Jack In The Box 2015 Annual Report Download - page 27

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Jack in the Box Franchise Operations
The following table presents Jack in the Box franchise revenues, costs, and margin in each fiscal year and other information we believe is useful in
analyzing the change in franchise operating results (dollars in thousands):



Franchise rental revenues
$ 226,494
$ 216,944
$ 207,458
Royalties
$ 133,726
$ 124,538
$ 117,855
Re-image contributions to franchisees
—
(22)
(1,990)
Franchise fees and other
2,431
3,323
5,460
Franchise royalties and other
$ 136,157
$ 127,839
$ 121,325
Total franchise revenues
$ 362,651
$ 344,783
$ 328,783
Rental expense
$ 136,782
$ 134,975
$ 128,157
Depreciation and amortization
33,128
33,844
32,876
Franchise occupancy expenses
$ 169,910
$ 168,819
$ 161,033
Franchise support and other costs
11,726
10,052
9,590
Total franchise costs
$ 181,636
$ 178,871
$ 170,623
Franchise margin
$ 181,015
$ 165,912
$ 158,160
Franchise margin as a % of franchise revenue
49.9%
48.1%
48.1%
Average number of franchise restaurants
1,828
1,794
1,721
% increase
1.9%
4.2%
Franchise restaurant AUVs
$ 1,429
$ 1,337
$ 1,312
Increase in franchise-operated same-store sales
7.0%
2.0%
Royalties as a percentage of franchise restaurant sales
5.1%
5.2%
5.2%
Franchise rental revenues increased $9.6 million, or 4.4%, in 2015 and $9.5 million, or 4.6%, in 2014 as compared with the respective prior year. In 2015,
the increase primarily reflects higher AUVs resulting in an increase in revenues from percentage rent. In 2014, franchise rental revenues increased due
primarily to an increase in the number of franchise restaurants leased or subleased from the Company, and an increase in AUVs.
Franchise royalties and other increased $8.3 million or 6.5% in 2015 and $6.5 million or 5.4% in 2014 versus the respective prior year. In 2015, higher
AUVs at franchise restaurants drove an increase in revenues from royalties. In 2014, an increase in the number of franchised restaurants, higher AUVs and a
decrease in re-image contributions of $2.0 million, recorded as a reduction of franchise royalties and other, contributed to the increase in franchise royalties
and other. In 2015 and 2014, these increases were partially offset by a reduction in franchise fees of $0.7 million and $2.0 million, respectively.
Franchise occupancy expenses, principally rents and depreciation on properties subleased or leased to franchisees, increased $1.1 million in 2015 and
$7.8 million in 2014. In 2015, the increase was due to higher rental expense related to customary rent increases partially offset by a decrease in depreciation
expense related to building assets becoming fully depreciated, which more than offset the additional depreciation expense driven by our refranchising
strategy. The increase in 2014 as compared with 2013 was primarily driven by an increase in the average number of franchise restaurants.
Franchise support and other costs increased $1.7 million in 2015 and $0.5 million in 2014 due to an increase in the number of franchised restaurants, and
in 2015, the recognition of bad debt expense of $0.8 million.
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