Franchise Group to Acquire Pet Supplies Plus in $700 Million Deal: What You Need to Know About Ownership

Franchise Group, Inc. (NASDAQ: FRG) has officially announced its acquisition of Pet Supplies Plus (PSP), addressing the question of who owns this major pet retail chain. Previously held by Sentinel Capital Partners affiliates, Pet Supplies Plus will become part of Franchise Group’s expanding portfolio following the all-cash transaction valued at approximately $700 million. The deal is expected to close in March 2021 and represents a significant consolidation in the franchise retail sector.

The Strategic Rationale Behind the Ownership Transfer

The acquisition brings together one of the nation’s largest franchise operators with a mature and rapidly expanding pet industry leader. With more than 500 locations across the country—nearly 60% franchised—Pet Supplies Plus represents a cornerstone acquisition for Franchise Group. The pet supplies business operates with robust unit economics and maintains a backlog of over 185 new store openings in various development stages, signaling strong market demand.

Brian Kahn, President & CEO of Franchise Group, emphasized the strategic fit: “PSP adds another franchise concept with strong unit economics and diversification into an economically resilient and secularly growing pet industry.” Under new ownership, Pet Supplies Plus is positioned to accelerate its franchise expansion while benefiting from Franchise Group’s operational expertise and best practice functions.

Revenue and Financial Performance

Pet Supplies Plus demonstrates impressive financial metrics for fiscal year 2020. The company is estimating total systemwide revenue of approximately $1.2 billion, with company-specific revenue exceeding $825 million and Adjusted EBITDA of nearly $80 million. The transaction is expected to boost Franchise Group’s systemwide annualized revenue to more than $3.6 billion upon closing.

The $100 million net present value of tax benefits associated with the transaction adds further financial appeal. Franchise Group estimates the combined entity will benefit from immediately accretive Non-GAAP earnings per share in 2021, while expected pro forma net total leverage is projected to remain under 3.4x—a healthy financial position.

Omnichannel Capabilities and Market Positioning

Under Franchise Group’s ownership, Pet Supplies Plus will leverage its comprehensive omnichannel infrastructure. The business model combines convenient neighborhood retail locations with direct-to-consumer local delivery options and a buy-online-pickup-in-store model, offering customers multiple cost-competitive shopping channels. This diversified revenue structure—drawing from corporate store sales, franchise royalties, and internal distribution to franchisees—creates stable cash flow streams.

Pet Supplies Plus maintains its position as the leading franchisor in the pet industry, supported by a well-developed franchise system that has generated substantial expansion interest with over 185 units in various development phases.

Financing and Capital Structure

To facilitate the acquisition, Franchise Group secured $1.3 billion in new term loan credit facilities through arrangements with J.P. Morgan, Citizens Bank, and Credit Suisse. These funds will refinance existing obligations related to Buddy’s Home Furnishings, American Freight, and Liberty Tax Service, while providing acquisition financing for the Pet Supplies Plus transaction. An affiliate of B. Riley Financial committed up to $300 million in additional unsecured financing.

About the Combined Entity

Following the close of this transaction, Franchise Group’s portfolio will include Liberty Tax Service, Buddy’s Home Furnishings, American Freight, The Vitamin Shoppe, and Pet Supplies Plus. The combined organization will operate more than 4,100 locations predominantly throughout the U.S. and Canada, structured as either company-operated units or franchised locations. This expanded scale is expected to lower Franchise Group’s overall cost of capital and enhance free cash flow generation capabilities.

The transaction represents a notable consolidation in franchise retail, with Pet Supplies Plus transitioning from Sentinel Capital Partners ownership to become part of a larger, diversified franchise operator positioned for continued growth in economically resilient market segments.