Jamba Juice 2009 Annual Report Download - page 23

Table of Contents
Our franchisees could take actions that harm our reputation and reduce our royalty revenue.
Franchisees are independent contractors and are not our employees. Further, we do not exercise control over the day-to-day operations of our franchise
stores. Any operational or development shortcomings of our franchise stores are likely to be attributed to our system-wide operations and could adversely affect
our reputation and have a direct negative impact on the royalty revenue we receive from those stores.
We could face liability from our franchisee and from government agencies.
A franchisee or government agency may bring legal action against us based on the franchisor/franchisee relationship. Various state and federal laws
govern our relationship with our franchisees and our potential sale of a franchise. If we fail to comply with these laws, we could be liable for damages to
franchisees, fines or other penalties. Expensive litigation with our franchisees or government agencies may adversely affect both our profits and our important
relations with our franchisees.
We periodically acquire existing Jamba Juice stores from our franchisees, which could adversely affect our results of operations.
Historically, we have acquired Jamba Juice stores from our franchisees either by negotiated agreement or exercise of our rights of first refusal or purchase
option under the franchise or area development agreement. Any acquisition that we undertake involves risks, including, our ability to successfully and
profitably transition acquired franchise stores into Company Stores. Failure to do so effectively could strain our financial and management resources as well
as negatively impact our results of operations.
If we expand into foreign markets we will be exposed to new uncertainties and risks, which could negatively impact our results of
operations.
We are exploring expanding our operations into new foreign markets, which will expose us to new risks and uncertainties, including product supply,
consumer preferences, occupancy costs, operating expenses and labor and infrastructure challenges. In addition, consumers in a foreign market may not be
familiar with the Jamba Juice brand, and we may need to build brand awareness in that market through greater investments in advertising and promotional
activity. Finally, international operations have inherent risks such as foreign currency exchange rate fluctuations, the application and effect of local laws and
regulations and enforceability of intellectual property and contract rights.
Our failure to manage our growth effectively could harm our business and operating results.
Our existing management, financial, and other resources may be inadequate to support our franchise growth strategy. Managing our growth effectively
will require us to continue to enhance our financial and management controls and informational and operations systems. We may not respond quickly enough
to the changing demands that our growth will impose on our management, employees and existing infrastructure. Our failure to manage our growth effectively
could harm our business and operating results.
Governmental regulation may adversely affect our ability to open new stores or otherwise adversely affect our existing and future operations
and results.
We and our franchisees are subject to various federal, state and local regulations. Each of our stores is subject to state and local licensing and regulation
by health, sanitation, food and workplace safety and other agencies. We and our franchisees may experience material difficulties or failures in obtaining the
necessary licenses or approvals for new stores, which could delay planned store openings. In addition, stringent and varied requirements of local regulators
with respect to zoning, land use and environmental factors could delay or prevent development of new stores in particular locations.
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