Picklr's Bankruptcy Puts Franchisor Lease Guarantees on Trial

“We signed, unfortunately, too many corporate guarantees that landed on the holding company. And that’s on us. I own it.”

That was Jorge Barragan, founder and CEO of The Picklr, explaining to Sports Business Journal why the indoor pickleball franchisor had gone to bankruptcy court. Picklr, Inc. filed for Chapter 11 on Oct. 9 in the U.S. Bankruptcy Court for the Northern District of Texas, and its company-store subsidiary, Picklr Clubs Inc., followed on Oct. 10, according to court filings. Both chose Subchapter V, a faster and cheaper track built for small business debtors. The franchising entity, Picklr Franchise Inc., has not filed.

The company’s message to members was short. “Our clubs are open. Our members are playing,” it said in a public statement cited by the International Association of Pickleball and Padel Facilities (IAPPF).

The growth that got Picklr here was fast even by franchising standards. In little more than three years, the company went from a single Utah club to about 90 clubs, nine company-operated and 81 franchised, across roughly 32 states, the filings say. About 77 franchisee groups own those franchised clubs, which serve some 35,000 members. Picklr added 35 net units in 2025 alone, Franchise Times reported from the brand’s franchise disclosure document (FDD), the document a franchisor must hand a buyer before a sale.

These are not cheap boxes. Opening a franchised club costs roughly $1.25 million to $2 million, according to the filings.

How a backstop became the bill

A lease guarantee makes the franchisor a co-signer on a franchisee’s rent. If the operator stops paying, the landlord can go after the brand. Picklr’s franchise agreement included a Corporate Guaranty Amendment under which Picklr Franchise Inc. could act as a partial backup guarantor, according to IAPPF’s review of the FDD. Barragan told SBJ that about 40 locations have such arrangements.

Karen Abrams, who heads the commercial real estate leasing practice at Paris Ackerman, told Franchise Times why young brands sign them: “Franchisors sometimes provide these guarantees to help newer franchisees secure desirable locations, particularly when the brand is relatively young or the franchisee lacks an established operating history.”

The filings point at rent as the pressure point. Many Picklr clubs carry “annual base rent of at least $750,000 per location, with built-in annual escalations,” the company told the court, and “as revenue at certain clubs fell short of projections, these occupancy costs became unsustainable.” Some landlords sent default and demand notices to franchisees.

Put that rent next to the FDD, where average annual gross sales across 12 franchise locations came to $962,734, per Franchise Times. The two figures describe different sets of clubs, so they cannot be subtracted cleanly. They still show how little room a slow ramp leaves when rent alone can run three quarters of a million dollars a year.

The corporate numbers were already strained. Picklr lost $4.4 million on $10.3 million of revenue in 2025 and carried about $19 million in total liabilities at the end of March, SBJ reported from the FDD’s financial statements. The parent’s petition lists guaranty claims of about $783,000, all marked contingent, unliquidated and disputed, Fox Business reported, citing IAPPF, which cautioned that those figures do not set final liability.

A franchisee writes the check

The rescue money comes from inside the system. Dynamus Alliance, an investor group led by Picklr franchisee and investor Tom Neale, committed $4.5 million in debtor-in-possession financing, subject to court approval, according to the company. SBJ put the figure at $4.8 million. Debtor-in-possession financing is a loan that keeps a company operating during bankruptcy and gets repaid ahead of most other debts. Dynamus had already lent $500,000 on Sept. 29 and another $350,000 on Oct. 9, court filings show, and is expected to sponsor the reorganization plan.

“We’re convinced that the model works,” Neale told SBJ. “It’s a matter of looking at some business realities and some headwinds that we collectively have faced and address those head on.”

The plan, as the filings lay it out, is to exit underperforming company-operated clubs and “burdensome leases,” negotiate rent accommodations with franchisee landlords, and “preserve and transition the franchise system through the Franchise Agreement Sale.” Barragan said no locations will close as a direct result of the filing, though he expects contraction. “Our goal is just to make sure that over the next 18 months to two years, as we start to see the shakeout happen, that we position our franchisees in the best position,” he told SBJ.

Not every franchisee waited for the parent. On Sept. 24, 3 Strand Holdings LLC and 12 related entities, including five that do business as The Picklr in Burlington, Danvers, Exton, Newark and Westbrook, filed their own Chapter 11 cases in the Middle District of Florida, IAPPF reported. That group is now fighting Picklr entities over an asset purchase agreement with Picklr Clubs.

Lease guarantees are one of the quieter tools a young franchisor uses to win landlords, and they rarely show up in the sales pitch. Abrams put the risk plainly: “What may seem like a manageable risk when guaranteeing one franchisee’s lease can become a serious financial problem when multiple franchisees default and the franchisor is suddenly responsible for their rent obligations.” For a buyer weighing a capital-intensive concept, the due diligence now starts with two questions: whose name is on the lease, and how much rent across the whole system the franchisor has promised to cover.

None of this means the racket business has lost its investors. Earlier this month we reported that Agassi Sports formed Let’s Play to roll up racket clubs. Picklr’s rivals are still opening, too: Pickleball Kingdom ended 2025 with 22 locations and Dill Dinkers with 19, according to their FDDs as cited by Franchise Times.

Barragan had already named the problem before the filing. In a LinkedIn post announcing Abby Olson as acting president and chief operating officer, he wrote that the company “was growing faster than we could operate,” Fox Business reported.

The first test is days away. The Florida court has set aside a full day on Oct. 20 to hear the dispute over the Northeast clubs, and what landlords agree to there will say a lot about how many Picklr franchisees get the long runway Barragan is promising.