FRG Franchise Group Inc

Item 1.01. Entry into a Material Definitive Agreement.

On February 2, 2023, Franchise Group, Inc. (the “Company”), Franchise Group Newco PSP, LLC (“FG Newco PSP”), Valor Acquisition, LLC (“Valor”), Franchise Group Newco Intermediate AF, LLC (“FG Newco Intermediate FA”, and together with the Company, FG Newco PSP and Valor, the “First Lien Borrowers”), and certain subsidiaries of the Company entered into the Third Amendment to First Lien Credit Agreement (the “First Lien Amendment”) by and among the First Lien Borrowers, the guarantors from time to time party thereto (together with the First Lien Borrowers, the “First Lien Loan Parties”), the lenders from time to time party thereto (the “First Lien Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (in such capacities, the “First Lien Agent”), which amends that certain First Lien Credit Agreement dated as of March 10, 2021 (as amended by the First Lien Amendment and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “First Lien Credit Agreement”) among the First Lien Loan Parties, the First Lien Lenders and the First Lien Agent, a copy of which was previously filed by the Company in the Form 8-K filed by the Company with the U.S. Securities and Exchange Commission on March 15, 2021.

The First Lien Amendment amends the First Lien Credit Agreement to, among other things, (a) provide for an incremental term loan facility in the principal amount of $300,000,000 (the “Third Amendment Incremental Facility”) and (b) change the reference rate under the First Lien Credit Agreement from the London interbank offered rate to the secured overnight financing rate. Pursuant to the First Lien Amendment, loans made under the Third Amendment Incremental Facility (“Third Amendment Incremental Loans”) will be a separate and distinct class from the Initial Term Loans (as defined in the First Lien Credit Agreement) and shall have terms and provisions as set forth in the First Lien Credit Agreement (as modified by the First Lien Amendment). The proceeds of the Third Amendment Incremental Loans will be used to repay certain amounts outstanding under the Company’s ABL Credit Agreement (as defined in the First Lien Credit Agreement) and pay fees and expenses related to the First Lien Amendment.

The foregoing description of the First Lien Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the document that is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.