MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Particular Notice Relating to Ahead-Wanting Statements

This quarterly report accommodates forward-looking statements regarding our
enterprise, operations, and monetary efficiency and situation in addition to our
plans, aims, and expectations for our enterprise operations and monetary
efficiency and situation. Any statements contained herein that aren't of
historic info could also be deemed to be forward-looking statements. You'll be able to
determine these statements by phrases comparable to "goal," "anticipate," "assume,"
"imagine," "may," "due," "estimate," "count on," "aim," "intend," "might,"
"goal," "plan," "predict," "potential," "positioned," "ought to," "goal,"
"will," "would," and different comparable expressions which might be predictions of or
point out future occasions and future developments. These forward-looking statements are
based mostly on present expectations, estimates, forecasts, and projections about our
enterprise and the business by which we function and our administration's beliefs and
assumptions. They don't seem to be ensures of future efficiency or growth and
contain identified and unknown dangers, uncertainties, and different elements which might be in
some instances past our management. Moreover, different elements might trigger precise
outcomes to vary materially from historic outcomes or from any outcomes
expressed or implied by such forward-looking statements. Elements that will trigger
such variations embody, however aren't restricted to, the dangers described below
"Merchandise 1A-Danger Elements," together with:

•the uncertainty of the long run influence of the COVID-19 pandemic and public well being
measures on our enterprise and outcomes of operations;

•the impact of steps we absorb response to the COVID-19 pandemic, the severity
and length of the pandemic, new variants of COVID-19 which have emerged, and
the velocity and efficacy of vaccine and therapy developments, the tempo of
restoration when the pandemic subsides and the heightened influence it has on a lot of
the dangers described herein and in our different filings with the SEC;

•potential regulatory actions referring to the COVID-19 pandemic and the associated
authorities mitigation efforts on our enterprise and our monetary outcomes;

•the chance that pure disasters, public well being crises, political uprisings,
uncertainty or unrest, or different catastrophic occasions may adversely have an effect on our
operations and monetary outcomes, together with the influence of the COVID-19 pandemic
on manufacturing operations and our provide chain, buyer site visitors and our
operations basically;

•the chance that any of the anticipated advantages of our acquisitions will
not be realized or won't be realized inside the anticipated time interval, our
companies and our acquisitions might not be built-in efficiently or such
integration could also be tougher, time-consuming or pricey than anticipated, or
revenues following our acquisitions could also be decrease than anticipated;

•our lack of ability to develop on a sustainable foundation;

•modifications in working prices, together with worker compensation and advantages;

•larger inflation charges;

•the seasonality of the services and products we offer in sure of our
enterprise segments;

•departures of key executives, senior administration members or administrators;

•our capacity to draw extra expertise to our groups;

•our capacity to take care of an lively buying and selling marketplace for our widespread inventory on The
Nasdaq World Market (“Nasdaq”);

•the impact of regulation of the services and products that we provide, together with
modifications in legal guidelines and laws and the prices and administrative burdens
related to complying with such legal guidelines and laws;

•our capacity to develop and keep relationships with our third-party product
and repair suppliers;

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•our capacity to supply merchandise and providers that our prospects demand;

•our capacity to efficiently handle our stock ranges and implement
initiatives to enhance stock administration and different capabilities;

•aggressive situations within the retail business and shopper providers markets;

•the efficiency of our merchandise inside the prevailing business;

•worldwide financial situations and enterprise uncertainty, the provision of
shopper and business credit score, change in shopper confidence, tastes,
preferences and spending, and modifications in vendor relationships;

•disruption of producing, warehouse or distribution services or
data programs;

•the continued discount of our opponents promotional pricing on new-in-box
home equipment, doubtlessly adversely impacting our gross sales of out-of-box home equipment
and related margin;

•any potential non-compliance, fraud or different misconduct by our franchisees,
sellers, or staff;

•our capacity and the flexibility of our franchisees and sellers to adjust to authorized
and regulatory necessities;

•failures by our franchisees, the franchisees' staff, and our sellers to
adjust to their contractual obligations to us and with legal guidelines and laws,
to the extent these failures have an effect on our popularity or topic us to authorized danger;

•the flexibility of our franchisees and sellers to open new territories and function
them efficiently;

•the provision of appropriate retailer places at applicable lease phrases;

•the flexibility of our franchisees and sellers to generate adequate income to
repay their indebtedness to us;

•our capacity to handle Firm-owned shops;

•our publicity to litigation and any governmental investigations;

•our capacity and our franchisees’ and sellers’ capacity to guard prospects’
private data, together with from a cyber-security incident;

•the influence of identity-theft issues on buyer attitudes towards our
providers;

•our capacity to entry the credit score markets and fulfill our covenants to lenders;

•our working subsidiary's potential repurchase of sure finance receivables
if sure representations and warranties concerning the high quality and nature of such
receivables are breached, which can negatively influence our outcomes of operations,
monetary situation, and liquidity;

•a decline within the credit score high quality of our prospects, a lower in our credit score
gross sales, or different elements outdoors of our management, which may result in a lower
in our product gross sales and profitability;

•our reliance on know-how programs and digital communications;

•the influence of any acquisitions or inclinations, together with our capacity to
combine acquisitions and capitalize on their anticipated synergies or our
capacity to sale non-core belongings together with the anticipated advantages; and

•different elements, together with the chance elements mentioned on this quarterly report.

Potential buyers and different readers are urged to contemplate these elements
rigorously in evaluating the forward-looking statements and are cautioned to not
place undue reliance on the forward-looking statements. These forward-looking
statements converse solely as of the date of this quarterly report. Except required
by legislation, we don't intend to publicly replace or revise any
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forward-looking statements to mirror new data or future occasions or
in any other case. A possible investor or different vendor ought to, nevertheless, assessment the
elements and dangers we describe within the reviews we’ll file on occasion with
the U.S. Securities and Alternate Fee (“SEC”) after the date of this
quarterly report.

Restatement

As acknowledged in Notice 15 "Restatement of Beforehand Issued Monetary Statements" to
our Condensed Consolidated Monetary Statements, we've amended and restated
our Condensed Consolidated Statements of Money Flows for the three months ended
March 26, 2022 and this Administration's Dialogue and Evaluation has been revised to
account for the consequences of the restatement.

Overview

We're an proprietor and operator of franchised and franchisable companies that
regularly seems to be to develop our portfolio of manufacturers whereas using our working
and capital allocation philosophies to generate sturdy money flows. We've got a
diversified and rising portfolio of extremely acknowledged manufacturers. Our asset-light
enterprise mannequin is designed to generate constant, recurring income and robust
working margins and requires restricted upkeep capital expenditures. As a
multi-brand operator, we regularly look to diversify and develop our portfolio of
manufacturers both by means of acquisition or natural model growth. Our acquisition
technique usually targets companies which might be extremely money circulation generative with
compelling unit economics that may be scaled by including franchise and firm
owned items, or that may be restructured to boost efficiency and worth to
Franchise Group. We attempt to create worth for our stockholders by producing
free money circulation and capital-efficient progress throughout financial cycles.

Our enterprise strains embody The Vitamin Shoppe ("Vitamin Shoppe"), Pet Provides
Plus, Badcock Residence Furnishings & Extra ("Badcock"), American Freight, Buddy's Residence
Furnishings ("Buddy's"), and Sylvan Studying ("Sylvan"). Consult with "Notice 13.
Segments" for added data.

Our income is primarily derived from merchandise gross sales, lease income,
financing revenues, royalties and different required charges from our franchisees.

In evaluating our efficiency, administration focuses on Adjusted EBITDA as a
measure of the money circulation from recurring operations from the companies. Adjusted
EBITDA represents web earnings (loss), earlier than earnings taxes, curiosity expense,
depreciation and amortization, and sure different objects.

Impression of COVID-19

As of the date of this Quarterly Report, we've not skilled a big
adverse influence on our gross sales and profitability because of the COVID-19 pandemic.
Nevertheless, the COVID-19 pandemic may negatively influence our enterprise and
monetary outcomes by weakening demand for our services and products, interfering
with our capacity and our franchisees' capacity to function retailer places,
disrupting our provide chain or affecting our capacity to lift capital from
monetary establishments. As occasions are quickly altering, we're unable to
precisely predict the influence that the COVID-19 pandemic could have on our
outcomes of operations on account of uncertainties together with, however not restricted to, the
curbing of presidency stimulus packages, the length of shutdowns,
quarantines and journey restrictions, the severity of the illness, the length
of the outbreak and the general public's response to the outbreak; nevertheless, we're
actively managing our enterprise to answer the influence.

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Outcomes of Operations

The desk beneath exhibits outcomes of operations for the three months ended March 26,
2022 and March 27, 2021.

                                                    Three Months Ended
                                                                               Change
(In 1000's)               March 26, 2022       March 27, 2021           $             %
Whole revenues              $     1,135,470      $       621,345      $ 514,125        82.7  %
Revenue from operations              130,366               52,976         77,390       146.1  %
Internet earnings                  $        12,317      $       (28,334)     $  40,651       143.5  %

Revenues. The desk beneath units forth the elements and modifications in our revenues
for the three months ended March 26, 2022 and March 27, 2021.

                                               Three Months Ended
                                                                          Change
(In 1000's)          March 26, 2022       March 27, 2021           $             %
Product                $       979,164      $       583,816      $ 395,348        67.7  %
Service and different              148,282               28,576        119,706       418.9  %
Rental                           8,024                8,953           (929)      (10.4) %
Whole income          $     1,135,470      $       621,345      $ 514,125        82.7  %



For the three months ended March 26, 2022, whole revenues elevated $514.1
million, or 83%, to $1,135.5 million in comparison with $621.3 million in the identical
interval final 12 months. This improve was primarily because of the Pet Provides Plus
Acquisition, which elevated income by $249.9 million, the Badcock Acquisition,
which elevated income by $256.3 million, and the Sylvan Acquisition, which
elevated income by $10.0 million. The rise was additionally on account of a $16.2 million
improve in income at our Vitamin Shoppe phase. These will increase had been offset
by a $17.1 million lower in income at our American Freight phase.

Working bills.  The next desk particulars the quantities and modifications in our
working bills for the three months ended March 26, 2022 and March 27, 2021.

                                                                                         Three Months Ended
                                                                                                                        Change
(In 1000's)                                             March 26, 2022           March 27, 2021              $                   %
Price of income:
 Product                                                 $       616,585                  339,414          $ 277,171                 81.7  %
 Service and different                                                 8,663                      405              8,258              2,039.0  %
 Rental                                                            2,861                    3,005               (144)                (4.8) %
   Whole value of income                                         628,109                  342,824            285,285                 83.2  %
Promoting, basic, and administrative bills                    376,995                  225,545            151,450                 67.1  %
  Whole working bills                               $     1,005,104          $       568,369          $ 436,735                 76.8  %


For the three months ended March 26, 2022, whole working bills had been
$1,005.1 million in comparison with $568.4 million in the identical interval final 12 months,
representing a rise of $436.7 million, or 76.8%. This improve was
primarily because of the Pet Provides Plus Acquisition which elevated working
bills by $228.7 million, the Badcock Acquisition, which elevated working
bills by $186.0 million, and the Sylvan Acquisition, which elevated
working bills by $9.1 million. The rise was additionally on account of $14.1 million
improve in working bills at our Vitamin Shoppe phase.



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Non-operating earnings (expense) elevated $30.2 million because of the following:

Discount buy achieve. Discount buy achieve elevated $0.1 million for the
three months ended March 26, 2022 in comparison with the identical interval final 12 months on account of
an adjustment made to the preliminary estimates of the truthful worth of
identifiable belongings acquired and liabilities assumed within the Badcock Acquisition.

Different. Different expense decreased $14.7 million for the three months ended
March 26, 2022 in comparison with the identical interval final 12 months primarily on account of a
prepayment penalty within the prior interval of $36.7 million from the reimbursement of
the Franchise Group New Holdco Time period Mortgage and ABL Time period Mortgage, partially offset by
a $23.7 million loss associated to our funding in NextPoint within the three months
ended March 26, 2022.

Curiosity expense, web. Curiosity expense, web elevated $44.9 million for the
three months ended March 26, 2022, on account of $65.3 million of curiosity expense
associated to the Badcock securitized receivables, the write-off of $0.3 million of
deferred financing prices from the $31.0 million principal cost of the First
Lien Badcock Time period Mortgage, and the write-off of $3.5 million of deferred financing
prices from the $150.0 million principal cost and termination of the Second
Lien Badcock Time period Mortgage.

Revenue tax profit. Our efficient tax fee from persevering with operations, together with
discrete earnings tax objects, was 23.0% and 9.1% for the three months ended March
26, 2022 and March 27, 2021, respectively. The change within the efficient tax fee
in comparison with the prior 12 months is because of the reversal of a valuation allowance
associated to web working loss carryforwards within the prior 12 months.

Phase Data

We, by means of our franchisees and Firm-owned shops, function a system of
rent-to-own and level of sale retail places. Our operations are carried out in
six reporting enterprise segments: Vitamin Shoppe, Badcock, Pet Provides Plus,
American Freight, Buddy's, and Sylvan. Consult with "Notice 13. Segments" for
extra data. As a result of the Pet Provides Plus Acquisition occurred on
March 10, 2021, comparable data isn't helpful because the prior 12 months interval
doesn't embody a full quarter of exercise. As a result of the Sylvan and Badcock
Acquisitions occurred on September 27, 2021 and November 22, 2021, respectively;
no comparable data is accessible. Due to this fact, Pet Provides Plus, Sylvan,
and Badcock data isn't offered on this dialogue.

The next desk summarizes the working outcomes of our Vitamin Shoppe
phase:

                                                       Three Months Ended
                                                                                  Change
         (In 1000's)           March 26, 2022       March 27, 2021          $            %
         Whole revenues          $       310,953      $       294,739      $ 16,214       5.5  %
         Working bills              275,599              261,464        14,135       5.4  %
         Phase earnings          $        35,354      $        33,275      $  2,079       6.2  %



Whole income for the three months ended March 26, 2022 for our Vitamin Shoppe
phase elevated $16.2 million or 5.5% in comparison with the identical interval within the prior
12 months. The rise in income was primarily on account of a 6.1% improve in comparable
retailer gross sales pushed primarily by a rise in buyer site visitors within the retail
shops, new product launches and value will increase on account of larger vendor prices.

Working bills for our Vitamin Shoppe phase elevated $14.1 million or
5.4% for the three months ended March 26, 2022 as in comparison with the identical interval in
the prior 12 months. The will increase in working bills had been primarily because of the
following:

•a $12.6 million improve in value of income on account of a corresponding improve in
income and a shift within the product combine; and

•a $2.8 million improve in worker compensation and advantages associated to
variable payroll prices and better healthcare prices.

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The next desk summarizes the working outcomes of the American Freight
phase:

                                                Three Months Ended
                                                                           Change
(In 1000's)           March 26, 2022       March 27, 2021           $             %
Whole revenues          $       241,416      $       258,517      $ (17,101)       (6.6) %
Working bills              230,203              233,387         (3,184)       (1.4) %
Phase earnings                   11,213      $        25,130      $ (13,917)      (55.4) %



Whole income for our American Freight phase decreased $17.1 million or (6.6)%
for the three months ended March 26, 2022 as in comparison with the identical interval final
12 months. The lower was attributable to a lower in comparable retailer gross sales due
to decrease demand for furnishings and home equipment pushed by authorities stimulus
packages within the prior 12 months interval and the inflationary setting which
resulted in decreased buyer site visitors.

Working bills for our American Freight phase decreased $3.2 million or
(1.4)% for the three months ended March 26, 2022 as in comparison with the identical interval
final 12 months because of the lower in fee based mostly compensation.

The next desk summarizes the working outcomes of the Buddy's phase:

                                                       Three Months Ended
                                                                                  Change
        (In 1000's)           March 26, 2022       March 27, 2021          $             %
        Whole revenues          $        15,585      $        16,780      $ (1,195)       (7.1) %
        Working bills               11,520               12,507          (987)       (7.9) %
        Phase earnings                    4,065                4,273          (208)       (4.9) %



Whole income for our Buddy's phase decreased $1.2 million or (7.1)% for the
three months ended March 26, 2022, as in comparison with the identical interval final 12 months. The
lower in income was primarily attributable to the refranchising of eight
Firm-owned shops on August 25, 2021. Income for comparable shops for the
three months ended March 26, 2022 elevated from $7.7 million to $9.0 million
in comparison with the identical interval final 12 months.

Working bills for our Buddy's phase decreased $1.0 million or (7.9)% for
the three months ended March 26, 2022, as in comparison with the identical interval final 12 months
primarily because of the refranchising of eight Firm-owned shops on August 21,
2021.

The Pet Provides Plus Acquisition occurred on March 10, 2021. As a result of the Pet
Provides Plus Acquisition occurred throughout the three months ended March 27, 2021,
all materials earnings assertion will increase within the present interval are because of the Pet
Provides Plus Acquisition.

Adjusted EBITDA

To offer extra data concerning our monetary outcomes, we've
disclosed Adjusted EBITDA within the desk beneath and inside this Quarterly Report.
Adjusted EBITDA represents web earnings (loss), earlier than earnings taxes, curiosity
expense, depreciation and amortization, and sure different objects specified beneath.
We've got offered a reconciliation beneath of Adjusted EBITDA to web earnings (loss),
probably the most immediately comparable GAAP monetary measure.

We've got included Adjusted EBITDA on this Quarterly Report as a result of we imagine the
presentation of this measure is beneficial to buyers as a supplemental measure in
evaluating the mixture efficiency of our working companies and in
evaluating our outcomes from interval to interval as a result of it excludes objects that we do
not imagine are reflective of our core or ongoing working outcomes. This
measure is utilized by our administration to guage efficiency and make useful resource
allocation choices every interval. Adjusted EBITDA can also be the first working
metric used within the willpower of government administration's compensation. In
addition, a measure just like Adjusted EBITDA is utilized in our credit score services.
Adjusted EBITDA isn't a acknowledged monetary measure below GAAP and might not be
corresponding to similarly-titled measures utilized by different corporations in our business.
Adjusted EBITDA shouldn't be thought-about in isolation from or instead
to web earnings (loss), working earnings (loss), or every other efficiency measures
derived in accordance with GAAP.

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The next desk presents a reconciliation of Adjusted EBITDA for every of the
intervals indicated.

Reconciliation of Internet Revenue to Adjusted

                                                                                  EBITDA
                                                                            Three Months Ended
(In 1000's)                                                    March 26, 2022          March 27, 2021
Internet earnings (loss) from persevering with operations                     $      12,317          $       (28,334)
Add again:
Curiosity expense                                                        92,327                   47,435
Revenue tax expense (profit)                                             3,678                   (2,851)
Depreciation and amortization                                           22,033                   11,458
Whole Changes                                                      118,038                   56,042
EBITDA                                                                 130,355                   27,708
Changes to EBITDA
Government severance and associated prices                                       96                      510
Inventory based mostly compensation                                                 6,626                    2,436
Litigation prices and settlements                                           230                       89
Company compliance prices                                                  51                      779
Retailer closures                                                             933                      222
Securitized receivables, web                                           (50,871)                       -
Prepayment penalty on early debt reimbursement                                   -                   36,726
Proper-of-use asset impairment                                              375                        -
Integration prices                                                          464                    3,123
Divestiture prices                                                         (337)                     342
Acquisition prices                                                          626                    7,230
Loss on funding in fairness securities                                 23,723                        -
Acquisition discount buy achieve                                           67                        -
Whole Changes to EBITDA                                            (18,017)                  51,457
Adjusted EBITDA                                                  $     112,338          $        79,165

Liquidity and Capital Sources

We imagine that we've adequate liquidity to assist our ongoing operations
and keep a adequate liquidity place to fulfill our obligations and
commitments. Our liquidity plans are established as a part of our monetary and
strategic planning processes and think about the liquidity essential to fund our
working, capital expenditure and debt service wants.

We primarily fund our operations and acquisitions by means of working money flows
and, as wanted, a mixture of borrowings below numerous credit score agreements,
availability below our revolving credit score services and the issuance of fairness
securities. Money technology could be topic to variability based mostly on many elements,
together with seasonality and the consequences of modifications in finish markets.

As of March 26, 2022, we've present installments of long-term obligations of
$488.0 million, of which is $310.1 million in debt associated to the securitization
of accounts receivable, $175.7 million in present time period loans web of debt
issuance prices, and $2.1 million from finance leases. We count on these
obligations could be serviced from our money and money equivalents, which had been
$149.6 million as of March 26, 2022, and the proceeds from our Badcock phase's
sale-leaseback transactions.

Through the three months ended March 26, 2022, we executed three substantial
transactions that may have an effect on our liquidity and capital sources in future
intervals. For extra particulars please see “Notice 7. Lengthy-Time period Obligations”:

•On December 27, 2021, we repaid $31.0 million and $150.0 million of principal
on our First Lien Badcock Time period Mortgage and Second Lien Badcock Time period Mortgage,
respectively, utilizing money proceeds from the Receivables Buy Settlement. The
reimbursement of the First Lien Badcock Time period Mortgage happy the necessities for
quarterly principal funds so no extra principal funds are due till
the maturity of the mortgage. The reimbursement of the First Lien Badcock Time period
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Mortgage resulted in extra curiosity expense of $0.3 million for the write-off
of deferred financing prices. The reimbursement of the Second Lien Badcock Time period Mortgage
repaid the complete excellent stability of principal, which resulted in extra
curiosity expense of $3.5 million for the write-off of deferred financing prices.

•On January 1, 2022 and March 25, 2022, we drew $17.0 million and $50.0 million,
respectively, on the senior secured revolving mortgage facility. The obligations of
the Firm below the Third Amended and Restated Mortgage and Safety Settlement are
secured by considerably all the belongings of the Firm pursuant to the ABL
Settlement and a Third Amended and Restated Pledge Settlement.

Sources and makes use of of money

Working actions. Within the three months ended March 26, 2022, web money from
working actions decreased $66.6 million in comparison with the identical interval within the
prior 12 months primarily on account of a $85.8 million improve in money used for stock
and a $21.2 million improve in accounts receivable. This was partially offset
by a $23.0 million improve in accounts payable and accrued bills and a $12.1
million improve in money earnings from operations. Money web earnings represents web
earnings adjusted for non-cash or non-operating actions comparable to depreciation
and amortization, deferred financing value amortization and the change in truthful
worth of funding.

Investing actions. Within the three months ended March 26, 2022, money utilized in
investing actions decreased $459.4 million in comparison with the identical interval within the
prior 12 months. This lower was primarily on account of a discount of $459.8 million in
money used for acquisitions. This was partially offset by a $2.3 million improve
of proceeds obtained from the sale of property, plant, and gear and a web
$4.6 million lower in issuance of working loans and funds obtained from
franchisees.

Financing actions. Within the three months ended March 26, 2022, money offered by
financing actions decreased $569.3 million in comparison with the identical interval within the
prior 12 months. This lower was on account of a $1,182.4 million lower in proceeds
from the issuance of debt, a $79.5 million lower in proceeds from the
issuance of most well-liked inventory and a rise of $11.7 million for dividends paid.
The lower of money offered by financing actions was partially offset by a
$617.5 million lower in repayments of long-term obligations and a $87.5
million lower in funds for debt issuance prices.

Lengthy-term debt borrowings

For an outline of our long-term debt borrowing discuss with “Notice 7. Lengthy-Time period
Obligations”.

Different elements affecting our liquidity

Tax Receivable Settlement. We could also be required to make funds below the Tax
Receivable Settlement ("TRA Funds") to the previous fairness holders of Buddy's
(the "Buddy's Members"). Beneath the phrases of the Tax Receivable Settlement, we
agreed to pay the Buddy's Members 40% of the money financial savings, if any, in federal,
state and native taxes that we notice or are deemed to comprehend because of
any will increase in tax foundation of the belongings of New Holdco ensuing from future
redemptions or exchanges of New Holdco items held by the Buddy's Members. Any
future obligations and the timing of such funds below the Tax Receivable
Settlement, nevertheless, are topic to a number of elements, together with (i) the timing of
subsequent exchanges of New Holdco items by the Buddy's Members, (ii) the worth
of our widespread inventory on the time of trade, (iii) the extent to which such
exchanges are taxable, (iv) the flexibility to generate adequate future taxable
earnings over the time period of the Tax Receivable Settlement to comprehend the tax advantages
and (v) any future modifications in tax legal guidelines. If we don't generate adequate taxable
earnings within the mixture over the time period of the Tax Receivable Settlement to make the most of
the tax advantages, then we might not be required to make the associated TRA
Funds. Though the quantity of the TRA Funds would scale back the entire money
circulation to us and New Holdco, we count on the money tax financial savings we'll notice from
the utilization of the associated tax advantages could be adequate to fund the
required funds. As of March 26, 2022, we've TRA Funds because of the Buddy's
Members of $17.3 million.

Dividends. The cost of dividends is on the discretion of our Board of
Administrators and relies upon, amongst different issues, on our earnings, capital
necessities, and monetary situation. Our capacity to pay dividends can also be
topic to compliance with monetary covenants which might be contained in our credit score
facility and could also be restricted by any future indebtedness that we incur or
issuances of our most well-liked inventory. As well as, relevant legislation requires our Board
of Administrators to find out that we've enough surplus previous to the declaration
of dividends. We can not present an assurance that we are going to pay dividends at any
particular degree or in any respect.


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Future money wants and capital necessities

Working and financing money circulation wants. Following transactions accomplished
subsequent to March 26, 2022, our main money wants are anticipated to incorporate the
cost of scheduled debt and curiosity funds, capital expenditures and regular
working actions. We imagine that the revolving credit score services together with
money from working actions, can be adequate to assist our money circulation
wants for a minimum of the following twelve months.

A number of elements may have an effect on our money circulation in future intervals, together with the
following:

•The extent to which we prolong extra working financing to our franchisees
past the degrees of prior intervals;

•The extent and timing of capital expenditures;

•The extent and timing of future acquisitions;

•Our capacity to combine our acquisitions and implement enterprise and price
financial savings initiatives to enhance profitability; and

•The extent, if any, to which our Board of Administrators elects to proceed to
declare dividends on our widespread inventory.

Compliance with debt covenants. Our revolving credit score and long-term debt
agreements impose restrictive covenants on us, together with necessities to fulfill
sure ratios. As of March 26, 2022, we had been in compliance with all covenants
below these agreements and, based mostly on a continuation of present working
outcomes, we count on to be in compliance for the rest of fiscal 2022.

Off Stability Sheet Preparations

For off stability sheet preparations and ensures to which the Firm stays
secondarily dependable, discuss with “Notice 12. Commitments and Contingencies”.

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ITEM 4
CONTROLS AND PROCEDURES

The Firm, below the supervision and with the participation of the Firm's
administration, together with the Firm's Chief Government Officer and the Chief
Monetary Officer, has evaluated the effectiveness of the Firm's disclosure
controls and procedures (as outlined in Guidelines 13a-15(e) and 15d-15(e) below the
Alternate Act) as of March 26, 2022. Based mostly on that analysis, the Firm's
Chief Government Officer and Chief Monetary Officer concluded that the Firm's
disclosure controls and procedures weren't efficient as of March 26, 2022
due to the fabric weak spot within the Firm's inside management over
monetary reporting described beneath.

In the middle of making ready its interim monetary statements for its fiscal
quarter ended September 24, 2022, the Firm recognized a cloth weak spot in
its inside controls over monetary reporting involving the preparation of its
Assertion of Money Flows. Because of this deficiency, there was a
misclassification of money flows related to curiosity funds on the
Firm's Badcock phase's secured borrowing leading to an overstatement of
money flows offered by working actions of $53.0 million and an
overstatement of money utilized in financing actions of $53.0 million within the
Firm's Quarterly Report on Kind 10-Q for the fiscal quarter ended March 26,
2022. Administration, with oversight from the Firm's Audit Committee, is actively
engaged on a remediation plan and is dedicated to the remediation of the
materials weak spot as expeditiously as potential. As soon as positioned in operation for a
adequate interval, the Firm will topic the remediated controls to
applicable assessments to be able to decide whether or not they're working successfully.

However the recognized materials weak spot, administration believes that the
Condensed Consolidated Monetary Statements and associated monetary data
included on this Amended Report pretty current, in all materials respects, the
Firm's stability sheets, statements of operations, complete earnings (loss)
and money flows as of and for the intervals offered.

On September 27, 2021 and November 22, 2021, the Firm acquired Sylvan and
Badcock, respectively. The Firm is within the strategy of implementing its
inside management construction over every of the acquired enterprise's operations and
expects that course of to be accomplished within the fourth quarter of fiscal 12 months 2022.




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