KBRA assigns preliminary ratings to two classes of notes from Primrose Funding, LLC Series 2022-1, a whole business securitization.

Primrose 2022-1 represents the second securitization issued by Primrose Funding, LLC, following the issuance of Series 2019-1 (Primrose 2019-1) on August 21, 2019. The current securitization shares in the same collateral pool. In conjunction with the issuance of Primrose 2022-1, KBRA anticipates affirming the ratings on the Issuer’s outstanding Series 2019-1 Class A-2 Notes (the Existing Notes, and, together with the Series 2022-1 Notes, the Notes) and withdrawing the Issuer’s Series 2019-1 Class A-1 Notes, which are currently undrawn and will be replaced with the Series 2022-1 Class A-1 Notes. The ratings are consistent with the results of our cash flow analysis following the addition of the Series 2022-1 Notes.

In connection with its inaugural securitization in 2019, Primrose School Franchising Company LLC (Primrose or the Company) contributed substantially all of its revenue-generating assets to the Issuer as collateral for the then offered notes. The Issuer is issuing two note classes totaling $145 million (the Series 2022-1 Notes). The collateral includes existing and future domestic franchise and development agreements, curriculum and other franchise fees and securitization intellectual property. The proceeds from the offered Notes will be used to pay certain transaction fees and expenses, and for general corporate purposes.

The Primrose franchise network is a leading provider of premium early childhood education and childcare in the United States. The Primrose franchise network provides a variety of curricula including arts, mathematics, language and literacy and social-emotional development, to customers through its system of 469 schools across 33 states, as of March 31, 2022. For the twelve months ending (LTM) March 31, 2022, the system generated system-wide sales (“SWS”) of approximately $1.0 billion. The system is 100% franchised with over 300 franchisees, each owning, on average, approximately 1.5 schools as of March 31, 2022.

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Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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