Jamba Juice 2007 Annual Report Download - page 128
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Table of Contents
NOTE 4. COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases its store locations under operating leases expiring through 2015. Most of the leases provide for renewable option periods. Total lease
expense approximated $624,000 as of December 13, 2005.
At December 13, 2005, the future minimum rental commitments under these leases, including renewal options likely to be exercised, were
approximately:
Year ending December,
2006 $601,000
2007 607,000
2008 609,000
2009 653,000
2010 623,000
Thereafter 1,604,000
In addition to the amounts above, the Company is responsible for common area maintenance costs, real property taxes and additional rents, based on
revenues, pursuant to certain store leases.
The Company entered into a lease agreement with a third-party to lease blender equipment for its store operations and is charged 2.0 cents per blended
beverage sold.
Blender charges are included in other store operating expenses in the accompanying statements of operations. As of December 13, 2005 charges incurred
were approximately $31,000.
Other Commitments and Contingencies
Royalty and Service Fees
The Company pays royalty and service fees equal to 5 percent of Net Revenues, as defined, pursuant to the License Agreement with JJC.
Pursuant to the Amendment discussed in Note 1, payment of the royalty fees are deferred until the earlier of the time that the Company maintains
positive cash flow for four consecutive quarters or June 30, 2008, at which time the deferred royalty fees become payable over a 12 month period and include
interest based on the Company’s prevailing rate, as calculated quarterly. The deferral of royalty fees is retroactively effective to January 1, 2003.
In 2005, the Company incurred approximately $332,000 in royalty fees, respectively. At December 13, 2005, unpaid royalty fees and related interest
expense in the amount of approximately $741,000, were included in accrued liabilities.
Territorial Fees
Pursuant to the License Agreement, the Company paid a territorial fee of $125,000 in 2000 to JJC for the development of the first ten Jamba Juice stores
in Florida. According to the License Agreement, the Company is
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