Sir Royalty Income Fund SIRZF

Renegade - New Concept rules

[frugalGreg]

With Renegade, there is precedent for SIR creating new brands; While it is a little unusual that they are operating out of existing Jack's locations and as popup/virtual locations vs standalone buildings, my view is that it's great they are pivoting and adapting, and that in due time Renegade will fall under the SRV agreement.  

SIR has the ability to introduce new brands (aka "concepts"), and as these mature SRV has the option to buy them.   I wasn't able to find the "formula"  in the declaration of trust, but this has happened in recent years with Scaddabush and most recently with Duke's. 

See below for wording around the arrangement for Duke's -- there is a threshold, both $ revenue, and # locations that trigger SRV's option, and a process for pricing the licensing rights and what would happen if SRV did not want to purchase them (right of first refusal).  Certainly the revenue threshold would apply with Renegade - it's less clear how they could consider # locations.  (I suspect the timing of the launch, just after the annual royalty pool adjustment, was designed to allow SIR to operate an extra year before a trigger event.)


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(full details, Page 9:  https://www.sircorp.com/wp-content/uploads/2020/05/SIR-2019_AR-full-secure.pdf)

On September 26, 2019, SIR opened a new Duke’s Refresher in the St. Lawrence Market neighbourhood of downtown Toronto. SIR believes that Duke’s Refresher has multi-unit growth potential and has advised the Fund that Duke’s Refresher should be considered as a potential New Concept Restaurant brand. As such, the earliest that any Duke’s Refresher would be added to the Royalty Pool would be the Adjustment Date following the earlier of: (i) the date that four Duke’s Refresher restaurants are open for business at the same time, and (ii) 90 days following the end of the fiscal year in which revenues from all Duke’s Refresher restaurants in Canada first exceed $12.0 million (the “Trigger Event”). As neither of these events are expected to occur before November 22, 2020, Duke’s Refresher is not expected to be added to the Royalty Pool on January 1, 2021

[BlueJay2020]

That is really helpful. It is a mystery, though, why they have not publicised the launch. It appears that there are quite a few openings on Feb 28. I'm also not sure if they will be able to run these side by side with the restaurant when it is at full steam.

[Robsopinion]

It's a "ghost kitchen" so the plan would be they could operate from anywhere. Start from the existing restaurants then if popular move to a new location in an industrial area with very low operating overhead. Every sounds great except the taking of the company from us, who has funded them through all of this. 

[flamingogold]

Just don't sell your shares, the float is tight so we can actually make a difference here. An offer of $4.75 brings us back to financial crises 2009 prices and where did we go after that? This pandemic is ending the early resutls out of Israel which leads the globe in covid vax numbers is proving successful. They wouldn't be offerring a dime if they didn't think this was going to come

[BlueJay2020]

The clock is going to start ticking very soon in terms of restarting distributions.  Of course, that's the last thing that SIr Corp will want, because that will trigger a sharp increase in the SP if Boston Pizza is anything to go by.  They want to keep the SP low to force a buy-out.  Plus they of course want to keep these deferred royalties for themselves. This is where we will