Jamba Juice 2009 Annual Report Download - page 21

Download and view the complete annual report

Please find page 21 of the 2009 Jamba Juice annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 151

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151

Table of Contents
The unexpected loss of one or more members of our executive management team could adversely affect our business.
We have experienced significant changes in our executive management team in 2008, including the departure of our chief executive officer, chief financial
officer, chief marketing officer, head of operations, and head of development. We have a new chief executive officer and have internally promoted other
members of the executive team and increased their responsibilities. We believe that these individuals understand our operational strategies and new strategic
priorities to revitalize our long-term growth and stockholder value. We have entered into employment agreements with each of these individuals, but we cannot
make any assurances that we can retain these individuals for the period necessary for us to return to sustained profitability. Competition for personnel in our
industry is strong and the ability to retain key employees during a revitalization effort can be difficult. The unexpected future loss of services of one or
members of our executive management team could have an adverse effect on our business. If we are unable to retain key executive officers, then it may be
difficult for us to maintain a competitive position within our industry or implement our strategic priorities.
Our growth strategy depends on increasing franchise ownership.
There were 511 Company Stores and 218 Franchise Stores open as of December 30, 2008. Our recent growth strategy is to transition from a Company
Store model to a model more evenly weighted between Company Stores and Franchise Stores. This strategy is subject to risks and uncertainties. We may not
be able to identify franchisee candidates with appropriate experience and financial resources or to negotiate mutually acceptable agreements with them. Our
franchisee candidates may not be able to obtain financing at acceptable rates and terms. We may not be able to increase the percentage of franchised stores at
the annual rate we desire or achieve the ownership mix of franchise stores to Company Stores that we desire.
Risks Related to Franchise Operations
The opening and success of franchised stores depend on various factors, including the following:
• the demand for our franchises;
• the selection of appropriate franchisee candidates;
• financing capital expenditures;
• locating and securing an adequate supply of new store sites;
• competition for sites and for business;
• negotiating leases with acceptable terms;
• hiring and training qualified operating personnel in local markets;
• managing construction and development costs of new stores at affordable levels, particularly in competitive markets;
• the availability of construction materials and labor;
• the availability of, and their ability to obtain, adequate supplies of ingredients that meet our quality standards;
• the impact of inclement weather, natural disasters and other calamities; and
• securing required governmental approvals (including construction, parking and other permits) in a timely manner.
As the number of franchisees increase, our revenues derived from royalties at franchise stores will increase, as will the risk that revenues could be
negatively impacted by defaults in the payment of royalties.
21