Allied Brands secures $4.9 million in US funding to expand franchise division

Allied Brands has secured $4.9 million in funding from a New York-based investment group in order to assist the growth of its franchise services division.

The division, launched in November last year, is designed to help franchise companies or those wanting to franchise. It is the third part of Allied Brands’ business along with its retail and direct-to-home divisions.

Allied Brands announced to the ASX it had secured $4.9 million from SpringTree Global Investors, an asset management company based in New York, which focuses on companies requiring $US5-10 million in debt or equity.

The agreement between the two companies provides over the next two years, funds will be provided through an initial note placement of $150,000, followed by interest and fee-free tranches of $100,000 every month.

Additionally, Allied Brands has been given the option to repay the tranches in cash rather than equity, with the facility not subject to any profit or financial covenants.

“The purpose for this convertible credit facility is to fund working capital requirements fuelled by the growth opportunities of the franchise services division. The company is in advanced discussions with several retail franchise systems in this regard.”

The first customer of the franchise systems division will be the Bay Swiss/Freedom Homewares retail group, which Allied acquired last year.

Shane Radbone, Allied CEO, said SpringTree’s investment was a great coup for the group.

“This is a great coup for the group. It also raises our profile in the US and international financial markets and shows that wea re now firmly on the international institutional investor radar screen for the first time.”

SpringTree managing director Jeff Easton said in a statement the company was impressed with Allied Brands’ performance.

“This is our fouth Australian investment, and we have been encouraged by the successes of the Australian portfolio companies.”