On November 27, 2016, Diversified Royalty Corp. (“DIV”) completed the sale (the “Sale Transaction”) of the trademarks and other intellectual property rights related to the Franworks restaurant businesses (“FW Rights”) to Original Joe’s Franchise Group Inc. (“OJFG”), a wholly owned subsidiary of Franworks Franchise Corp. (“Franworks”), for $90.0 million in cash, the cancellation of 8,992,187 DIV common shares held by OJFG, the extinguishment of OJFG’s right to receive 637,051 DIV common shares related to the April 1, 2015 royalty pool adjustment and the extinguishment of OJFG’s right to receive accrued dividends on such 637,051 shares to the date of closing.
The Sale Transaction with Franworks and OJFG was part of a larger transaction whereby Cara Operations Limited (“Cara”) entered into an agreement with OJFG to acquire majority control of OJFG for $93.0 million. $90.0 million of Cara’s $93.0 million investment in OJFG was used to fund the acquisition of the FW Rights by OJFG. Cara’s investment in OJFG and the Sale Transaction closed concurrently.
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors. DIV currently owns the Sutton and Mr. Lube trademarks. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada with approximately 7,900 agents and 200 offices across Canada. Mr. Lube is the leading quick lube service business in Canada with 170 locations across Canada and approximately $200 million of annual system sales.
DIV was represented on the Sale Transaction by a Farris transaction team led by Bradley A. Newby that included David J. Selley (banking), Robert Veitch and Nikki Saint-Onge.