FRP supports restaurant franchise facilitating the financing of new store capital expenditure
FRP's Financial Advisory team conducted pre-lending financial due diligence for a restaurant franchise group and the bank, facilitating the financing of new store capital expenditure.
Background
Basil, a franchisee for a fast-food chain with branches in Central Europe, sought a €15 million revolving credit facility from a clearing bank to finance capital expenditure to grow the number of restaurants in their franchise portfolio.
Action
The FRP Financial Advisory team provided pre-lending financial due diligence services to evaluate whether the group could meet its obligations to the bank and comply with the terms of the franchise agreements. FRP conducted a detailed analysis of the historical performance of the existing store portfolio and reviewed management’s model to assess the likelihood of achieving the forecast. This analysis informed sensitivity testing, which explored the impact of various scenarios on the business and forecast covenant headroom. Additionally, FRP identified key risks to the business at both the micro and macroeconomic levels.
Outcome
The analysis helped management and the bank understand the various measures the group could take to meet its debt service costs and covenant requirements in differing scenarios. This work informed the financial covenants, supporting the business in the roll-out of its new stores while protecting the bank’s position.
It’s been a pleasure working together, the way FRP have presented the information has helped us look at the business through a different lens, which is always helpful.Franchise Director Client
Related team
Richard Sanfourche
Simon Longfield
