191		230,203		92,988		40.4	%
Segment income	$	(86,630)	$	11,213	$	(97,843)	(872.6)	%

Total revenue for our American Freight segment decreased $4.9 million, or 2.0%, for the three months ended April 1, 2023 as compared to the same period last year. The decrease was attributable to lower demand for furniture, mattresses, and appliances driven by a weaker tax refund season than the prior year period, in addition to the inflationary environment which resulted in reduced customer traffic.

Operating expenses for our American Freight segment increased $93.0 million, or 40.4%, for the three months ended April 1, 2023 as compared to the same period in the prior year. The increase in operating expense was primarily due to a $75.0 million non-cash goodwill impairment charge, as further discussed in “Note 5 - Goodwill and Intangible Assets” in the Notes to the Consolidated Financial Statements in this Quarterly Report. The increase was also due to higher merchandise costs from orders placed in the prior year, which includes higher inbound freight costs.

Buddy’s

The following table summarizes the operating results of our Buddy’s segment:

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	14,968	$	15,585	$	(617)	(4.0)	%
Operating expenses	11,228		11,520		(292)		(2.5)	%
Segment income	$	3,740	$	4,065	$	(325)	(8.0)	%

Total revenue for our Buddy’s segment decreased $0.6 million, or (4.0)%, for the three months ended April 1, 2023 as compared to the same period last year. The decrease in revenue was primarily attributable to a weaker tax refund season than the prior year.

Operating expenses for our Buddy’s segment decreased $0.3 million, or (2.5)% for the three months ended April 1, 2023, as compared to the same period last year as cost of revenue decreased at a rate comparable to revenue.

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Sylvan

The following table summarizes the operating results of our Sylvan segment:

	Three Months Ended
					Change
(In thousands)	April 1, 2023		March 26, 2022		$		%
Total revenues	$	10,232	$	10,043	$	189	1.9	%
Operating expenses	9,081		9,095		(14)		(0.2)	%
Segment income	$	1,151	$	948	$	203	21.4	%

Total revenue for our Sylvan segment increased $0.2 million, or 1.9%, for the three months ended April 1, 2023 as compared to the same period last year. The increase was attributable to an increase in franchise revenue.

Adjusted EBITDA

To provide additional information regarding our financial results, we have disclosed Adjusted EBITDA in the table below and within this Quarterly Report. Adjusted EBITDA represents net income (loss), before income taxes, interest expense, depreciation and amortization, and certain other items specified below. Additionally, acquisition costs include adjusting for costs of potential acquisitions and final costs of completed acquisitions. We have provided a reconciliation below of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.

We have included Adjusted EBITDA in this Quarterly Report because we believe the presentation of this measure is useful to investors as a supplemental measure in evaluating the aggregate performance of our operating businesses and in comparing our results from period to period because it excludes items that we do not believe are reflective of our core or ongoing operating results. In the Adjusted EBITDA table below, we have removed all revenues and expenses related to our Badcock segment’s in-house financing operations. This includes all amounts related to accounts receivables and securitized receivables. We believe this provides investors a more accurate representation of ongoing operations as we intend to cease in-house financing operations within a year. This measure is used by our management to evaluate performance and make resource allocation decisions each period. Adjusted EBITDA is also the primary operating metric used in the determination of executive management’s compensation. In addition, a measure similar to Adjusted EBITDA is used in our credit facilities. Adjusted EBITDA is not a recognized financial measure under GAAP and may not be comparable to similarly-titled measures used by other companies in our industry. Adjusted EBITDA should not be considered in isolation from or as an alternative to net income (loss), operating income (loss), or any other performance measures derived in accordance with GAAP.

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The following table presents a reconciliation of Adjusted EBITDA for each of the periods indicated.

	Reconciliation of Net Income to Adjusted EBITDA
	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Net income (loss)	$	(108,317)	$	12,317
Add back:
Interest expense	87,129		92,327
Income tax expense (benefit)	(7,175)		3,678
Depreciation and amortization charges	21,624		22,033
Total Adjustments	101,578		118,038
EBITDA	(6,739)		130,355
Adjustments to EBITDA
Executive severance and related costs	1,569		96
Stock-based and long term executive compensation	4,450		6,626
Litigation costs and settlements	94		230
Corporate compliance costs	(4)		51
Store closures	18		933
Securitized accounts receivable interest income	(30,584)		(65,026)
Securitized accounts receivable allowance for credit losses	21,995		16,413
W.S. Badcock financing operations	(3,121)		(2,258)
Right-of-use and long-term asset impairment	544		375
Goodwill impairment	75,000		—
Integration costs	649		464
Divestiture costs	198		(337)
Acquisition costs	101		626
Loss on investment in equity securities	1,830		23,723
Acquisition bargain purchase gain	—		67
Total Adjustments to EBITDA	72,739		(18,017)
Adjusted EBITDA	$	66,000	$	112,338

Liquidity and Capital Resources

We believe that we have sufficient liquidity to support our ongoing operations and maintain a sufficient liquidity position to meet our obligations and commitments for the next twelve months. Our liquidity plans are established as part of our financial and strategic planning processes and consider the liquidity necessary to fund our operating, capital expenditure and debt service needs.

We primarily fund our operations through operating cash flows and, as needed, a combination of borrowings under various credit agreements, availability under our revolving credit facilities and the issuance of equity securities. Cash generation can be subject to variability based on many factors, including seasonality and the effects of changes in end markets.

As of April 1, 2023, we have current installments of long-term obligations of $11.8 million, of which $5.1 million is finance leases and $6.7 million is the current portion of our senior secured revolving loan facility We expect these obligations can be serviced from our cash and cash equivalents, which were $98.3 million as of April 1, 2023.

During the three months ended April 1, 2023, we executed the following substantial transaction that will affect our liquidity and capital resources in future periods:

•On February 2, 2023, we entered into the Third Amendment to the First Lien Credit Agreement to provide for an incremental term loan facility in the principal amount of $300.0 million. The net proceeds of $281.5 million were used to make repayments on our senior secured revolving loan facility.

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Sources and uses of cash

Operating activities. In the three months ended April 1, 2023, net cash provided by operating activities increased $10.5 million compared to the same period in the prior year primarily due to an $83.2 million decrease in cash used for inventory compared to the prior year period and a $16.1 million decrease in receivables. These increases were partially offset by $21.9 decrease in accounts payable and a $67.2 million decrease in cash income from operations. Cash net income represents net income adjusted for non-cash or non-operating activities such as goodwill impairment, gains on the sale of Company assets, depreciation and amortization, deferred financing cost amortization and the change in fair value of investment.

Investing activities. In the three months ended April 1, 2023, cash used in investing activities increased $5.6 million compared to the same period in the prior year. This increase was primarily due to an increase of $4.5 million in cash used for the purchase of property, plant, and equipment and a $1.4 million decrease in cash proceeds from the sale of property, plant and equipment.

Financing activities. In the three months ended April 1, 2023, cash provided by financing activities was $14.4 million, compared to cash used by financing activities of $141.1 million in the three months ended March 26, 2022. The increase in cash provided by financing activities was primarily due to proceeds received from the issuance of long-term debt, which increased $348.0 million in the current year period. Net cash inflows from secured debt obligations also increased $32.7 million. These inflows of cash were offset by a $205.5 million increase in repayments of long-term obligations and a $17.4 million increase in payments for debt issuance costs.

Long-term debt borrowings

For a description of our long-term debt borrowing refer to “Note 7 – Long-Term Obligations” in this Quarterly Report.

Other factors affecting our liquidity

Tax Receivable Agreement. We may be required to make payments under the Tax Receivable Agreement (“TRA Payments”) to the former equity holders of Buddy’s (the “Buddy’s Members”). Under the terms of the Tax Receivable Agreement, we agreed to pay the Buddy’s Members 40% of the cash savings, if any, in federal, state and local taxes that we realize or are deemed to realize as a result of any increases in tax basis of the assets of New Holdco resulting from future redemptions or exchanges of New Holdco units held by the Buddy’s Members. Any future obligations and the timing of such payments under the Tax Receivable Agreement, however, are subject to several factors, including (i) the timing of subsequent exchanges of New Holdco units by the Buddy’s Members, (ii) the price of our common stock at the time of exchange, (iii) the extent to which such exchanges are taxable, (iv) the ability to generate sufficient future taxable income over the term of the Tax Receivable Agreement to realize the tax benefits and (v) any future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then we would not be required to make the related TRA Payments. Although the amount of the TRA Payments would reduce the total cash flow to us and New Holdco, we expect the cash tax savings we will realize from the utilization of the related tax benefits would be sufficient to fund the required payments. As of April 1, 2023, we have TRA Payments due to the Buddy's Members of $15.4 million.

Dividends. On May 9, 2023, the Board declared quarterly dividends of $0.46875 per share of Series A Preferred Stock. The dividends will be paid in cash on or about July 17, 2023 to holders of record of the Company's Series A Preferred Stock on the close of business on July 3, 2023. The payment of dividends is at the discretion of our Board of Directors and depends, among other things, on our earnings, capital requirements, and financial condition. Our ability to pay dividends is also subject to compliance with financial covenants that are contained in our credit facility and may be restricted by any future indebtedness that we incur or issuances of our preferred stock. In addition, applicable law requires our Board of Directors to determine that we have adequate surplus prior to the declaration of dividends. We cannot provide an assurance that we will pay dividends at any specific level or at all.

Future cash needs and capital requirements

Operating and financing cash flow needs. Our primary cash needs are expected to include the payment of scheduled debt and interest payments, capital expenditures and normal operating activities. We believe that the revolving credit facilities along with cash from operating activities, will be sufficient to support our cash flow needs for at least the next twelve months.

Several factors could affect our cash flow in future periods, including the following:

26

•The extent to which we extend additional operating financing to our franchisees beyond the levels of prior periods;

•The extent and timing of capital expenditures;

•The extent and timing of future acquisitions;

•Our ability to integrate our acquisitions and implement business and cost savings initiatives to improve profitability; and

•The extent, if any, to which our Board of Directors elects to continue to declare dividends on our common stock.

Compliance with debt covenants. Our revolving credit and long-term debt agreements impose restrictive covenants on us, including requirements to meet certain ratios. As of April 1, 2023, we were in compliance with all covenants under these agreements and, based on a continuation of current operating results, we expect to be in compliance for the remainder of fiscal 2023.

Off Balance Sheet Arrangements

For off balance sheet arrangements and guarantees to which the Company remains secondarily liable, refer to “Note 12 – Commitments and Contingencies” in this Quarterly Report.

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ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes. We may enter into interest rate swaps to manage exposure to interest rate changes. We do not enter into derivative instruments for any purpose other than cash flow hedging and we do not hold derivative instruments for trading purposes.

Our exposure to interest rate risk relates to our long-term debt obligations, as they bear interest at LIBOR and SOFR, reset periodically and have an interest rate margin. Assuming our revolving credit facility was fully drawn, a ten basis point change in the interest rates would change our annual interest expense by $1.9 million.

ITEM 4

CONTROLS AND PROCEDURES

The Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of April 1, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of April 1, 2023 because of the material weakness in our internal control over financial reporting described below.

During the fiscal quarter ended September 24, 2022, the Company identified a material weakness in its controls over financial reporting involving the preparation of its Statement of Cash Flows. As a result of this deficiency, there was a misclassification of cash flows associated with interest payments on the Company’s secured borrowing resulting in an overstatement of cash flows provided by operating activities of $100.9 million and an overstatement of cash flows used in financing activities of $100.9 million in the Company’s 10-Q for the period ended June 25, 2022 and an overstatement of cash flows provided by operating activities of $53.0 million and an overstatement of cash used in financing activities of $53.0 million for the period ended March 26, 2022.

Management, with oversight from the Audit Committee, initiated several steps to design and implement new controls to remediate this material weakness. These steps included (i) implementing changes to the cash flow statement to segregate material non-recurring transactions, such as securitizations, to allow for better visibility of the presentation of the transactions, and (ii) enhancements to processes to identify any new non-recurring transactions that occurred during the period. While management has designed and implemented new controls to remediate this material weakness, the controls have not been in operation for a sufficient period of time to demonstrate that the material weakness has been remediated. These actions and planned actions are subject to ongoing evaluation by management and will require testing and validation of design and operating effectiveness of internal controls over financial reporting over future periods. Management is committed to the continuous improvement of internal control over financial reporting.

Notwithstanding the identified material weakness, management believes that the Condensed Consolidated Financial Statements and related financial information included in this 10-Q fairly present, in all material respects, our balance sheets, statements of operations, comprehensive income and cash flows as of and for the periods presented.

Changes in Internal Control over Financial Reporting

Other than the ongoing remediation efforts of the material weakness disclosed above, there were no changes in our internal control over financial reporting during the three months ended April 1, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1

LEGAL PROCEEDINGS

For information regarding legal proceedings, refer to “Note 12 – Commitments and Contingencies” in the Notes to the Consolidated Financial Statements in this Quarterly Report, which information is incorporated herein by reference.

ITEM 1A

RISK FACTORS

There are no additional risk factors that should be considered in addition to the risk factors described in Part I, Item 1A, in the Form 10-K.

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no sales of our equity securities for the period covered by this Quarterly Report.

SHARE REPURCHASES

On May 18, 2022, our Board of Directors approved a stock repurchase program under which we may repurchase up to $500.0 million of our outstanding shares of common stock over the next three years. The repurchase program authorizes shares to be repurchased from time to time in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The actual timing, number and value of shares, if any, repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including, among others, the availability of stock, general market and business conditions, the trading price of our common stock and applicable legal requirements. This plan supersedes our previous stock repurchase programs. There was no share repurchase activity during the three months ended April 1, 2023.

As of April 1, 2023, we had approximately $327.5 million remaining under the stock repurchase program approved by our Board of Directors.

ITEM 3

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4

MINE SAFETY DISCLOSURES

None.

ITEM 5

OTHER INFORMATION

None.

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ITEM 6

EXHIBITS

We have filed the following exhibits as part of this Quarterly Report:

Exhibit Number	Exhibit Description	Filed  Herewith	Incorporated by  Reference
3.1	Second Amended and Restated Certificate of Incorporation of Liberty Tax, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K, File No. 001-35588 filed on December 19, 2018).		X
3.1.1	Certificate of Designation of the Voting Non-Economic Preferred Stock of Liberty Tax, Inc. filed with the Secretary of State of the State of Delaware July 10, 2019 (incorporated by reference to Exhibit 3.1, File No. 001-35588 filed on July 11, 2019).		X
3.1.2	Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Liberty Tax, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K, File No. 001-35588 filed September 19, 2019).		X
3.1.3	Certificate of Increase of the Number of Shares of Voting Non-Economic Preferred Stock of Franchise Group, Inc., filed with the Secretary of State of the State of Delaware on September 30, 2019 (incorporated by reference to Exhibit 3.1 to Form 8-K, File No. 001-35588 filed October 1, 2019).		X
3.1.4	Certificate of Designation designating the 7.50% Series A Cumulative Perpetual Preferred Stock of Franchise Group, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K, File No. 001-35588 filed September 18, 2020).		X
3.1.5	Certificate of Increase of the Number of Shares of 7.50% Series A Cumulative Perpetual Preferred Stock of Franchise Group, Inc., filed with the Secretary of State of the State of Delaware on January 15, 2021 (incorporated by reference to Exhibit 3.1 to Form 8-K, File No. 001-35588 filed January 15, 2021).		X
3.2	Third Amended and Restated Bylaws of Franchise Group, Inc. (incorporated by reference to Exhibit 3.2 to Form 10-K, File No. 001-35588 filed on February 28, 2023).		X
10.1	Third Amendment to First Lien Credit Agreement dated as of February 2, 2023, by and among Franchise Group, Inc., Franchise Group Newco PSP, LLC, Valor Acquisition LLC, Franchise Group Newco Intermediate AF, LLC, certain other subsidiaries of Franchise Group, Inc. party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to Form 8-K, File No. 001-35588 filed on February 3, 2023).		X
31.1	Certification of Chief Executive Officer	X
31.2	Certification of Chief Financial Officer	X

30

32.1	Section 1350 Certification (Chief Executive Officer)	X
32.2	Section 1350 Certification (Chief Financial Officer)	X
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2023, formatted in Inline XBRL, filed herewith: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations (unaudited), (iii) the Condensed Consolidated Statements of Stockholders’ Equity (unaudited), (iv) the Condensed Consolidated Statements of Cash Flows (unaudited) and (v) the Notes to Unaudited Condensed Consolidated Financial Statements	X
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2023, formatted in Inline XBRL (included with Exhibit 101)	X
*All schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted disclosure schedules to the SEC upon request by the SEC; provided, however, that the Company reserves the right to request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

31

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		FRANCHISE GROUP, INC. (Registrant)
May 10, 2023	By:		/s/ Brian R. Kahn
			Brian R. Kahn Chief Executive Officer and Director (Principal Executive Officer)
May 10, 2023	By:		/s/ Eric F. Seeton
			Eric F. Seeton Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

I, Brian R. Kahn, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FRANCHISE GROUP, INC.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 10, 2023	By:	/s/ Brian R. Kahn
		Brian R. Kahn
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Eric F. Seeton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FRANCHISE GROUP, INC.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 10, 2023	By:	/s/ Eric F. Seeton
		Eric F. Seeton
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Franchise Group, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended April 1, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian R. Kahn, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 10, 2023	By:	/s/ Brian R. Kahn
		Brian R. Kahn
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Franchise Group, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 24, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric F. Seeton, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 10, 2023	By:	/s/ Eric F. Seeton
		Eric F. Seeton
		Chief Financial Officer
		(Principal Financial Officer)

XML

Cover - shares	3 Months Ended
	Apr. 01, 2023	May 05, 2023
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 01, 2023
Document Transition Report	false
Entity File Number	001-35588
Entity Registrant Name	Franchise Group, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-3561876
Entity Address, Address Line One	109 Innovation Court, Suite J
Entity Address, City or Town	Delaware,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43015
City Area Code	740)
Local Phone Number	-2222
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		35,172,623
Entity Central Index Key	0001528930
Amendment Flag	false
Current Fiscal Year End Date	--12-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Common Stock [Member]
Entity Information [Line Items]
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	FRG
Security Exchange Name	NASDAQ
Series A Preferred Stock
Entity Information [Line Items]
Title of 12(b) Security	7.50% Series A Cumulative Preferred Stock, par value $0.01 per share and liquidation preference of $25.00 per share
Trading Symbol	FRGAP
Security Exchange Name	NASDAQ

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022
Revenues:
Revenue from Contract with Customer, Excluding Assessed Tax	$ 1,104,821	$ 1,135,470
Operating expenses:
Direct Costs of Leased and Rented Property or Equipment	2,626	2,861
Cost of Revenue	669,109	628,109
Selling, general, and administrative expenses	387,241	376,995
Goodwill, Impairment Loss	75,000	0
Total operating expenses	1,131,350	1,005,104
Loss from operations	(26,529)	130,366
Other income (expense):
Bargain purchase gain	0	(67)
Foreign currency transaction gain	(1,834)	(21,977)
Interest expense	(87,129)	(92,327)
Income tax benefit	(7,175)	3,678
Comprehensive income (loss)	(108,317)	12,317
Other comprehensive income (loss)	0	0
Loss before income taxes	$ (115,492)	$ 15,995
Net income (loss) per share:
Weighted Average Number of Shares Outstanding, Basic	35,002,174	40,307,412
Weighted Average Number of Shares Outstanding, Diluted	35,002,174	41,107,793
Product [Member]
Revenues:
Revenue from Contract with Customer, Excluding Assessed Tax	$ 976,808	$ 979,164
Operating expenses:
Cost of Goods and Services Sold	656,904	616,585
Service [Member]
Revenues:
Revenue from Contract with Customer, Excluding Assessed Tax	120,567	148,282
Operating expenses:
Cost of Goods and Services Sold	9,579	8,663
Rental
Revenues:
Revenue from Contract with Customer, Excluding Assessed Tax	$ 7,446	$ 8,024

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 01, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 98,266	$ 80,783
Receivables:
Total Receivables, Current, Net	151,723	170,162
Inventory, Net	759,891	736,841
Assets Held-for-sale, Not Part of Disposal Group, Current	7,633	8,528
Other current assets	29,610	27,272
Total current assets	1,337,490	1,316,499
Property, equipment, and software, net	234,705	223,718
Equity Securities, FV-NI, Noncurrent	9,758	11,587
Accounts and Financing Receivable, after Allowance for Credit Loss, Noncurrent	11,202	11,735
Goodwill	663,466	737,402
Operating Lease, Right-of-Use Asset	910,269	890,949
Indefinite-Lived Trade Names	222,703	222,703
Other intangible assets, net	114,000	116,799
Other assets	65,232	59,493
Total assets	3,607,262	3,630,412
Current liabilities:
Current installments of long-term obligations	11,771	6,935
Secured Debt, Current	412,862	340,021
Operating Lease, Liability, Current	179,246	179,519
Accounts payable and accrued expenses	415,665	376,895
Deferred revenue - current	40,983	40,541
Total current liabilities	1,060,527	943,911
Long-term Debt and Lease Obligation	741,174	720,474
Long-term Debt, Excluding Current Maturities	1,394,320	1,374,479
Secured Long-term Debt, Noncurrent	68,163	107,448
Other Liabilities, Noncurrent	65,431	62,720
Total liabilities	3,329,615	3,209,032
Equity:
Additional paid-in capital	310,160	311,069
Retained earnings	(32,909)	109,917
Total equity	277,647	421,380
Total liabilities and equity	3,607,262	3,630,412
Accounts Receivable from Securitization	290,367	292,913
Asset-backed Securities, Securitized Loans and Receivables
Receivables:
Total Receivables, Current, Net		292,913
Accounts Receivable, after Allowance for Credit Loss, Noncurrent	38,437	39,527
Current receivables, net
Receivables:
Total Receivables, Current, Net	151,723	170,162
Special voting preferred stock
Equity:
Preferred stock	45	45
Class A common stock
Equity:
Common stock	$ 351	$ 349

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Apr. 01, 2023	Dec. 31, 2022
Accounts Receivable, Allowance for Credit Loss	$ (3,038,000)	$ (4,106,000)
allowance for credit losses	(71,148,000)	(57,095,000)
Allowance for Credit Losses, Securitized Receivables, Noncurrent	(9,418,000)	(7,705,000)
Accounts Receivable, Allowance for Credit Loss, Noncurrent	(1,064,000)	(892,000)
Finite-Lived Intangible Assets, Accumulated Amortization	$ 26,907,000	$ 24,003,000
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Issued	4,541,125	4,541,125
Class A common stock
Common Stock, Value, Issued	$ 351,000	$ 349,000
Common Stock [Member]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued	35,148,564
Common Stock, Shares, Outstanding	35,148,564

XML

Condensed Consolidated Statement of Stockholders Equity Statement shares in Thousands, $ in Thousands	USD ($)	USS ($)	Common Stock [Member] USD ($) shares	Preferred Stock [Member] USD ($) shares	Parent [Member] USD ($)	Parent [Member] Cumulative Effect, Period of Adoption, Adjustment USD ($)	Additional Paid-in Capital [Member] USD ($)	Additional Paid-in Capital [Member] USS ($)	Retained Earnings [Member] USD ($)	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment USD ($)
Shares, Outstanding, Beginning Balance at Dec. 25, 2021 | shares			40,297	4,541
Equity, Attributable to Parent, Beginning Balance at Dec. 25, 2021			$ 403,000	$ 45,000	$ 762,831,000		$ 475,396,000		$ 286,987,000
Net Income (Loss) Attributable to Parent					12,317,000				12,317,000
Stock Issued During Period, Value, Stock Options Exercised					180,000		180,000
Stock Issued During Period, Shares, Acquisitions | shares			41
Adjustment to APIC, Share-based Compensation, Requisite Service Period Recognition					5,029,000		5,028,000
Dividends	$ (26,567,000)								(26,567,000)
Dividends, Preferred Stock, Cash					(2,128,000)				(2,128,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | shares			15
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture			$ 1,000
Stock Issued During Period, Value, New Issues		$ 24						$ 24
Stock Issued During Period, Shares, New Issues | shares			1
Equity, Attributable to Parent, Ending Balance at Mar. 26, 2022			$ 404,000	$ 45,000	751,686,000		480,628,000		270,609,000
Shares, Outstanding, Ending Balance at Mar. 26, 2022 | shares			40,354	4,541
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 | shares			34,926	4,541
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2022	421,380,000		$ 349,000	$ 45,000	421,380,000	$ (9,978,000)	311,069,000		109,917,000	$ (9,978,000)
Net Income (Loss) Attributable to Parent					(108,317,000)				(108,317,000)
Stock Issued During Period, Value, Stock Options Exercised					131,000		130,000
Stock Issued During Period, Shares, Acquisitions | shares			208
Adjustment to APIC, Share-based Compensation, Requisite Service Period Recognition					(1,038,000)		(1,039,000)
Dividends	(22,403,000)								(22,403,000)
Dividends, Preferred Stock, Cash					(2,128,000)				(2,128,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | shares			15
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture			$ 1,000
Equity, Attributable to Parent, Ending Balance at Apr. 01, 2023	$ 277,647,000		$ 351,000	$ 45,000	$ 277,647,000		$ 310,160,000		$ (32,909,000)
Shares, Outstanding, Ending Balance at Apr. 01, 2023 | shares			35,149	4,541

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		12 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022	Dec. 25, 2021
Operating Activities
Net loss	$ (108,317,000)	$ 12,317,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses for accounts receivable	20,327,000	15,103,000
Goodwill, Impairment Loss	75,000,000	0	$ 0
Other Depreciation and Amortization	21,851,000	22,033,000
Amortization of Debt Issuance Costs	2,830,000	6,379,000
Amortization of Debt Discount (Premium)	27,000,000	29,801,000
Stock-based compensation expense	2,719,000	5,447,000
Change in fair value of investment	1,830,000	23,723,000
Gain (Loss) on Sale of Intangible and Other Assets	0	(2,206,000)
Gain (Loss) on Disposition of Other Assets	(42,000)	(2,227,000)
Changes in other assets and liabilities	(23,511,000)	(101,227,000)
Net Cash Provided by (Used in) Operating Activities, Continuing Operations	19,687,000	9,143,000
Investing Activities
Assets Acquired from Franchisees and Area Developers	(14,219,000)	(9,752,000)
Proceeds from Sale of Intangible Assets	1,166,000	2,554,000
Payments to Acquire Businesses, Net of Cash Acquired	(3,682,000)	(3,930,000)
Net cash (used in) investing activities	(16,735,000)	(11,128,000)
Financing Activities
Dividends paid	(25,698,000)	(27,315,000)
Proceeds from Long-term Lines of Credit	415,000,000	67,000,000
Repayments of Other Long-term Debt	(387,585,000)	(182,096,000)
Finance Lease, Principal Payments	(1,207,000)	(768,000)
Proceeds from Issuance of Secured Debt	132,151,000	57,358,000
Repayments of Secured Debt	(97,210,000)	(55,096,000)
Payment for debt issue costs	(17,393,000)	0
Payment, Tax Withholding, Share-based Payment Arrangement	(3,626,000)	(215,000)
Net cash provided by (used in) financing activities	14,432,000	(141,132,000)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	17,384,000	(143,117,000)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	98,634,000	149,597,000	81,250,000	$ 292,714,000
Cash and Cash Equivalents, at Carrying Value, Ending Balance	98,266,000	149,597,000	$ 80,783,000
Supplemental disclosures of cash flow information:
Cash paid for interest, net of capitalized interest of $4 and $3, respectively	1,562,000	274,000
Cash paid for taxes, net of refunds	30,847,000	21,424,000
Cash Paid for Interest on Secured Debt	23,757,000	16,830,000
Payments to Acquire Software	2,229,000	3,177,000
Capital Expenditures Incurred but Not yet Paid	12,741,000	0
Restricted Cash, Noncurrent	368,000	0
Restricted Cash and Cash Equivalents	$ 98,634,000	$ 149,597,000

XML

Organization and Significant Accounting Policies

3 Months Ended

Apr. 01, 2023

Accounting Policies [Abstract]

Organization and Significant Accounting Policies

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 31, 2022 that was filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (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 31, 2022 balance sheet information was derived from the audited financial statements as of that date.

Reclassifications

Certain prior year amounts within the footnotes have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which changes how companies 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.

Effective January 1, 2023, the Company adopted ASU 2016-13 and applied a cumulative-effect adjustment to retained earnings. The Company has reviewed its entire portfolio of assets recognized on the balance sheet as of December 31, 2022 and identified customer receivables and securitized receivables as the materially impacted assets within the scope of ASC 326. Upon adoption of ASC 326 the Company recorded a net decrease to retained earnings of $10.0 million as of January 1, 2023. Prior period amounts were not adjusted and will continue to be reported under the previous accounting standards.

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as a result of the adoption of ASC 326 were as follows:

	Impact of Adoption of ASC 326
(In thousands)	Balance at December 31, 2022		Adjustments due to ASC 326		Balance at January 1, 2023
Assets
Current receivables, net	$	170,162	$	(654)	$	169,508
Current securitized receivables, net	292,913		(11,619)		281,294
Non-current securitized receivables, net	39,527		(1,568)		37,959
Deferred income taxes	38,528		3,863		42,391
Stockholders’ Equity
Retained earnings	$	109,917	$	(9,978)	$	99,939

XML

Acquisitions

3 Months Ended

Apr. 01, 2023

Business Combinations [Abstract]

Acquisitions

(2) Acquisitions

The Company continually looks to diversify and grow its portfolio of brands through acquisitions. On February 28, 2023, the Company’s Pet Supplies Plus segment acquired 20 stores through bankruptcy proceedings of a third party for approximately $3.7 million. The components of the preliminary purchase price allocation are not presented herein due to the immateriality of the transaction to the Company overall. The Company’s Pet Supplies Plus segment subsequently franchised 12 of the 20 acquired stores.

XML

Notes and Accounts Receivable

3 Months Ended

Apr. 01, 2023

Receivables [Abstract]

Accounts and Notes Receivable

Accounts and Notes Receivable

Current and non-current receivables as of April 1, 2023 and December 31, 2022 are presented in the Condensed Consolidated Balance Sheets as follows:

(In thousands)	April 1, 2023		December 31, 2022
Trade accounts receivable	$	30,916	$	40,165
Customer accounts receivable	26,266		56,639
Franchisee accounts receivable	58,795		46,778
Notes receivable	2,211		2,361
Income tax receivable	36,573		28,325
Allowance for credit losses	(3,038)		(4,106)
Current receivables, net	151,723		170,162
Notes receivable, non-current	12,266		12,627
Allowance for credit losses, non-current	(1,064)		(892)
Non-current receivables, net	11,202		11,735
Total receivables	$	162,925	$	181,897

Allowance for Credit Losses

The adequacy of the allowance for credit losses is assessed on a quarterly basis and adjusted as deemed necessary. Receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for credit losses. Expected credit losses for trade and franchisee accounts receivable are immaterial. Notes receivable are due from the Company’s franchisees and are collateralized by the underlying franchise. The debtors’ ability to repay the notes is dependent upon both the performance of the franchisee’s industry as a whole and the individual franchise areas.

Activity in the allowance for credit losses for trade, customer, and franchisee accounts receivable and notes receivable for the three months ended April 1, 2023 and March 26, 2022 were as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Balance at beginning of period	$	4,998	$	6,192
Cumulative effect of adopted accounting standards	654		—
Provision for credit loss expense (benefit)	(1,541)		(669)
Write-offs, net of recoveries	(9)		—
Balance at end of period	$	4,102	$	5,523

Past due amounts are primarily attributable to trade and franchisee accounts receivable that have been generated over the past year and are past due by 1-30 days. The delinquency distribution of accounts and notes receivable past due at April 1, 2023 were as follows:

	April 1, 2023
(In thousands)	Past due		Current		Total receivables
Accounts receivable	$	8,311	$	107,666	$	115,977
Notes receivable	—		14,417		14,417
Total accounts and notes receivable	$	8,311	$	122,083	$	130,394

Securitized Accounts Receivable

In order to monetize its customer credit receivables portfolio, the Company's Badcock Home Furniture & more (“Badcock”) segment sells beneficial interests in customer revolving lines of credit pursuant to securitization transactions. The Company securitized an additional $133.4 million of its customer credit receivables portfolio during the three months ended April 1, 2023. For additional details regarding these securitizations, refer to “Note 5 – Securitized Accounts Receivable” in the Form 10-K.

When securitized receivables are delinquent for approximately one year, the estimated uncollectible amount from the customer is written off and the corresponding securitized accounts receivable is reduced. Financial instruments that could potentially subject the Company to concentrations of credit risk consist of accounts receivable with its customers. The Company manages such risk by managing the customer accounts receivable portfolio using delinquency as a key credit quality indicator. Management believes the allowance is adequate to cover the Company’s credit loss exposure. Due to their non-recourse nature, the Company will record a gain on extinguishment for any debt secured by uncollectible accounts receivable in the future when the debt meets the extinguishment requirements in accordance with ASC 470, “Debt”.

Activity in the allowance for credit losses on securitized accounts for the three months ended April 1, 2023 and March 26, 2022 was as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Balance at beginning of period	$	64,800	$	—
Cumulative effect of adopted accounting standards	13,187		—
Provision for credit loss expense	21,995		15,792
Write-offs, net of recoveries	(19,416)		(12,126)
Balance at end of period	$	80,566	$	3,666

Current amounts include receivables for customers who have made a payment in the past 30 days. Any customers who have not made a required payment within the last 30 days are considered past due. The following table presents the delinquency distribution of the carrying value of customer accounts receivable by year of origination as of April 1, 2023:

Delinquency Bucket	2023		2022		2021		Prior		Total
(in thousands)
Current	$	76,678	$	167,866	$	22,218	$	5,649	$	272,411
1-30	12,103		32,889		6,926		1,987		53,904
31-60	1,310		7,976		2,533		1,008		12,827
61-90	—		5,781		1,931		735		8,448
91+	—		41,224		28,222		11,532		80,977
Total	$	90,091	$	255,735	$	61,830	$	20,910	$	428,567

Servicing revenue, interest income and interest expense generated from securitized receivables for the three months ended April 1, 2023 and March 26, 2022 were as follows:

(In thousands)	April 1, 2023		March 26, 2022
Securitization servicing revenue	$	3,245	$	2,652
Interest income from securitization1	30,475		65,269
Interest expense, debt secured by accounts receivable	(48,125)		(65,299)

1 Includes interest income from Badcock customer receivables (refer to “Note 3 – Accounts and Notes Receivable”) and securitized receivables.

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Goodwill and Intangible Assets

3 Months Ended

Apr. 01, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company performs impairment tests for goodwill as of the end of July of each fiscal year and between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair values of the Company’s reporting units below their carrying values. As a result of the Company’s American Freight segment’s underperformance compared to projections for the three months ended April 1, 2023, as well as current macroeconomic conditions, the Company updated its long-term forecasts. The Company performed an interim goodwill impairment quantitative assessment as of April 1, 2023, and based on the results of the analysis, the Company recorded a non-cash goodwill impairment charge of $75.0 million, which was recorded in “Goodwill impairment” in the accompanying Condensed Consolidated Statements of Operations. Other than the American Freight segment’s accumulated goodwill impairment of $70.0 million as of December 31, 2022, no other reporting units had accumulated goodwill impairment losses recorded.

The estimated fair value of the Company’s American Freight reporting unit was calculated using a weighted-average of values determined from an income approach and a market approach. The income approach involves estimating the fair value of each reporting unit by discounting its estimated future cash flows using a discount rate that would be consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained from observed stock prices of public companies and recent merger and acquisition transaction data of comparable entities. In order to estimate the fair value of goodwill, management must make certain estimates and assumptions that affect the total fair value of the reporting unit including, among other things, an assessment of market conditions, projected cash flows, discount rates and growth rates. Management’s estimates of projected cash flows related to the reporting unit include, but are not limited to, future earnings of the reporting unit, assumptions about the use or disposition of assets included in the reporting unit, estimated remaining lives of those assets, and future expenditures necessary to maintain the assets’ existing service potential. The assumptions in the fair value measurement reflect the current market environment, industry-specific factors and company-specific factors.

Changes in the carrying amount of goodwill for the three months ended April 1, 2023 are as follows:

	Vitamin Shoppe		Pet Supplies Plus		American Freight		Buddy’s		Sylvan		Total
Balance as of December 31, 2022	$	1,277	$	336,791	$	300,829	$	79,099	$	19,406	$	737,402
Acquisitions	—		3,690		—		—		—		3,690
Goodwill impairment	—		—		(75,000)		—		—		(75,000)
Disposals and purchase accounting adjustments	—		(2,626)		—		—		—		(2,626)
Balance as of April 1, 2023	$	1,277	$	337,855	$	225,829	$	79,099	$	19,406	$	663,466

Components of intangible assets as of April 1, 2023 and December 31, 2022 were as follows:

	April 1, 2023
(In thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Indefinite lived tradenames	$	222,703	$	—	$	222,703
Intangible assets:
Franchise and dealer agreements	$	96,005	$	(16,218)	$	79,787
Customer contracts	42,528		(9,807)		32,721
Other intangible assets	2,374		(882)		1,492
Total intangible assets	$	140,907	$	(26,907)	$	114,000

	December 31, 2022
(In thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Indefinite lived tradenames	$	222,703	$	—	$	222,703
Intangible assets:
Franchise and dealer agreements	$	96,005	$	(14,348)	$	81,657
Customer contracts	42,484		(8,878)		33,606
Other intangible assets	2,313		(777)		1,536
Total intangible assets	$	140,802	$	(24,003)	$	116,799

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Revenue Revenue (Notes)

3 Months Ended

Apr. 01, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

(6) Revenue

For details regarding the principal activities from which the Company generates its revenue, refer to “Note 1 – Description of Business and Summary of Significant Accounting Policies Presentation” in the Form 10-K. For more detailed information regarding reportable segments, refer to “Note 13 – Segments” in this Quarterly Report. The following represents the disaggregated revenue by reportable segments for the three months ended April 1, 2023:

	Three Months Ended
	April 1, 2023
(In thousands)	Vitamin Shoppe		Pet Supplies Plus		Badcock		American Freight		Buddy’s		Sylvan		Consolidated
Retail sales	$	320,597	$	163,259	$	132,256	$	202,150	$	724	$	8	$	818,994
Wholesale sales	782		151,982		—		5,050		—		—		157,814
Total product revenue	321,379		315,241		132,256		207,200		724		8		976,808
Royalties and advertising fees	178		10,884		—		795		5,183		9,880		26,920
Financing revenue	—		—		498		9,927		—		—		10,425
Interest income	—		83		22,239		177		—		—		22,499
Interest income from amortization of original purchase discount	—		—		8,236		—		—		—		8,236
Warranty and damage revenue	—		—		12,305		10,588		1,563		—		24,456
Other revenues	145		7,863		11,753		7,874		52		344		28,031
Total service revenue	323		18,830		55,031		29,361		6,798		10,224		120,567
Rental revenue, net	—		—		—		—		7,446		—		7,446
Total rental revenue	—		—		—		—		7,446		—		7,446
Total revenue	$	321,702	$	334,071	$	187,287	$	236,561	$	14,968	$	10,232	$	1,104,821

The following represents the disaggregated revenue by reportable segments for the three months ended March 26, 2022:

	Three Months Ended
	March 26, 2022
(In thousands)	Vitamin Shoppe		Pet Supplies Plus		Badcock		American Freight		Buddy’s		Sylvan		Consolidated
Retail sales	$	310,430	$	162,549	$	166,642	$	211,513	$	1,070	$	11	$	852,215
Wholesale sales	175		123,232		—		3,542		—		—		126,949
Total product revenue	310,605		285,781		166,642		215,055		1,070		11		979,164
Royalties and advertising fees	134		9,062		—		548		4,824		9,509		24,077
Financing revenue	—		—		—		8,175		—		—		8,175
Interest income	—		73		27,663		195		—		—		27,931
Interest income from amortization of original purchase discount	—		—		37,606		—		—		—		37,606
Warranty and damage revenue	—		—		13,546		11,479		1,604		—		26,629
Other revenues	214		6,298		10,802		5,964		63		523		23,864
Total service revenue	348		15,433		89,617		26,361		6,491		10,032		148,282
Rental revenue, net	—		—		—		—		8,024		—		8,024
Total rental revenue	—		—		—		—		8,024		—		8,024
Total revenue	$	310,953	$	301,214	$	256,259	$	241,416	$	15,585	$	10,043	$	1,135,470

Contract Balances

The following table provides information about receivables and contract liabilities (deferred revenue) from contracts with customers as of April 1, 2023 and December 31, 2022:

(In thousands)	April 1, 2023		December 31, 2022
Accounts receivable	$	115,977	$	143,582
Notes receivable	14,477		14,988
Customer deposits	$	21,663	$	20,816
Gift cards and loyalty programs	9,496		9,565
Deferred franchise fee revenue	23,642		22,175
Other deferred revenue	9,955		10,688
Total deferred revenue	$	64,756	$	63,244

Deferred revenue consists of (1) amounts received for merchandise of which customers have not yet taken possession, (2) gift card or store credits outstanding, and (3) loyalty reward program credits which are primarily recognized within one year following the revenue deferral. Deferred franchise fee revenue is recognized over the term of the agreement, which is between five and twenty years. The amount of revenue recognized in the period that was included in the contract liability balance at the beginning of the period is immaterial to the condensed consolidated financial statements.

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Income Taxes

3 Months Ended

Apr. 01, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Overview

For the three months ended April 1, 2023 and March 26, 2022, the Company had an effective tax rate of 6.2% and 23.0%, respectively. The changes in the effective tax rate compared to the prior year are due to a current year projected pre-tax loss compared to prior year pre-tax income and a current year non-cash goodwill impairment charge that is nondeductible for tax purposes.

Tax Receivable Agreement

On July 10, 2019, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with the then-existing non-controlling interest holders (the “Buddy’s Members”) that provides for the payment by the Company to the Buddy’s Members of 40% of the cash savings, if any, in federal, state and local taxes that the Company realizes or is deemed to realize as a result of any increases in tax basis of the assets of Franchise Group New Holdco, LLC (“New Holdco”) resulting from future redemptions or exchanges of New Holdco units.

Payments will be made when such Tax Receivable Agreement related deductions actually reduce the Company’s income tax liability. No payments were made to the Buddy’s Members pursuant to the Tax Receivable Agreement during the three months ended April 1, 2023. Total amounts due under the Tax Receivable Agreement to the Buddy’s Members as of April 1, 2023 were $15.4 million, with $1.0 million in “Other current liabilities” and the remaining amount recorded in “Other non-current liabilities” in the accompanying Condensed Consolidated Balance Sheets. Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company has obtained an increase in its share of the tax basis in

the net assets of New Holdco when the New Holdco units were redeemed or exchanged by the non-controlling interest holders and other qualifying transactions. The Company has treated the redemptions and exchanges of New Holdco units by the non-controlling interest holders as direct purchases of New Holdco units for U.S. federal income tax purposes. This increase in tax basis will reduce the amounts that it would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

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Stockholders' Equity

3 Months Ended

Apr. 01, 2023

Equity [Abstract]

Stockholders' Equity

Net Income (Loss) Per Share

Diluted net income (loss) per share is computed using the weighted-average number of common stock and, if dilutive, the potential common stock outstanding during the period. Potential common stock consists of the incremental common stock issuable upon the exercise of stock options and vesting of restricted stock units. The dilutive effect of outstanding stock options and restricted stock units is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the calculations of basic and diluted net income (loss) per share:

	Three Months Ended
(In thousands, except for share and per share amounts)	April 1, 2023		March 26, 2022
Net income (loss) attributable to Franchise Group	$	(108,317)	$	12,317
Less: Preferred dividend declared	(2,128)		(2,128)
Adjusted net income (loss) available to Common Stockholders	$	(110,445)	$	10,189
Weighted-average common stock outstanding	35,002,174		40,307,412
Net dilutive effect of stock options and restricted stock	—		800,381
Weighted-average diluted shares outstanding	35,002,174		41,107,793
Net income (loss) per share:
Basic net income per share	$	(3.16)	$	0.25
Diluted net income per share	(3.16)		0.25

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Stock Compensation Plans

3 Months Ended

Apr. 01, 2023

Share-Based Payment Arrangement [Abstract]

Stock Compensation Plans

Stock Compensation Plans

For a discussion of our stock-based compensation plans, refer to “Note 12 – Stock Compensation Plans” in the Form 10-K.

Restricted Stock Units

The Company has awarded service-based restricted stock units (the “RSUs”) to its non-employee directors, officers and certain employees. The Company recognizes expense based on the estimated fair value of the RSUs granted over the vesting period on a straight-line basis. The fair value of RSUs is determined using the Company’s closing stock price on the date of the grant. At April 1, 2023, unrecognized compensation costs related to the RSUs were $11.7 million. These costs are expected to be recognized through fiscal year 2024.

The following table summarizes the status of the RSUs as of and changes during the three months ended April 1, 2023:

	Number of RSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	273,302	$	36.39
Granted	284,818	27.89
Vested	(51,431)	28.23
Canceled	(500)	42.41
Balance as of April 1, 2023	506,189	$	32.43

Performance Restricted Stock Units

The Company has awarded performance restricted stock units (the “PRSUs”) to its officers and certain employees. The Company recognizes expense based on the estimated fair value of the PRSUs granted over the vesting period on a straight-line basis. The fair value of PRSUs is determined using the Company’s closing stock price on the date of the grant. At April 1, 2023, unrecognized compensation costs related to the PRSUs were $5.9 million. These costs are expected to be recognized through fiscal year 2025.

The following table summarizes the status of the PRSUs as of and changes during the three months ended April 1, 2023:

	Number of PRSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	364,857	$	32.92
Granted	217,088	33.79
Adjusted for performance results achieved(1)	154,904	24.84
Vested	(282,256)	24.82
Canceled	(500)	42.41
Balance as of April 1, 2023	454,093	$	35.60

(1) Represents an adjustment for performance results achieved related to outstanding 2020 PRSU shares that reached 200% achievement in March 2023.

Market-Based Performance Restricted Stock Units

The Company has awarded market-based performance restricted stock units (the “MPRSUs”) to its officers and certain employees. The Company recognizes expense based on the estimated fair value of the MPRSUs granted over the vesting period on a straight-line basis. The fair value of MPRSUs is determined using a Monte Carlo simulation valuation model to calculate grant date fair value. Compensation expense is recognized over the requisite service period using the proportionate amount of the award’s fair value that has been earned through service to date. Under GAAP, compensation expense is not reversed if the award target is not achieved. At April 1, 2023, unrecognized compensation costs related to the MPRSUs were $8.0 million. These costs are expected to be recognized through fiscal year 2024.

The following table summarizes the status of the MPRSUs as of and changes during the three months ended April 1, 2023:

	Number of MPRSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	840,926	$	21.77
Granted	—	—
Vested	—	—
Canceled	(37,500)	19.97
Balance as of April 1, 2023	803,426	$	21.86

Stock Options

The Company has awarded stock options to its non-employee directors and officers. As of April 1, 2023, there were 239,564 stock options outstanding. During the three months ended April 1, 2023, there were no stock options granted, 15,000 stock options exercised, and no stock options forfeited. The weighted-average exercise price of stock options outstanding was $9.54 per share as of April 1, 2023. All outstanding stock options will expire in fiscal years 2023 and 2024.

At April 1, 2023, there were zero non-vested stock options outstanding and there was no remaining unrecognized compensation cost related to vested stock options.

The following table summarizes information about stock options outstanding and exercisable at April 1, 2023:

	Options Outstanding and Exercisable
Range of exercise prices	Number	Weighted average exercise price		Weighted average remaining contractual life (in years)
$0.00 - $10.89	185,000	$	8.80	0.7
$10.90 - $12.01	54,564	11.97		0.7
	239,564	$	9.54

Stock Compensation Expense

The Company recorded $2.7 million and $5.4 million in stock-based compensation expense during the three months ended April 1, 2023 and March 26, 2022, respectively.

Long-Term Incentive Plans

The Company has long-term incentive plans at various operating companies which are recorded as liabilities. Upon vesting, the awards granted under these plans may be settled in cash or shares of the Company’s stock at the Company’s discretion. The total aggregate liability for these plans as of April 1, 2023 is $9.8 million, recorded in “Other non-current liabilities” on the Condensed Consolidated Balance Sheets. During the three months ended April 1, 2023, total expense recognized related to these plans was $1.8 million.

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Related Party Transactions

3 Months Ended

Apr. 01, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company considers any of its directors, executive officers or beneficial owners of more than 5% of its common stock, or any member of the immediate family of the foregoing persons, to be related parties.

Messrs. Kahn and Laurence

Brian Kahn and Vintage Capital Management, LLC and its affiliates (“Vintage”), in aggregate, held approximately 40.2% of the aggregate voting power of the Company through their ownership of common stock as of April 1, 2023. Brian Kahn and Andrew Laurence are principals of Vintage. Mr. Kahn is a member of the Board of Directors, President and Chief Executive Officer of the Company. Mr. Laurence is an Executive Vice President of the Company and served as a member of the Company’s Board of Directors until May 2021.

Buddy’s Franchises. Mr. Kahn’s brother-in-law owns eight Buddy’s franchises. All transactions between the Company’s Buddy’s segment and Mr. Kahn’s brother-in-law are conducted on a basis consistent with other franchisees.

Tax Receivable Agreement

Refer to “Note 8 – Income Taxes” for detail regarding the amounts due under the Tax Receivable Agreement to the Buddy’s Members.

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Commitments and Contingencies

3 Months Ended

Apr. 01, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In the ordinary course of operations, the Company may become a party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s business, financial condition, cash flows, or results of operations.

The Company is party to claims and lawsuits that are considered to be ordinary, routine litigation incidental to the business, including claims and lawsuits concerning the fees charged to customers for various products and services, relationships with franchisees, intellectual property disputes, employment matters, and contract disputes. Although the Company cannot provide assurance that it will ultimately prevail in each instance, it believes the amount, if any, it will be required to pay in the discharge of liabilities or settlements in these claims will not have a material adverse impact on its consolidated results of operations, financial position, or cash flows.

Guarantees

The Company remains secondarily liable under various real estate leases that were assigned to franchisees who acquired Pet Supplies Plus or Vitamin Shoppe stores from the Company. In the event of the failure of an acquirer to pay lease payments, the Company could be obligated to pay the remaining lease payments which extend through 2033 and in aggregate are $30.3 million and $30.2 million as of April 1, 2023 and December 31, 2022, respectively. In certain cases, the Company could attempt to recover from the franchisees’ personal assets should the Company be required to pay remaining lease obligations.

If the Company is required to make payments under any of these guarantees, the Company could seek to recover those amounts from the franchisees or in some cases their affiliates. The Company believes that payment under any of these guarantees is remote as of April 1, 2023.

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Segments (Notes)

3 Months Ended

Apr. 01, 2023

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

(13) Segments

The Company’s operations are conducted in six reportable business segments: Vitamin Shoppe, Pet Supplies Plus, Badcock, American Freight, Buddy’s, and Sylvan. The Company defines its segments as those operations which results its chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

The Vitamin Shoppe segment is an omnichannel specialty retailer and wellness lifestyle company with the mission of providing customers with the most trusted products, guidance, and services to help them become their best selves, however they define it. The Vitamin Shoppe segment offers one of the largest varieties of products among vitamin, mineral and supplement retailers. The broad product offering enables the company to provide customers with a depth of selection of products that may not be readily available at other specialty retailers or mass merchants, such as discount stores, supermarkets, drug stores and wholesale clubs. The Vitamin Shoppe continues to focus on improving the customer experience through the roll-out of initiatives including increasing customer engagement and personalization, redesigning the omnichannel experience (including in stores as well as through the internet and mobile devices), growing private brands and improving the effectiveness of pricing and promotions. Vitamin Shoppe is headquartered in Secaucus, New Jersey.

The Pet Supplies Plus segment is a leading omnichannel retail chain and franchisor of pet supplies and services. Pet Supplies Plus has a diversified revenue model comprised of Company-owned store revenue, franchise royalties and revenue generated by the wholesale distribution of products to its franchisees. Pet Supplies Plus offers a curated selection of premium brands, proprietary private labels and specialty products with retail price parity with online players. Additionally, Pet Supplies Plus offers grooming, pet wash and other services in most of its locations. The Pet Supplies Plus segment operates under the “Pet Supplies Plus” brand and is headquartered in Livonia, Michigan.

The Badcock segment is a retailer of furniture, appliances, bedding, electronics, home office equipment, accessories and seasonal items in a showroom format. Additionally, Badcock offers multiple and flexible payment solutions and credit options through its consumer financing services. The Badcock segment operates under the “Badcock Home Furniture & More” brand and is headquartered in Mulberry, Florida.

The American Freight segment is a retail chain offering in-store and online access to furniture, mattresses, new and out-of-box home appliances and home accessories at discount prices. American Freight buys direct from manufacturers and sells direct in warehouse-style stores. By cutting out the middleman and keeping its overhead costs low, American Freight can offer quality products at low prices. American Freight provides customers with multiple payment options providing access to high-quality products and brand name appliances that may otherwise remain aspirational to some of its customers.

American Freight also serves as a liquidation channel for major appliance vendors. American Freight operates specialty distribution centers that test every out-of-box appliance before it is offered for sale to customers. Customers typically are covered by the original manufacturer’s warranty and are offered the opportunity to purchase a full suite of extended-service plans and services. The American Freight segment operates under the “American Freight” brand and is headquartered in Delaware, Ohio.

The Buddy’s segment is a specialty retailer of high quality, name brand consumer electronic, residential furniture, appliances and household accessories through rent-to-own agreements. The rental transaction allows customers the opportunity to benefit from the use of high-quality products under flexible rental purchase agreements without long-term obligations. The Buddy’s segment operates under the “Buddy’s” brand and is headquartered in Orlando, Florida.

The Sylvan segment is an established and growing franchisor of supplemental education for Pre-K-12 students and families. Sylvan addresses the full range of student needs with a broad variety of academic curriculums delivered in an omnichannel format. The Sylvan platform provides franchisees with the ability to provide a range of services, including on premises, virtually, at a satellite location, and in the home. Sylvan is headquartered in Hunt Valley, Maryland.

Refer to “Note 6 – Revenue” for total revenues by segment. Operating income (loss) by segment were as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Income (loss) from operations:
Vitamin Shoppe	$	27,194	$	35,354
Pet Supplies Plus	19,367		17,021
Badcock	14,742		70,230
American Freight	(86,630)		11,213
Buddy’s	3,740		4,065
Sylvan	1,151		948
Total Segments	(20,436)		138,831
Corporate	(6,093)		(8,465)
Consolidated income (loss) from operations	$	(26,529)	$	130,366

Total assets by segment were as follows:

(In thousands)	April 1, 2023		December 31, 2022
Total assets:
Vitamin Shoppe	$	623,453	$	625,543
Pet Supplies Plus	1,013,360		977,234
Badcock	748,927		789,727
American Freight	857,705		904,378
Buddy’s	134,692		135,192
Sylvan	86,856		90,361
Total Segments	3,464,993		3,522,435
Corporate	142,269		107,977
Consolidated total assets	$	3,607,262	$	3,630,412

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Receivables, Loans, Notes Receivable, and Others

3 Months Ended

Apr. 01, 2023

Receivables [Abstract]

Accounts and Notes Receivable

Accounts and Notes Receivable

Current and non-current receivables as of April 1, 2023 and December 31, 2022 are presented in the Condensed Consolidated Balance Sheets as follows:

(In thousands)	April 1, 2023		December 31, 2022
Trade accounts receivable	$	30,916	$	40,165
Customer accounts receivable	26,266		56,639
Franchisee accounts receivable	58,795		46,778
Notes receivable	2,211		2,361
Income tax receivable	36,573		28,325
Allowance for credit losses	(3,038)		(4,106)
Current receivables, net	151,723		170,162
Notes receivable, non-current	12,266		12,627
Allowance for credit losses, non-current	(1,064)		(892)
Non-current receivables, net	11,202		11,735
Total receivables	$	162,925	$	181,897

Allowance for Credit Losses

The adequacy of the allowance for credit losses is assessed on a quarterly basis and adjusted as deemed necessary. Receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for credit losses. Expected credit losses for trade and franchisee accounts receivable are immaterial. Notes receivable are due from the Company’s franchisees and are collateralized by the underlying franchise. The debtors’ ability to repay the notes is dependent upon both the performance of the franchisee’s industry as a whole and the individual franchise areas.

Activity in the allowance for credit losses for trade, customer, and franchisee accounts receivable and notes receivable for the three months ended April 1, 2023 and March 26, 2022 were as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Balance at beginning of period	$	4,998	$	6,192
Cumulative effect of adopted accounting standards	654		—
Provision for credit loss expense (benefit)	(1,541)		(669)
Write-offs, net of recoveries	(9)		—
Balance at end of period	$	4,102	$	5,523

Past due amounts are primarily attributable to trade and franchisee accounts receivable that have been generated over the past year and are past due by 1-30 days. The delinquency distribution of accounts and notes receivable past due at April 1, 2023 were as follows:

	April 1, 2023
(In thousands)	Past due		Current		Total receivables
Accounts receivable	$	8,311	$	107,666	$	115,977
Notes receivable	—		14,417		14,417
Total accounts and notes receivable	$	8,311	$	122,083	$	130,394

Securitized Accounts Receivable

In order to monetize its customer credit receivables portfolio, the Company's Badcock Home Furniture & more (“Badcock”) segment sells beneficial interests in customer revolving lines of credit pursuant to securitization transactions. The Company securitized an additional $133.4 million of its customer credit receivables portfolio during the three months ended April 1, 2023. For additional details regarding these securitizations, refer to “Note 5 – Securitized Accounts Receivable” in the Form 10-K.

When securitized receivables are delinquent for approximately one year, the estimated uncollectible amount from the customer is written off and the corresponding securitized accounts receivable is reduced. Financial instruments that could potentially subject the Company to concentrations of credit risk consist of accounts receivable with its customers. The Company manages such risk by managing the customer accounts receivable portfolio using delinquency as a key credit quality indicator. Management believes the allowance is adequate to cover the Company’s credit loss exposure. Due to their non-recourse nature, the Company will record a gain on extinguishment for any debt secured by uncollectible accounts receivable in the future when the debt meets the extinguishment requirements in accordance with ASC 470, “Debt”.

Activity in the allowance for credit losses on securitized accounts for the three months ended April 1, 2023 and March 26, 2022 was as follows:

	Three Months Ended
(In thousands)	April 1, 2023		March 26, 2022
Balance at beginning of period	$	64,800	$	—
Cumulative effect of adopted accounting standards	13,187		—
Provision for credit loss expense	21,995		15,792
Write-offs, net of recoveries	(19,416)		(12,126)
Balance at end of period	$	80,566	$	3,666

Current amounts include receivables for customers who have made a payment in the past 30 days. Any customers who have not made a required payment within the last 30 days are considered past due. The following table presents the delinquency distribution of the carrying value of customer accounts receivable by year of origination as of April 1, 2023:

Delinquency Bucket	2023		2022		2021		Prior		Total
(in thousands)
Current	$	76,678	$	167,866	$	22,218	$	5,649	$	272,411
1-30	12,103		32,889		6,926		1,987		53,904
31-60	1,310		7,976		2,533		1,008		12,827
61-90	—		5,781		1,931		735		8,448
91+	—		41,224		28,222		11,532		80,977
Total	$	90,091	$	255,735	$	61,830	$	20,910	$	428,567

Servicing revenue, interest income and interest expense generated from securitized receivables for the three months ended April 1, 2023 and March 26, 2022 were as follows:

(In thousands)	April 1, 2023		March 26, 2022
Securitization servicing revenue	$	3,245	$	2,652
Interest income from securitization1	30,475		65,269
Interest expense, debt secured by accounts receivable	(48,125)		(65,299)

1 Includes interest income from Badcock customer receivables (refer to “Note 3 – Accounts and Notes Receivable”) and securitized receivables.

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Organization and Significant Accounting Policies (Policies)

3 Months Ended

Apr. 01, 2023

Accounting Policies [Abstract]

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 31, 2022 that was filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (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 31, 2022 balance sheet information was derived from the audited financial statements as of that date.

Reclassifications

Certain prior year amounts within the footnotes have been reclassified to conform to the current year presentation.

New Accounting Pronouncements, Policy

Recent Accounting Pronouncements Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which changes how companies 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.

Effective January 1, 2023, the Company adopted ASU 2016-13 and applied a cumulative-effect adjustment to retained earnings. The Company has reviewed its entire portfolio of assets recognized on the balance sheet as of December 31, 2022 and identified customer receivables and securitized receivables as the materially impacted assets within the scope of ASC 326. Upon adoption of ASC 326 the Company recorded a net decrease to retained earnings of $10.0 million as of January 1, 2023. Prior period amounts were not adjusted and will continue to be reported under the previous accounting standards.

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as a result of the adoption of ASC 326 were as follows:

	Impact of Adoption of ASC 326
(In thousands)	Balance at December 31, 2022		Adjustments due to ASC 326		Balance at January 1, 2023
Assets
Current receivables, net	$	170,162	$	(654)	$	169,508
Current securitized receivables, net	292,913		(11,619)		281,294
Non-current securitized receivables, net	39,527		(1,568)		37,959
Deferred income taxes	38,528		3,863		42,391
Stockholders’ Equity
Retained earnings	$	109,917	$	(9,978)	$	99,939

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Apr. 01, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill for the three months ended April 1, 2023 are as follows:

	Vitamin Shoppe		Pet Supplies Plus		American Freight		Buddy’s		Sylvan		Total
Balance as of December 31, 2022	$	1,277	$	336,791	$	300,829	$	79,099	$	19,406	$	737,402
Acquisitions	—		3,690		—		—		—		3,690
Goodwill impairment	—		—		(75,000)		—		—		(75,000)
Disposals and purchase accounting adjustments	—		(2,626)		—		—		—		(2,626)
Balance as of April 1, 2023	$	1,277	$	337,855	$	225,829	$	79,099	$	19,406	$	663,466

Schedule of the amortizable other intangible assets

Components of intangible assets as of April 1, 2023 and December 31, 2022 were as follows:

	April 1, 2023
(In thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Indefinite lived tradenames	$	222,703	$	—	$	222,703
Intangible assets:
Franchise and dealer agreements	$	96,005	$	(16,218)	$	79,787
Customer contracts	42,528		(9,807)		32,721
Other intangible assets	2,374		(882)		1,492
Total intangible assets	$	140,907	$	(26,907)	$	114,000

	December 31, 2022
(In thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Indefinite lived tradenames	$	222,703	$	—	$	222,703
Intangible assets:
Franchise and dealer agreements	$	96,005	$	(14,348)	$	81,657
Customer contracts	42,484		(8,878)		33,606
Other intangible assets	2,313		(777)		1,536
Total intangible assets	$	140,802	$	(24,003)	$	116,799

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Long-Term Obligations (Tables)

3 Months Ended

Apr. 01, 2023

Debt Disclosure [Abstract]

Schedule of Debt

For details regarding the Company’s long-term debt obligations, refer to “Note 10 – Long-Term Obligations” in the Form 10-K.

Long-term obligations at April 1, 2023 and December 31, 2022 were as follows:

(In thousands)	April 1, 2023		December 31, 2022
Term loans, net of debt issuance costs
First lien term loan, due March 10, 2026	$	1,064,470	$	779,777
Second lien term loan, due September 10, 2026	289,993		289,435
Total term loans, net of debt issuance costs	1,354,463		1,069,212
ABL Revolver	23,500		295,000
Other long-term obligations	5,061		6,147
Finance lease liabilities	23,067		11,055
Total long-term obligations	1,406,091		1,381,414
Less current installments	11,771		6,935
Total long-term obligations, net	$	1,394,320	$	1,374,479

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Stockholders' Equity (Tables)

3 Months Ended

Apr. 01, 2023

Equity [Abstract]

Schedule of computation of basic and diluted net income (loss) per share

The following table sets forth the calculations of basic and diluted net income (loss) per share:

	Three Months Ended
(In thousands, except for share and per share amounts)	April 1, 2023		March 26, 2022
Net income (loss) attributable to Franchise Group	$	(108,317)	$	12,317
Less: Preferred dividend declared	(2,128)		(2,128)
Adjusted net income (loss) available to Common Stockholders	$	(110,445)	$	10,189
Weighted-average common stock outstanding	35,002,174		40,307,412
Net dilutive effect of stock options and restricted stock	—		800,381
Weighted-average diluted shares outstanding	35,002,174		41,107,793
Net income (loss) per share:
Basic net income per share	$	(3.16)	$	0.25
Diluted net income per share	(3.16)		0.25

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Stock Compensation Plans (Tables)

3 Months Ended

Apr. 01, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table summarizes the status of the RSUs as of and changes during the three months ended April 1, 2023:

	Number of RSUs	Weighted average fair value at grant date
Balance as of December 31, 2022	273,302	$	36.39
Granted	284,818	27.89
Vested	(51,431)	28.23
Canceled	(500)	42.41
Balance as of April 1, 2023	506,189	$	32.43

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Organization and Significant Accounting Policies (Details) - USD ($) $ in Thousands	Apr. 01, 2023	Dec. 31, 2022
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net	$ 151,723	$ 170,162
Deferred Income Taxes and Tax Credits		38,528
Retained earnings	(32,909)	109,917
Cumulative Effect, Period of Adoption, Adjustment
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net		(654)
Deferred Income Taxes and Tax Credits		3,863
Retained earnings		(9,978)
Cumulative Effect, Period of Adoption, Adjusted Balance
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net		169,508
Deferred Income Taxes and Tax Credits		42,391
Retained earnings		99,939
Asset-backed Securities, Securitized Loans and Receivables
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net		292,913
Accounts Receivable, after Allowance for Credit Loss, Noncurrent	38,437	39,527
Asset-backed Securities, Securitized Loans and Receivables | Cumulative Effect, Period of Adoption, Adjustment
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net		(11,619)
Accounts Receivable, after Allowance for Credit Loss, Noncurrent		(1,568)
Asset-backed Securities, Securitized Loans and Receivables | Cumulative Effect, Period of Adoption, Adjusted Balance
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net		281,294
Accounts Receivable, after Allowance for Credit Loss, Noncurrent		37,959
Current receivables, net
Change in Accounting Estimate [Line Items]
Total Receivables, Current, Net	$ 151,723	$ 170,162

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Acquisitions (Details) $ in Millions	Feb. 28, 2023 USD ($)
Business Combinations [Abstract]
Business Combination, Price of Acquisition, Expected	$ 3.7

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Accounts and Notes Receivable - Schedule of Receivables (Details) - USD ($) $ in Thousands	Apr. 01, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Trade accounts receivable	$ 115,977	$ 143,582
Income taxes receivable	36,573	28,325
Accounts Receivable, Allowance for Credit Loss, Current	(3,038)	(4,106)
Total Receivables, Current, Net	151,723	170,162
Accounts Receivable, Allowance for Credit Loss, Noncurrent	(1,064)	(892)
Receivables, Net, Non-current	11,202	11,735
Receivables, Fair Value Disclosure	162,925	181,897
Receivables from franchisees
Accounts, Notes, Loans and Financing Receivable [Line Items]
Trade accounts receivable	58,795	46,778
Trade Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Trade accounts receivable	30,916	40,165
Receivables from customer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Trade accounts receivable	26,266	56,639
Other Noncurrent Assets
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable, non-current	12,266	12,627
Other Current Assets
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivable with Imputed Interest, Face Amount	2,211	2,361
Notes Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Allowance for Credit Loss, Noncurrent	$ (1,064)	$ (892)

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Accounts and Notes Receivable - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022	Dec. 25, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Trade accounts receivable	$ 115,977		$ 143,582
Receivables, Fair Value Disclosure	130,394
Accounts Receivable, Allowance for Credit Loss	3,038		4,106
Interest Income, Financing Receivable	30,475	$ 65,269
Securitization Revenue	3,245	2,652
Interest expense, financing receivable	(48,125)	(65,299)
Financial Asset, Past Due
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Noncurrent, 90 Days or More Past Due, Still Accruing	8,311
Other Current Assets | Current
Financing Receivable, Allowance for Credit Loss [Line Items]
Trade accounts receivable	122,083
Trade Accounts Receivable [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Trade accounts receivable	30,916		40,165
Receivables, Fair Value Disclosure	115,977
Accounts Receivable, Allowance for Credit Loss	4,102	5,523	4,998	$ 6,192
Provision for Other Credit Losses	(1,541)	$ (669)
Accounts Receivable, Allowance for Credit Loss, Writeoff	(9)
Trade Accounts Receivable [Member] | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Allowance for Credit Loss			$ 654
Trade Accounts Receivable [Member] | Financial Asset, Past Due
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Noncurrent, 90 Days or More Past Due, Still Accruing	8,311
Trade Accounts Receivable [Member] | Current
Financing Receivable, Allowance for Credit Loss [Line Items]
Trade accounts receivable	107,666
Notes Receivable [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Receivables, Fair Value Disclosure	14,417
Notes Receivable [Member] | Financial Asset, Past Due
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Noncurrent, 90 Days or More Past Due, Still Accruing	0
Notes Receivable [Member] | Current
Financing Receivable, Allowance for Credit Loss [Line Items]
Trade accounts receivable	$ 14,417

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Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired in Acquisition	$ 3,690
ERROR in label resolution.	140,907		$ 140,802
Finite-Lived Intangible Assets, Accumulated Amortization	(26,907)		(24,003)
Intangible Assets, Net (Excluding Goodwill)	114,000		116,799
Goodwill, Impairment Loss	75,000	$ 0	0
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
ERROR in label resolution.	96,005		96,005
Finite-Lived Intangible Assets, Accumulated Amortization			(14,348)
Intangible Assets, Net (Excluding Goodwill)			81,657
Customer Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
ERROR in label resolution.	42,528		42,484
Finite-Lived Intangible Assets, Accumulated Amortization	(9,807)		(8,878)
Intangible Assets, Net (Excluding Goodwill)	32,721		$ 33,606
Pet Supplies Plus
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired in Acquisition	3,690
Goodwill, Impairment Loss	$ 0

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Components of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022
Amortizable other intangible assets:
Gross carrying amount	$ 140,907		$ 140,802
Accumulated amortization	(26,907)		(24,003)
Net carrying amount	114,000		116,799
Goodwill	663,466		737,402
Goodwill, Acquired in Acquisition	3,690
Goodwill, Impairment Loss	(75,000)	$ 0	0
Goodwill, Period Increase (Decrease)	(2,626)
American Freight [Member]
Amortizable other intangible assets:
Goodwill	225,829		300,829
Pet Supplies Plus
Amortizable other intangible assets:
Goodwill	337,855		336,791
Buddy's [Member]
Amortizable other intangible assets:
Goodwill	79,099		79,099
Sylvan Learning
Amortizable other intangible assets:
Goodwill	19,406		19,406
Trade Names [Member]
Amortizable other intangible assets:
Indefinite-Lived Trademarks	222,703		222,703
Franchise Agreements [Member]
Amortizable other intangible assets:
Accumulated amortization	(16,218)
Net carrying amount	79,787
Noncompete Agreements [Member]
Amortizable other intangible assets:
Gross carrying amount	96,005		96,005
Accumulated amortization			(14,348)
Net carrying amount			81,657
Reacquired rights
Amortizable other intangible assets:
Gross carrying amount	2,374		2,313
Accumulated amortization	(882)		(777)
Net carrying amount	1,492		1,536
Customer Contracts [Member]
Amortizable other intangible assets:
Gross carrying amount	42,528		42,484
Accumulated amortization	(9,807)		(8,878)
Net carrying amount	32,721		$ 33,606
American Freight [Member]
Amortizable other intangible assets:
Goodwill, Acquired in Acquisition	0
Goodwill, Impairment Loss	(75,000)
Goodwill, Period Increase (Decrease)	0
Pet Supplies Plus
Amortizable other intangible assets:
Goodwill, Acquired in Acquisition	3,690
Goodwill, Impairment Loss	0
Goodwill, Period Increase (Decrease)	(2,626)
Buddy's [Member]
Amortizable other intangible assets:
Goodwill, Acquired in Acquisition	0
Goodwill, Impairment Loss	0
Goodwill, Period Increase (Decrease)	0
Buddy's [Member]
Amortizable other intangible assets:
Goodwill, Acquired in Acquisition	0
Goodwill, Impairment Loss	0
Goodwill, Period Increase (Decrease)	0
Sylvan Learning
Amortizable other intangible assets:
Goodwill, Acquired in Acquisition	0
Goodwill, Impairment Loss	0
Sylvan
Amortizable other intangible assets:
Goodwill, Period Increase (Decrease)	$ 0

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Revenue Revenue (Details) - USD ($)	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022
Revenues	$ 1,104,821,000	$ 1,135,470,000
Interest income	22,499,000	27,931,000
Revenues:
Lease Income	7,446,000	8,024,000
Deferred Revenue	64,756,000		$ 63,244,000
Deferred Revenue, Noncurrent	9,955,000		10,688,000
Trade accounts receivable	115,977,000		143,582,000
Financing Receivable, before Allowance for Credit Loss	14,477,000		14,988,000
Interest income from amortization of original purchase discount	8,236,000	37,606,000
Vitamin Shoppe [Member]
Revenues	321,702,000	310,953,000
Revenues:
Lease Income	0	0
American Freight [Member]
Revenues	236,561,000	241,416,000
Interest income	177,000	195,000
Revenues:
Lease Income	0	0
Pet Supplies Plus
Revenues	334,071,000	301,214,000
Interest income	83,000	73,000
Revenues:
Lease Income	0	0
Buddy's [Member]
Revenues	14,968,000	15,585,000
Interest income	0	0
Revenues:
Lease Income	7,446,000	8,024,000
Sylvan
Revenues	10,232,000	10,043,000
Revenues:
Lease Income	0	0
Badcock
Revenues	187,287,000	256,259,000
Interest income	22,239,000	27,663,000
Revenues:
Lease Income	0	0
Retail [Member]
Revenues	818,994,000	852,215,000
Retail [Member] | Vitamin Shoppe [Member]
Revenues	320,597,000	310,430,000
Retail [Member] | American Freight [Member]
Revenues	202,150,000	211,513,000
Retail [Member] | Pet Supplies Plus
Revenues	163,259,000	162,549,000
Retail [Member] | Buddy's [Member]
Revenues	724,000	1,070,000
Retail [Member] | Sylvan
Revenues	8,000	11,000
Retail [Member] | Badcock
Revenues	132,256,000	166,642,000
Wholesale
Revenues	157,814,000	126,949,000
Wholesale | Vitamin Shoppe [Member]
Revenues	782,000	175,000
Wholesale | American Freight [Member]
Revenues	5,050,000	3,542,000
Wholesale | Pet Supplies Plus
Revenues	151,982,000	123,232,000
Wholesale | Buddy's [Member]
Revenues	0	0
Wholesale | Sylvan
Revenues	0	0
Wholesale | Badcock
Revenues	0	0
Product [Member]
Revenues	976,808,000	979,164,000
Product [Member] | Vitamin Shoppe [Member]
Revenues	321,379,000	310,605,000
Product [Member] | American Freight [Member]
Revenues	207,200,000	215,055,000
Product [Member] | Pet Supplies Plus
Revenues	315,241,000	285,781,000
Product [Member] | Buddy's [Member]
Revenues	724,000	1,070,000
Product [Member] | Sylvan
Revenues	8,000	11,000
Product [Member] | Badcock
Revenues	132,256,000	166,642,000
Royalties and Advertising [Member]
Revenues	26,920,000	24,077,000
Royalties and Advertising [Member] | Vitamin Shoppe [Member]
Revenues	178,000	134,000
Royalties and Advertising [Member] | American Freight [Member]
Revenues	795,000	548,000
Royalties and Advertising [Member] | Pet Supplies Plus
Revenues	10,884,000	9,062,000
Royalties and Advertising [Member] | Buddy's [Member]
Revenues	5,183,000	4,824,000
Royalties and Advertising [Member] | Sylvan
Revenues	9,880,000	9,509,000
Royalties and Advertising [Member] | Badcock
Revenues	0	0
Financial Service [Member]
Revenues	10,425,000	8,175,000
Financial Service [Member] | Vitamin Shoppe [Member]
Revenues	0	0
Interest income	0	0
Financial Service [Member] | American Freight [Member]
Revenues	9,927,000	8,175,000
Financial Service [Member] | Pet Supplies Plus
Revenues	0	0
Financial Service [Member] | Buddy's [Member]
Revenues	0	0
Financial Service [Member] | Sylvan
Revenues	0	0
Financial Service [Member] | Badcock
Revenues	498,000	0
Membership [Member]
Revenues	24,456,000	26,629,000
Membership [Member] | Vitamin Shoppe [Member]
Revenues	0	0
Membership [Member] | American Freight [Member]
Revenues	10,588,000	11,479,000
Membership [Member] | Pet Supplies Plus
Revenues	0	0
Membership [Member] | Buddy's [Member]
Revenues	1,563,000	1,604,000
Membership [Member] | Sylvan
Revenues	0	0
Membership [Member] | Badcock
Revenues	12,305,000	13,546,000
Service, Other [Member]
Revenues	28,031,000	23,864,000
Service, Other [Member] | Vitamin Shoppe [Member]
Revenues	145,000	214,000
Service, Other [Member] | American Freight [Member]
Revenues	7,874,000	5,964,000
Service, Other [Member] | Pet Supplies Plus
Revenues	7,863,000	6,298,000
Service, Other [Member] | Buddy's [Member]
Revenues	52,000	63,000
Service, Other [Member] | Sylvan
Revenues	344,000	523,000
Service, Other [Member] | Badcock
Revenues	11,753,000	10,802,000
Service [Member]
Revenues	120,567,000	148,282,000
Service [Member] | Vitamin Shoppe [Member]
Revenues	323,000	348,000
Service [Member] | American Freight [Member]
Revenues	29,361,000	26,361,000
Service [Member] | Pet Supplies Plus
Revenues	18,830,000	15,433,000
Service [Member] | Buddy's [Member]
Revenues	6,798,000	6,491,000
Service [Member] | Sylvan
Revenues	10,224,000	10,032,000
Service [Member] | Badcock
Revenues	55,031,000	89,617,000
Gift Cards And Loyalty Programs
Revenues:
Contract with Customer, Liability	9,496,000	9,565,000
Franchise Fees
Revenues:
Contract with Customer, Liability	23,642,000		$ 22,175,000
customer deposit
Revenues:
Contract with Customer, Liability	$ 21,663,000	$ 20,816,000

XML

Revenue Revenue (Details 1) - USD ($) $ in Thousands	Apr. 01, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Deferred Revenue	$ 64,756	$ 63,244

XML

Revenue Revenue (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022
Revenues	$ 1,104,821	$ 1,135,470
Lease Income	7,446	8,024
Interest income	22,499	27,931
Product [Member]
Revenues	976,808	979,164
Royalties and Advertising [Member]
Revenues	26,920	24,077
Financial Service [Member]
Revenues	10,425	8,175
Membership [Member]
Revenues	24,456	26,629
Service, Other [Member]
Revenues	28,031	23,864
Service [Member]
Revenues	120,567	148,282
Retail [Member]
Revenues	818,994	852,215
Wholesale
Revenues	157,814	126,949
Vitamin Shoppe [Member]
Revenues	321,702	310,953
Lease Income	0	0
Vitamin Shoppe [Member] | Product [Member]
Revenues	321,379	310,605
Vitamin Shoppe [Member] | Royalties and Advertising [Member]
Revenues	178	134
Vitamin Shoppe [Member] | Financial Service [Member]
Revenues	0	0
Interest income	0	0
Vitamin Shoppe [Member] | Membership [Member]
Revenues	0	0
Vitamin Shoppe [Member] | Service, Other [Member]
Revenues	145	214
Vitamin Shoppe [Member] | Service [Member]
Revenues	323	348
Vitamin Shoppe [Member] | Retail [Member]
Revenues	320,597	310,430
Vitamin Shoppe [Member] | Wholesale
Revenues	782	175
American Freight [Member]
Revenues	236,561	241,416
Lease Income	0	0
Interest income	177	195
American Freight [Member] | Product [Member]
Revenues	207,200	215,055
American Freight [Member] | Royalties and Advertising [Member]
Revenues	795	548
American Freight [Member] | Financial Service [Member]
Revenues	9,927	8,175
American Freight [Member] | Membership [Member]
Revenues	10,588	11,479
American Freight [Member] | Service, Other [Member]
Revenues	7,874	5,964
American Freight [Member] | Service [Member]
Revenues	29,361	26,361
American Freight [Member] | Retail [Member]
Revenues	202,150	211,513
American Freight [Member] | Wholesale
Revenues	5,050	3,542
Buddy's [Member]
Revenues	14,968	15,585
Lease Income	7,446	8,024
Interest income	0	0
Buddy's [Member] | Product [Member]
Revenues	724	1,070
Buddy's [Member] | Royalties and Advertising [Member]
Revenues	5,183	4,824
Buddy's [Member] | Financial Service [Member]
Revenues	0	0
Buddy's [Member] | Membership [Member]
Revenues	1,563	1,604
Buddy's [Member] | Service, Other [Member]
Revenues	52	63
Buddy's [Member] | Service [Member]
Revenues	6,798	6,491
Buddy's [Member] | Retail [Member]
Revenues	724	1,070
Buddy's [Member] | Wholesale
Revenues	0	0
Pet Supplies Plus
Revenues	334,071	301,214
Lease Income	0	0
Interest income	83	73
Pet Supplies Plus | Product [Member]
Revenues	315,241	285,781
Pet Supplies Plus | Royalties and Advertising [Member]
Revenues	10,884	9,062
Pet Supplies Plus | Financial Service [Member]
Revenues	0	0
Pet Supplies Plus | Membership [Member]
Revenues	0	0
Pet Supplies Plus | Service, Other [Member]
Revenues	7,863	6,298
Pet Supplies Plus | Service [Member]
Revenues	18,830	15,433
Pet Supplies Plus | Retail [Member]
Revenues	163,259	162,549
Pet Supplies Plus | Wholesale
Revenues	$ 151,982	$ 123,232

XML

Long-Term Obligations (Details) - USD ($) $ in Thousands	Apr. 01, 2023	Feb. 02, 2023	Dec. 31, 2022
Credit facility
Other Long-term Debt	$ 5,061		$ 6,147
Long-term Debt and Lease Obligation, Including Current Maturities	1,406,091		1,381,414
Current Installments of Long-Term Obligation	11,771		6,935
Long-term Debt, Excluding Current Maturities	1,394,320		1,374,479
Term loan
Credit facility
Total debt	1,354,463		1,069,212
Revolver
Credit facility
Total debt	23,500		295,000
Finance Lease Liability [Member]
Credit facility
Total debt	23,067		11,055
Line of Credit [Member]
Credit facility
Maximum borrowing capacity		$ 300,000
Senior Secured Notes, First Lien Credit Agreement | Term loan
Credit facility
Debt Instrument, Face Amount	1,064,470		779,777
Senior Lien | Term loan
Credit facility
Debt Instrument, Face Amount	$ 289,993		$ 289,435

XML

Income Taxes (Details) - USD ($)		3 Months Ended
	Jul. 10, 2019	Apr. 01, 2023	Mar. 26, 2022
Income Tax Disclosure [Abstract]
Tax Receivable Agreement, Payment to Non-controlling Holders	40.00%
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount		$ 0.062	$ 0.230
Tax Receivable Agreement [Member]
Income Tax Contingency [Line Items]
Deferred Tax Liabilities, Deferred Expense		15,400,000
Tax Receivable Agreement [Member] | Other Current Liabilities
Income Tax Contingency [Line Items]
Deferred Tax Liabilities, Deferred Expense		$ 1,000,000.0

XML

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022
Stockholders' Equity
Net loss	$ (108,317)	$ 12,317
Dividends, Preferred Stock	(2,128)	(2,128)
Net Income (Loss) Available to Common Stockholders, Basic	$ (110,445)	$ 10,189
Weighted Average Number of Shares Outstanding, Basic	35,002,174	40,307,412
Weighted Average Number of Shares Outstanding, Diluted	35,002,174	41,107,793
Incremental Common Shares Attributable to Dilutive Effect of Options and Restricted Stock Units	0	800,381
Earnings Per Share, Basic	$ (3.16)	$ 0.25
Earnings Per Share, Diluted	$ (3.16)	$ 0.25
Common Class A [Member]
Stockholders' Equity
Net loss	$ (108,317)
Weighted Average Number of Shares Outstanding, Basic	35,002,174	40,307,412
Earnings Per Share, Basic	$ (3.16)	$ 0.25

XML

Stock Compensation Plans (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022
Nonvested stock option activity, Weighted average exercise price
Employee Benefits and Share-Based Compensation	$ 2.7	$ 5.4
Restricted Stock Units
Nonvested stock option activity, Nonvested options
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance	273,302
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	284,818
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	(51,431)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	(500)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	506,189
Nonvested stock option activity, Weighted average exercise price
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 36.39
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	27.89
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	28.23
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations, Weighted Average Grant Date Fair Value	42.41
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 32.43
Performance Shares
Nonvested stock option activity, Nonvested options
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance	364,857
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	217,088
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	(282,256)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	(500)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	454,093
Nonvested stock option activity, Weighted average exercise price
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 32.92
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	33.79
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	24.82
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations, Weighted Average Grant Date Fair Value	42.41
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 35.60
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Other	154,904
Adjusted for performance results achieved	$ 24.84
Performance Shares | MegaGrant
Nonvested stock option activity, Nonvested options
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance	840,926
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	(37,500)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	803,426
Nonvested stock option activity, Weighted average exercise price
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 21.77
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	0
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations, Weighted Average Grant Date Fair Value	19.97
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 21.86
Share-based Payment Arrangement, Option [Member]
Nonvested stock option activity, Weighted average exercise price
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	239,564
Weighted average exercise price (in dollars per share)	$ 9.54
Share-based Payment Arrangement, Option [Member] | Exercise Price, Range One [Member]
Nonvested stock option activity, Weighted average exercise price
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	185,000
Weighted average exercise price (in dollars per share)	$ 8.80
Share-based Payment Arrangement, Option, Exercise Price Range, Exercisable, Weighted Average Remaining Contractual Term	8 months 12 days
Share-based Payment Arrangement, Option [Member] | Exercise Price, Range Two [Member]
Nonvested stock option activity, Weighted average exercise price
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	54,564
Weighted average exercise price (in dollars per share)	$ 11.97
Share-based Payment Arrangement, Option, Exercise Price Range, Outstanding, Weighted Average Remaining Contractual Term	8 months 12 days

XML

Stock Compensation Plans (Details 2) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 01, 2023 USD ($) $ / shares shares
stock awards expense [Member] | Accounts Payable and Accrued Liabilities
Stock options outstanding and exercisable
Share-based Payment Arrangement, Expense | $	$ 1.8
Share-based Payment Arrangement, Option [Member]
Stock options outstanding and exercisable
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	239,564
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	(15,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ / shares	$ 9.54
Outstanding at the beginning of the period (in shares)	0
Share-based Payment Arrangement, Option [Member] | Exercise Price, Range One [Member]
Stock options outstanding and exercisable
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	185,000
Share-based Payment Arrangement, Option [Member] | Exercise Price, Range two
Stock options outstanding and exercisable
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	54,564
Restricted Stock Units
Stock options outstanding and exercisable
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $	$ 11.7
Restricted Stock Units | Accounts Payable and Accrued Liabilities
Stock options outstanding and exercisable
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $	9.8
Performance Shares
Stock options outstanding and exercisable
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $	5.9
MegaGrant
Stock options outstanding and exercisable
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $	$ 8.0
Stock Option Plan
Stock options outstanding and exercisable
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	239,564
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0

XML

Restricted Stock Units (Details 3) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 01, 2023	Dec. 31, 2022
Restricted Stock Units
Restricted Cash and Cash Equivalents Items [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	284,818
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	506,189	273,302
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	$ 27.89
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	51,431
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	$ 28.23
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	500
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations, Weighted Average Grant Date Fair Value	$ 42.41
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 32.43	$ 36.39
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 11.7
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	$ 27.89
Performance Shares
Restricted Cash and Cash Equivalents Items [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	217,088
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	454,093	364,857
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	$ 33.79
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	282,256
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	$ 24.82
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	500
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations, Weighted Average Grant Date Fair Value	$ 42.41
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	$ 35.60	$ 32.92
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 5.9
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	$ 33.79
Performance Shares | MegaGrant
Restricted Cash and Cash Equivalents Items [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	0
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	803,426	840,926
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	37,500
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations, Weighted Average Grant Date Fair Value	$ 19.97
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Weighted Average Grant Date Fair Value	21.86	$ 21.77
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted, Weighted Average Grant Date Fair Value	$ 0

XML

Related Party Transactions (Details)	Jul. 10, 2019	Apr. 01, 2023
Related Party Transaction [Line Items]
Tax Receivable Agreement, Payment to Non-controlling Holders	40.00%
Vintage RTO, L.P. ownership [Member]
Related Party Transaction [Line Items]
aggregate voting power		40.20%

XML

Commitments and Contingencies (Details) - USD ($) $ in Millions	Apr. 01, 2023	Mar. 26, 2022
Commitments and Contingencies Disclosure [Abstract]
Net Amount at Risk by Product and Guarantee, Net Amount at Risk	$ 30.3	$ 30.2

XML

Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022
Segment Reporting Information [Line Items]
Operating Income (Loss)	$ (26,529)	$ 130,366
Goodwill	663,466		$ 737,402
Assets	3,607,262		3,630,412
Revenues	1,104,821	1,135,470
Vitamin Shoppe [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	27,194	35,354
Goodwill	1,277		1,277
Assets	623,453		625,543
Revenues	321,702	310,953
American Freight [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	(86,630)	11,213
Goodwill	225,829		300,829
Assets	857,705		904,378
Revenues	236,561	241,416
Pet Supplies Plus
Segment Reporting Information [Line Items]
Operating Income (Loss)	19,367	17,021
Goodwill	337,855		336,791
Assets	1,013,360		977,234
Revenues	334,071	301,214
Buddy's [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	3,740	4,065
Goodwill	79,099		79,099
Assets	134,692		135,192
Revenues	14,968	15,585
Overhead [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	(6,093)	(8,465)
Badcock
Segment Reporting Information [Line Items]
Operating Income (Loss)	14,742	70,230
Assets	748,927		789,727
Revenues	187,287	256,259
Sylvan Learning
Segment Reporting Information [Line Items]
Operating Income (Loss)	1,151	948
Goodwill	19,406		19,406
Assets	86,856		90,361
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	(20,436)	$ 138,831
Assets	3,464,993		3,522,435
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Assets	$ 142,269		$ 107,977

XML

Receivables, Loans, Notes Receivable, and Others (Details) - Asset Pledged as Collateral with Right	3 Months Ended
	Apr. 01, 2023
Receivables [Abstract]
Other Significant Noncash Transaction, Consideration Received	133.4
Financing Receivable, Allowance for Credit Loss [Line Items]
Other Significant Noncash Transaction, Consideration Received	133.4

XML

Receivables, Loans, Notes Receivable, and Others - Schedule of Accounts Receivable By Origination (Details) $ in Thousands	Apr. 01, 2023 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Excluding Accrued Interest, Year One, Originated, Current Fiscal Year	$ 90,091
Financing Receivable, Excluding Accrued Interest, Year Two, Originated, Fiscal Year before Current Fiscal Year	255,735
Financing Receivable, Excluding Accrued Interest, Year Three, Originated, Two Years before Current Fiscal Year	61,830
Financing Receivable, Excluding Accrued Interest, Year Five, Originated, Four Years before Current Fiscal Year	20,910
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss	428,567
Current
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Excluding Accrued Interest, Year One, Originated, Current Fiscal Year	76,678
Financing Receivable, Excluding Accrued Interest, Year Two, Originated, Fiscal Year before Current Fiscal Year	167,866
Financing Receivable, Excluding Accrued Interest, Year Three, Originated, Two Years before Current Fiscal Year	22,218
Financing Receivable, Excluding Accrued Interest, Year Five, Originated, Four Years before Current Fiscal Year	5,649
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss	272,411
1 - 30
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Excluding Accrued Interest, Year One, Originated, Current Fiscal Year	12,103
Financing Receivable, Excluding Accrued Interest, Year Two, Originated, Fiscal Year before Current Fiscal Year	32,889
Financing Receivable, Excluding Accrued Interest, Year Three, Originated, Two Years before Current Fiscal Year	6,926
Financing Receivable, Excluding Accrued Interest, Year Five, Originated, Four Years before Current Fiscal Year	1,987
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss	53,904
31-60
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Excluding Accrued Interest, Year One, Originated, Current Fiscal Year	1,310
Financing Receivable, Excluding Accrued Interest, Year Two, Originated, Fiscal Year before Current Fiscal Year	7,976
Financing Receivable, Excluding Accrued Interest, Year Three, Originated, Two Years before Current Fiscal Year	2,533
Financing Receivable, Excluding Accrued Interest, Year Five, Originated, Four Years before Current Fiscal Year	1,008
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss	12,827
61-90
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Excluding Accrued Interest, Year One, Originated, Current Fiscal Year	0
Financing Receivable, Excluding Accrued Interest, Year Two, Originated, Fiscal Year before Current Fiscal Year	5,781
Financing Receivable, Excluding Accrued Interest, Year Three, Originated, Two Years before Current Fiscal Year	1,931
Financing Receivable, Excluding Accrued Interest, Year Five, Originated, Four Years before Current Fiscal Year	735
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss	8,448
91+
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Excluding Accrued Interest, Year One, Originated, Current Fiscal Year	0
Financing Receivable, Excluding Accrued Interest, Year Two, Originated, Fiscal Year before Current Fiscal Year	41,224
Financing Receivable, Excluding Accrued Interest, Year Three, Originated, Two Years before Current Fiscal Year	28,222
Financing Receivable, Excluding Accrued Interest, Year Five, Originated, Four Years before Current Fiscal Year	11,532
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss	$ 80,977

XML

Receivables, Loans, Notes Receivable, and Others - Activity for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2023	Mar. 26, 2022	Dec. 31, 2022	Dec. 25, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 3,038		$ 4,106
Securitized accounts receivable
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Allowance for Credit Loss	80,566	$ 3,666	64,800	$ 0
Provision for Other Credit Losses	21,995	15,792
Accounts Receivable, Allowance for Credit Loss, Writeoff	$ (19,416)	$ (12,126)
Securitized accounts receivable | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Accounts Receivable, Allowance for Credit Loss			$ 13,187