Record system sales and in-line EBITDA guidance
Franchise Brands has rounded off 2025 with record System sales, up 2% year on year, despite a choppy macro backdrop. Management expects Adjusted EBITDA to land in line with market expectations of £33.8 million to £35.3 million. That combination – modest top-line growth and guidance met – signals resilience in the Group’s core reactive and planned services.
Quick jargon check: “System sales” refers to sales generated across the franchise network, not just the Group’s own revenue. “Adjusted EBITDA” is a cash earnings proxy that strips out non-cash and one-off items to show underlying performance.
£10m share buy-back – what it tells us
The Board plans to launch a share buy-back of up to £10 million, subject to consents. It will be executed through a mix of on-market purchases by the Company and the Employee Benefit Trust (EBT), and it replaces the existing EBT purchase programme that restarted in 2024 (c.£2.6 million invested out of a £5 million allowance to date).
Why it matters: it’s a clear statement of confidence in future prospects and cash generation. The EBT angle also matters – buying shares into the EBT helps offset dilution from share option awards. Combined with continued deleveraging, it indicates the Company is balancing investment, debt reduction and shareholder returns rather than prioritising just one lever.
Divisional performance – solid in reactive services, project work still soft
Pirtek: diversification helping reactive demand
Pirtek’s System sales grew 1%. Reactive demand held up well, helped by successful sector diversification. The drag remains project work and other discretionary spend, which stayed subdued. The message: the defensive, need-it-now side of the business is doing the heavy lifting.
Water & Waste Services: steady 1% growth
Also up 1% on System sales, with resilient demand in reactive and planned work. As with Pirtek, project work was challenging. That consistent theme across B2B infrastructure services is typical late-cycle behaviour – the urgent jobs get done, the nice-to-haves are deferred.
Filta International (North America): standout growth
Filta International’s core franchise business in North America delivered a strong year, with System sales up 7%. Used cooking oil sales rose 20%, driven by an 11% increase in volume and an 8% increase in price. Management also reports good progress with the FiltaMax growth initiative and expanding the range of services – helpful for broadening the revenue base and pricing power.
B2C division: in line despite recruitment challenges
The consumer-facing division traded in line with management expectations, even as franchisee recruitment and retention remained tough. That’s not surprising in a cautious consumer environment. Stability here is a decent outcome.
Cash flow and debt – deleveraging continues
Cash generation in 2025 allowed the Group to repay £15.5 million of its term loan and revolving credit facility. Adjusted net debt fell to £55.2 million at 31 December 2025 (31 December 2024: £65.1 million). Adjusted net debt is the covenant metric, and the Group is “comfortably within” its banking covenants.
This matters for two reasons. First, it supports the credibility of the buy-back – returning cash while still paying down debt. Second, it sets up operational gearing when growth normalises. The franchise model naturally scales well when volumes improve, and a leaner balance sheet amplifies that effect.
Outlook – resilience now, optionality for recovery
Management remains cautious on the macro, especially in the UK, and still sees project and discretionary work as the weak spot. The US remains supportive. There’s a potential tailwind in Germany from expected infrastructure spending, with confidence possibly returning in H2 2026.
For investors, the near-term setup looks like: steady demand in essential reactive/planned services, continued integration and efficiency from “One Franchise Brands” and Group-wide IT initiatives, and upside if discretionary projects unfreeze. The comment on “inherent operational gearing” is a reminder that the franchise platform can deliver sharper profit recovery than headline sales alone when conditions improve.
Key numbers snapshot
| System sales (Group) | Up 2% (record level) |
| Adjusted EBITDA guidance | In line with market expectations of £33.8m to £35.3m |
| Pirtek System sales | Up 1% |
| Water & Waste Services System sales | Up 1% |
| Filta International (North America) System sales | Up 7% |
| Used cooking oil sales | Up 20% (volume +11%, price +8%) |
| Debt repayment in 2025 | £15.5m (term loan and RCF) |
| Adjusted net debt (31 Dec 2025) | £55.2m (31 Dec 2024: £65.1m) |
| Share buy-back programme | Up to £10m (subject to consents) |
| Prior EBT share purchase programme | Up to £5m; c.£2.6m invested to date |
My take – positives, watch-outs and why it matters
- Positives: Record System sales, EBITDA in line, strong North America, deleveraging and a new £10m buy-back. That is a confident, balanced update.
- Execution: “One Franchise Brands” and Group-wide IT are doing the quiet work – driving efficiency and cross-brand selling. Integration progress should support margins as volumes recover.
- Capital allocation: Repaying £15.5m of debt while announcing a buy-back suggests robust cash generation. The EBT involvement helps mitigate option dilution.
- Watch-outs: Project and discretionary work are still soft, particularly in the UK. Franchisee recruitment and retention remain challenging in B2C. Timing of recovery in Europe is uncertain, even if Germany improves in H2 2026.
- Big picture: The franchise model’s operational gearing means modest sales growth can translate into better profit growth when the cycle turns. If macro headwinds ease, earnings could accelerate from a stronger, integrated base.
What to watch next
- Formal launch and pace of the buy-back once consents are secured.
- Further debt reduction alongside the buy-back – net debt trajectory through 2026.
- Progress on FiltaMax and broader service expansion in North America.
- Signs of improvement in project work in the UK and Europe; any early confirmation of German infrastructure-led demand in H2 2026.
- Delivery of “One Franchise Brands” and Group-wide IT benefits in cost and sales productivity.
- Franchisee recruitment and retention trends in B2C.
Footnotes
Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, impairment losses, exchange differences, share-based payment expense and non-recurring items.
Current market expectations for Adjusted EBITDA in FY2025 are £33.8 million to £35.3 million.
