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Riley Wealth Management and Franchise Group, Inc.

Franchise Group, Inc. (FRG) is a company that operates a portfolio of retail businesses, including well-known brands such as Vitamin Shoppe, Pet Supplies Plus, Buddy’s Home Furnishings, and Wag N’ Wash. It owns and operates over 2,200 locations, many of which are run through franchise or partnership agreements. FRG focuses on consumer goods, health and wellness, pet supplies, and home furnishings.

Riley Wealth Management is a division of B. Riley Financial, Inc., a financial services firm based in Los Angeles. B. Riley Wealth Management provides investment advisory and wealth management services. The firm is known for its investment banking, financial consulting, and brokerage services. It has a wide range of clients, from individuals to large institutional investors. B. Riley was involved in the formation of FRG, assisting with the strategic planning of its acquisitions and acting as a broker for FRG shares (NASDAQ: FRGAP).

However, after issues arose with FRG and its brands (such as a decline in consumer spending and the criminal investigation into CEO Brian Kahn), B. Riley and its investors suffered significant financial losses.

Riley and FRG | What Happened

2022: Formation and Deal with FRG

• In early 2022, B. Riley Financial, under then CEO Kahn, helped facilitate the creation of FRG through a series of acquisitions. This deal was backed by significant investments, including a $2.8 billion buyout.
• By mid 2022, FRG was established as a holding company in control of multiple retail.
• Throughout the remainder of the year, B. Riley helped finance the deal, arranging $200 million in loans to Kahn, using his stake in FRG as collateral. Nomura Holdings also provided a $500 million loan, further financing the deal and taking equity stakes in FRG.

2023: Financial Troubles Begin

• In early 2023, Kahn resigned as CEO of B. Riley amid a criminal investigation into his involvement with the now-defunct Prophecy Asset Management hedge fund. Kahn denied wrongdoing and claimed he was also a victim of fraud related to Prophecy’s collapse.
• B. Riley and FRG began facing financial challenges, with a significant downturn in consumer spending affecting FRG’s operations, including its retail chains. This economic strain contributed to FRG’s financial instability.

2024: FRG Files for Bankruptcy

• By February 2024, FRG filed for Chapter 11 bankruptcy protection in Delaware, citing nearly $2 billion in debts. The filing followed months of struggles stemming from declines in consumer spending and the ongoing fallout from the Prophecy scandal.
• FRG’s shareholders and B. Riley were notably affected, with B. Riley set to face $120 million in losses because of its significant liability related to its 31% stake in FRG.

Source: Los Angeles Times

Riley / FRG Investigation | Contact Us 

Peiffer Wolf is currently investigating claims against B. Riley in light of allegations that B. Riley failed to disclose known negative information about FRG and conflicts of interest between FRG and B. Riley.

If you invested in FRG shares with B. Riley, Contact Us by calling 585-310-5140 or by filling out an online Contact Form for a FREE Consultation.