What loss did Bft recognize on the divestiture of the Row House brand?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 3 – Divestitures
Divestiture of Stride brand – On February 13, 2024, the Company and an affiliate of the Member entered into an agreement with a buyer, pursuant to which the Company divested the Stride brand, including the intellectual property, franchise rights and franchise agreements for open studios. The buyer of the Stride brand is a former member of management and shareholder of the Member's parent. The Company received no consideration from the divestiture of the Stride brand and the Member will assist the buyer with transition support including cash payments of approximately $265 payable over the 12-month period following divestiture. The divestiture allows the Company to better focus and utilize its resources on its other brands. The Company recognized a gain on divestiture of $323, which was included within selling, general and administrative expenses in the consolidated statements of operations. The divested brand did not represent a strategic shift that ha
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the company recognized a loss of $59,000 on the divestiture of the Row House brand. This divestiture, which included the intellectual property, franchise rights, and franchise agreements for open studios, occurred on May 20, 2024. Bft and an affiliate of the Member entered into an agreement with a buyer for the transaction. The Member retained certain liabilities related to known litigation, pre-litigation, and disputes as of the closing of the divestiture. Bft received no consideration from the divestiture.
The document states that this loss was included within selling, general, and administrative expenses in the consolidated statements of operations. The divestiture was made to allow Bft to better focus and utilize its resources on its other brands. Despite the loss, the divestiture of the Row House brand did not represent a strategic shift that had a major effect on Bft's operations and financial results, and therefore, it was not presented as discontinued operations.
For a prospective franchisee, this information provides insight into Bft's strategic decisions regarding its brand portfolio. It demonstrates that Bft is willing to divest brands that do not align with its long-term goals, even if it results in a financial loss. This could be seen as a positive sign, as it indicates that Bft is actively managing its resources and focusing on its core business. However, it also highlights the risk that Bft may make strategic decisions that could impact the value of its various brands.