KBRA has assigned preliminary ratings to the Arby’s Funding, LLC, Series 2026-1 Class A-1 and Class A-2 Notes. This transaction is structured as a whole business securitization (WBS). The rating action follows an analysis indicating that existing credit enhancement and cash flows remain sufficient to support the new notes. This issuance is expected to facilitate the repayment of the existing Series 2020-1 Class A-1 and Class A-2 notes.
Arby’s Funding Series 2026-1 Note Issuance
The preliminary ratings apply to the Series 2026-1 Class A-1 and Class A-2 Notes issued by Arby’s Funding, LLC. This whole business securitization is designed to manage the company's debt obligations through structured finance. Upon the successful issuance of these Series 2026-1 Notes, the company expects to repay the outstanding Series 2020-1 Class A-1 and Class A-2 notes. KBRA has indicated it expects to withdraw the ratings associated with the 2020-1 series once that repayment is finalized. The rating process involved a detailed assessment of the sufficiency of cash flows and credit enhancements to support the new debt structure, ensuring that the transition between the 2020-1 and 2026-1 series maintains the necessary financial safeguards for noteholders.
Arby’s Collateral and Systemwide Performance
Arby’s operates as a franchisor and operator of limited-service, meat-forward sandwich restaurants. As of June 28, 2026, the Arby’s system comprised 3,458 restaurants, which generated approximately $4.4 billion in systemwide sales. The collateral pledged for this securitization is comprehensive, consisting primarily of existing and future franchise and license agreements, royalties, and certain fees. Additionally, the collateral includes the brand's intellectual property, specific real estate assets, and related revenues. This broad asset base underpins the whole business securitization model, linking the notes' performance directly to the brand's operational scale and the consistent revenue streams generated by its extensive network of franchised locations and various service-related fees.
Key Takeaways
- KBRA assigned preliminary ratings to the Arby’s Funding, LLC, Series 2026-1 Class A-1 and Class A-2 Notes.
- The Arby’s system reported approximately $4.4 billion in systemwide sales across 3,458 restaurants as of June 28, 2026.
- Issuance of the Series 2026-1 Notes is intended to repay the existing Series 2020-1 Class A-1 and Class A-2 notes.
FinanceInsyte's Take
In our view, this transition from the 2020-1 to the 2026-1 series signals a disciplined approach to managing long-term capital structures through whole business securitization. By utilizing a broad collateral base—including intellectual property and franchise royalties—Arby’s is effectively leveraging its $4.4 billion systemwide sales to maintain liquidity. This move suggests a strategic refinancing effort aimed at optimizing debt profiles. For financial infrastructure observers, this underscores the continued relevance of WBS models in providing structured, asset-backed stability for large-scale franchisor operations.
Questions & Answers
How will the Series 2026-1 issuance impact existing debt?
The issuance of the Series 2026-1 Notes is expected to facilitate the full repayment of the Series 2020-1 Class A-1 and Class A-2 notes, at which point KBRA intends to withdraw those specific ratings.
What specific assets secure the Arby’s Funding notes?
The pledged collateral includes franchise and license agreements, royalties, certain fees, intellectual property, specific real estate assets, and related revenues generated by the Arby's system.
What is the scale of the Arby's operational footprint?
As of June 28, 2026, the Arby's system included 3,458 restaurants and achieved approximately $4.4 billion in systemwide sales.
Why did KBRA proceed with these preliminary ratings?
KBRA's analysis determined that the existing credit enhancement and projected cash flows are sufficient to support the ratings following the issuance of the new Series 2026-1 notes.
Source: BUSINESSWIRE
