29 New Restaurants Added to A&W Royalty Pool
Effective January 5, 2023, the number of A&W restaurants for which royalties are paid to A&W Trade Marks Limited Partnership will be increased by 22 net new restaurants, bringing the total number of A&W restaurants in the royalty pool to 1,037.
The estimated annual sales of the 22 net new A&W restaurants being added to the Royalty Pool is $40,915,000. Based on the 3% royalty to the Fund, this will translate into an additional $1,227,000 in annual royalty payments to the Fund.
“We are pleased to be adding 22 net new A&W restaurants to the Royalty Pool,” said Susan Senecal, President and Chief Executive Officer of A&W Food Services. “Despite a post COVID-19 slowdown in the permitting process and general construction industry, A&W Food Services continues to successfully open new restaurants across Canada, particularly in Ontario and Quebec, which continue to be strategic growth markets for us.”
The consideration to be paid to A&W Food Services is $12,894,000, representing 80% of the consideration payable for the net additional royalty payments. This consideration will be paid on January 5, 2023 by issuance of 380,368 limited partnership units, which will immediately be exchanged for 760,736 non-voting common shares of A&W Trade Marks Inc., exchangeable at the option of A&W Food Services for 380,368 limited voting units of the Fund. 20% of the consideration payable for the net additional royalty revenue will be paid by issuance of additional LP units in December 2023. The actual amount of this consideration to be paid, and the number of LP units to be issued, will be determined based upon on the actual annual sales reported by the 22 net new restaurants.
After the amendment to the Royalty Pool on January 5, 2023, A&W Food Services will receive a proportionate increase in monthly dividends and will own the equivalent of 28.1% of the voting securities of A&W Revenue Royalties Income Fund.
The growth of the Royalty Pool reflects the continuing strength and success of the A&W brand.