KBRA Assigns Preliminary Ratings to Five Guys Funding LLC Series 2021-1 Senior Secured Notes

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes from Five Guys Funding LLC, a whole business securitization. KBRA also anticipates withdrawing the Series 2017-1, A-1 Notes and affirming the rating on the Series 2017-1, A-2 Notes.

This transaction is the second whole business securitization (WBS) issued by Five Guys Funding, LLC (the “Master Issuer”). In connection with its first securitization transaction in 2017, Five Guys Enterprises, LLC. (“Five Guys”, or the “Company”) contributed substantially all of its revenue-generating assets to the Master Issuer as collateral for the then offered notes. The Master Issuer is issuing two note class totaling $250 million (the “Series 2021-1 Notes”). The collateral includes existing and future domestic franchise agreements, existing and future company-operated restaurant royalties, U.S. and Canadian intellectual property and related license agreements, collections from company-operated restaurants and bakery sales, and certain international collections. The proceeds from the offered Notes will be used to pay certain transaction fees and expenses, and for general corporate purposes.

As of March 31, 2021, the Five Guys restaurant system included 1,684 locations of which 1,458 were located in North America, with annual system-wide sales of approximately $2.3 billion. The transaction is supported by royalties from 1,017 franchise locations and 441 company-operated restaurants, representing approximately 70% and 30% of total North American locations, respectively. The transaction also benefits from license revenue related to locations outside of North America. Approximately 87% of the restaurant locations are within North America, while the remainder are outside of North America, across 20 countries.

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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 pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.


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