KBRA Assigns Preliminary Rating to Five Guys Funding, LLC Series 2022-1 Senior Secured Notes

KBRA assigns a preliminary rating to one class of notes from Five Guys Funding, LLC Series 2022-1, a whole business securitization.

In connection with its first securitization transaction in 2017, Five Guys Enterprises (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 one note class totaling $200 million (the Series 2022-1 Notes). The collateral includes existing and future domestic franchise agreements, existing and future company-operated restaurant royalties, US 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 December 31, 2021, the Five Guys restaurant system included 1,733 locations of which 1,458 were located in North America, with annual system-wide sales of approximately $2.8 billion. The transaction is supported by royalties from 872 franchise locations and 586 company-operated restaurants, representing approximately 60% and 40% of total North American locations, respectively, pro forma based on the planned acquisition of approximately 107 franchised locations. The transaction also benefits from certain company-owned stores, license revenue related to locations outside of North America and other income. Approximately 84% of the restaurant locations are within North America with the remainder across 21 countries.

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Related Publications

• Whole Business Securitization ABS Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

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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