Frager’s is about to be employee-owned.
A Few Cool Hardware Stores (AFCHS), the largest locally owned hardware store chain in the Nation’s Capital is selling their company – to their staff.
Founded in 2003, the company now owns 13 Ace Hardware stores located in the DC and Baltimore metro areas, including Frager’s Hardware (1115 Pennsylvania Ave. SE), which they purchased in 2017.
AFCHS owners Gina Schaefer and Marc Friedman announced their plan to sell ownership of their company through an Employee Stock Ownership Plan, or ESOP.
ESOPs offer employees stake in a company through a stock allocation that accrues value over time, much like a 401(K) plan. The amount of stock distributed is determined by the number of employees receiving shares and each employee’s individual salaries. It’s all done at no cost to the employee.
The benefits of the transition from privately-owned to employee-owned include increased staff engagement in decision-making processes, personal wealth building, and an active investment in the success and health of the business, said a spokesperson.
“I think this puts us in a different class in comparison to other small businesses,” said Frager’s Hardware Manager Aisha Bryant. “Becoming employee owned has sparked an even greater motivation [amongst our team] to continue to give maximum effort.”
The ESOP is a slower process than a conventional sale. The full transition to employee ownership will happen in three phases over the next few years through the ESOP’s trust.
The first transfer of 30 percent of the company’s ownership took place on August 1, 2021. The company is projected to transfer 100 percent ownership to their more than 250 employees through the ESOP trust over the next 5 to 6 years.
“The ESOP model allows us to give back to the employees who have done so much for our company, while still aligning with the culture we’re proud to have built over the last 20 years of business,” said Schaefer.
The sale allows Friedman and Schaefer to gradually transition out of ownership. For now, the two will continue to serve as CFO and CEO, respectively, but over the new few years the employee-owned company will conduct a search for some new folks to take on those roles, a spokesperson said.
For more information, visit the AFCHS website at www.acehardwaredc.com/pages/employee-owned.