KBRA Assigns Preliminary Ratings to FOCUS Brands Funding LLC Series 2023-2

KBRA assigns preliminary ratings to one class of notes from Focus Brands Funding LLC, Series 2023-2 (Focus 2023-2), a whole business securitization (WBS). In conjunction with the issuance of Series 2023-2, KBRA anticipates affirming the ratings on the Co-Issuers' outstanding Series 2017-1 Class A-2-II Notes, Series 2022-1 Class A-1 and Class A-2 Notes and the Series 2023-1 Class A-1 Notes (the Existing Notes, and, together with the Series 2023-2 Notes, the Notes) and withdrawing the ratings on the Co-Issuers’ Series 2018-1 Class A-2 Notes which are expected to be redeemed in full primarily through the proceeds generated from issuing the Series 2023-2 A-2 Notes as well as through Company funds. The ratings are consistent with the results of our cash flow analysis following the addition of the Series 2023-2 Notes.

The Company is the franchisor and operator of branded locations under the brands Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s Deli, Moe’s Southwest Grill and Schlotzsky’s. The collateral includes existing and future franchise and development agreements, existing and future company-operated location royalties, licensing fees, certain vendor payments and fees, intellectual property, and related revenues. The Co-Issuers are issuing one class of notes totaling $240 million (the 2023-2 Notes).

As of June 25, 2023, the Focus restaurant system included approximately 6,487 restaurants, cafes, stores, bakeries and other locations with annual system-wide sales of approximately $4.0 billion. The transaction relates to royalties from 6,414 franchise locations and 73 company-operated restaurants, representing approximately 99% and 1% of total locations, respectively. Approximately 72% of the locations are in the US and the remainder are located across 61 countries and territories.

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Related Publications

• Focus Brands Funding Rating Report Series 2023-1 Rating Report
• Focus Brands Funding New Issue Report 2022-1
• Whole Business Securitization Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

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

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

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

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

About KBRA

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

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