KBRA Assigns Preliminary Ratings to Zaxby’s Funding LLC Series 2021-1 Senior Secured Notes

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes from Zaxby’s Funding LLC, a whole business securitization.

This transaction represents Zaxby’s Operating Company L.P.’s (“Zaxby’s” or the “Company”) first securitization. The transaction is structured as a “whole business securitization” (WBS) in which Zaxby’s and certain of its affiliates are contributing substantially all of their domestic revenue-generating assets to Zaxby’s Funding LLC (the “Issuer”) and its subsidiaries. The Issuer is issuing three class of notes totaling $985 million (the “Notes”). The transaction collateral includes existing and future domestic franchise agreements and associated royalties and fees, royalties and profits from company-operated restaurants, certain vendor rebates, rental income, other fees and income and intellectual property. The proceeds from the offered Notes will be used to refinance Zaxby’s existing indebtedness, to pay certain transaction fees and expenses, and for general corporate purposes.

The Company is the franchisor and operator of restaurants under the Zaxby’s brand. The Company has a 30-year history as a founder-run restaurant brand focused primarily on chicken. Headquartered in Athens, GA, the Zaxby’s system includes 911 restaurants across 17 states in the Southern U.S. as of March 28, 2021. System-wide sales totaled approximately $2.1 billion for the twelve months ending (“LTM”) March 28, 2021 (“Q1 2021”) and the system is approximately 84% franchised.

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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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