B. Riley Wealth Management

On November 3, 2024, Franchise Group, Inc. (FRG), the parent company of retail brands like Vitamin Shoppe and Pet Supplies Plus, filed for Chapter 11 bankruptcy in Delaware. This development has significant implications for investors, particularly those who purchased FRG shares through B. Riley Wealth Management.

Franchise Group was established in 2019 and quickly grew by acquiring multiple retail brands. B. Riley Financial, an investment and brokerage firm, played a pivotal role in FRG’s expansion by providing financial backing for acquisitions and holding a significant equity stake. In 2023, B. Riley facilitated a management-led buyout of Franchise Group, further deepening their connection.

Several key factors contributed to Franchise Group’s financial collapse:

1. Decreasing Consumer Spending: Lower consumer demand adversely impacted the company’s retail operations, leading to declining revenues.
2. Leadership Instability: The resignation of FRG’s founder and former CEO, Brian Kahn, amid a criminal securities fraud investigation created additional instability. Although Kahn denied wrongdoing, his departure left a leadership void.
3. High Debt Levels: Franchise Group accumulated nearly $2 billion in debt, forcing it into bankruptcy proceedings. First-lien lenders have since agreed to convert their debt into equity in the reorganized company.

B. Riley Wealth Management clients who invested in FRG may face significant financial losses. Questions have arisen regarding B. Riley’s recommendation to invest in FRG, given the firm’s substantial stake in the company and potential conflicts of interest. Investors may not have been fully informed about FRG’s financial struggles or the risks associated with their investments.

At ChapmanAlbin, we specialize in representing investors harmed by financial misconduct. Contact us today to discuss your situation and explore how we can help.