Jack In The Box 2012 Annual Report Download - page 51
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Refranchisings and franchisee development — The following is a summary of the number of Jack in the Box restaurants sold to franchisees, the number
of restaurants developed by franchisees and the related gains and fees recognized ( dollars in thousands):
Restaurants sold to franchisees
97
332
219
New restaurants opened by franchisees
50
58
37
Initial franchise fees
$5,535
$15,898
$10,218
Proceeds from the sale of company-operated restaurants:
Cash (1)
$47,115
$119,275
$66,152
Notes receivable
1,200
1,000
25,809
48,315
120,275
91,961
Net assets sold (primarily property and equipment)
(16,833)
(52,943)
(35,113)
Goodwill related to the sale of company-operated restaurants
(1,334)
(3,469)
(1,860)
Other (2)
(1,003)
(2,738)
—
Gains on the sale of company-operated restaurants
$29,145
$61,125
$54,988
____________________________
(1) Amounts in 2012 include additional proceeds of $2.3 million recognized upon the extension of the underlying franchise and lease agreements related to restaurants sold in a
prior year.
(2) Primarily represents future lease commitments and impairment costs associated with the closure of one location in 2012 and three in 2011. These locations were closed in
conjunction with the sale of the related markets.
Franchise acquisitions — In each of the last three years, we have acquired Qdoba franchised restaurants in select markets where we believe there is
continued opportunity for restaurant development. We account for the acquisition of franchised restaurants using the acquisition method of accounting for
business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The
goodwill recorded primarily relates to the sales growth potential of the markets acquired. The following table provides detail of the combined acquisitions in
each year (dollars in thousands):
Restaurants acquired from franchisees
46
32
16
Property and equipment
$12,379
$6,934
$6,756
Reacquired franchise rights
604
386
301
Goodwill
36,084
24,300
1,058
Liabilities assumed
(122)
(117)
—
Gains on the acquisition of franchise-operated restaurants (1)
—
(426)
—
Total consideration
$48,945
$31,077
$8,115
____________________________
(1) In 2011, the assets acquired and liabilities assumed exceeded the consideration for two units acquired. The gains are included in selling, general and administrative expenses in
the accompanying consolidated statements of earnings.
The changes in the carrying amount of goodwill during 2012 and 2011 by operating segment were as follows (in thousands):
Balance at October 3, 2010
$52,650
$32,391
$85,041
Acquisition of franchised restaurants
—
24,300
24,300
Sale of company-operated restaurants to franchisees
(3,469)
—
(3,469)
Balance at October 2, 2011
49,181
56,691
105,872
Acquisition of franchised restaurants
—
36,084
36,084
Sale of company-operated restaurants to franchisees
(1,334)
—
(1,334)
Balance at September 30, 2012
$47,847
$92,775
$140,622
F-11