Papa Johns 2010 Annual Report Download - page 90

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83
14. Related Party Transactions
Certain of our officers and directors own equity interests in entities that generate and/or have rights to
develop franchised restaurants. Following is a summary of full-year transactions and year-end balances
with franchisees owned by related parties, the Marketing Fund and Papa Card, Inc. (in thousands):
2010
2009
2008
Revenues from affiliates:
Commissary sales 19,137$ 17,625$ 18,280$
Other sales 1,961 2,284 4,240
Franchise royalties 3,192 2,514 2,500
Franchise and development fees - 50 50
Total 24,290$ 22,473$ 25,070$
Other income from affiliates -$ 57$ -$
Accounts receivable - affiliates 624$ 648$ 854$
We paid $443,000 in 2010, $755,000 in 2009 and $355,000 in 2008 for charter aircraft services provided
by an entity owned by our Founder, Chairman and Co-Chief Executive Officer. We believe the rates
charged to the Company were at competitive market rates that could have been obtained from
independent third parties for similar aircraft.
During 2010, 2009 and 2008, we sold certain print and promotional materials to a company partially
owned by our Founder, Chairman and Co-Chief Executive Officer, which did not have a significant
impact on the Company’s sales or operating earnings. In addition, during 2010 and 2009, the Company
sold certain print and promotional materials to a company of which one member of our Board of
Directors is the President and Chief Executive Officer (not significant in 2010 or 2009 and none in
2008). The above transactions were at market rates.
We contributed $6.0 million in 2010, $7.7 million in 2009 and $4.9 million in 2008 to the Marketing
Fund as discretionary advertising contributions.
During 2008, a franchise entity that is owned by one executive officer and two former executive officers
of Papa John’s sold two restaurants for $415,000 to an unrelated third-party franchise entity. In addition,
during 2008 a franchise entity that is owned by a member of our Board of Directors sold three restaurants
in two separate transactions for a total of $470,000 to unrelated third-party franchise entities.
See Note 3 for information related to our purchasing agreement with BIBP.
15. Commitments and Contingencies
We lease office, retail and commissary space under operating leases, which have an average term of five
years and provide for at least one renewal. Certain leases further provide that the lease payments may be
increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index.
PJUK, our subsidiary located in the United Kingdom, leases certain retail space, which is primarily
subleased to our franchisees. We also lease the trailers used by our distribution subsidiary, PJFS, for an
average period of eight years. Total lease expense was $24.5 million in 2010, $24.2 million in 2009 and
$24.5 million in 2008, net of sublease payments received.