A MAJOR retail ownership group is selling off its most valuable asset.
The group is navigating bankruptcy with around $2 billion in debt.
1
The Franchise Group, the parent company of retail brands such as Pet Supplies Plus, Badcock Home Furniture, and Buddy’s Home Furnishings is selling its flagship brand, The Vitamin Shoppe.
The group filed for Chapter 11 bankruptcy last November, citing the need to protect its top-performing brands.
Now it has agreed to sell The Vitamin Shoppe to private equity firms Kingswood Capital Management and Performance Investment Partners for $193.5 million.
The deal is part of Franchise’s reorganization plan, which will go before a judge for approval next month.
Despite its parent company’s troubles, The Vitamin Shoppe has remained profitable, operating 650 stores nationwide.
The 50-year-old health and wellness chain even announced expansion plans as recently as 2023.
“We are excited to partner with The Vitamin Shoppe team and help them build upon the success the business has enjoyed over the last forty-eight years,” said Kingswood’s Michael Niegsch and Performance Investment Partners’ Mark Genender.
In recent years, the brand has leaned into physical retail, launching a store-within-a-store concept to spotlight local wellness vendors.
It also introduced a telehealth initiative called Whole Health Rx last May.
The broader wellness market hit $6.3 trillion in 2023 and could reach $9 trillion by 2028, according to The Global Wellness Institute.
Franchise Group joins a growing list of companies – including restaurant and healthcare chains – that have filed for bankruptcy in recent years.
As part of its restructuring, Franchise shuttered all 357 locations of its American Freight furniture chain.
American Freight, which sold everything from mattresses to dishwashers, competed with retailers like Wayfair and Big Lots.
The company blamed its financial collapse on post-pandemic spending declines and inflation pressures.
The situation worsened following a federal investigation into CEO Brian Kahn’s involvement with the firm that took Franchise private in 2023.
According to filings, the investigation scared off potential partners and derailed any hope of a bailout.
“Franchise Group’s operating businesses, and primarily American Freight, continued to encounter headwinds driven by macro-economic and other factors,” said chief restructuring officer David Orlofsky.
“Together with the allegations against Mr. Kahn, [this] adversely impacted Franchise Group’s ability to sell or otherwise monetize any of its other businesses,” he added.
Traditional wellness companies have also struggled to adapt to medical innovations like Ozempic and Wegovy.
WeightWatchers, for example, is reportedly preparing to file for bankruptcy under $1.6 billion in debt.
Many consumers are turning to next-gen weight-loss drugs that promise faster results with less effort.