Jamba Juice 2013 Annual Report Download - page 21

TABLE OF CONTENTS
The Company’s success depends on the value of the Jamba Juice and Jamba brands.
The Jamba Juice brand practice is to inspire and simplify healthy living. We believe we must preserve and grow the value of the Jamba
Juice brand in order to be successful in building our business and particularly in building a consumer products growth platform primarily
under the Jamba brand. Brand value is based in part on consumer perceptions, and the Jamba Juice brand has been highly rated in several
recent brand studies. We intend to reinforce and extend these perceptions for the Jamba brand to help support our licensing efforts. Our
brand building initiatives involve increasing our product offerings, opening new Franchise Stores, expanding the JambaGO and Jamba
Smoothie Station platforms and entering into licensing arrangements to increase awareness of our brands and create and maintain brand
loyalty. Our licensees are often authorized to use our logos and provide branded beverages, food and other products directly to customers.
We provide training and support to, and monitor the operations of, these business partners, but the product quality and service they deliver
may be diminished by any number of factors beyond our control, including financial pressures. We believe customers expect the same
quality of products and service from our licensees as they do from us. Any shortcoming of one of our business partners, particularly an
issue affecting the quality of the service experience or the safety of beverages or food, may be attributed by customers to us, thus damaging
our reputation and brand value and potentially affecting our results of operations. If our brand building initiatives are unsuccessful, or if
business incidents occur which erode consumer perceptions of our brand, then the value of our products may diminish and we may not be
able to implement our business strategy.
We may experience higher than anticipated costs in connection with the refresh and remodel of existing Company Stores.
Updating the format and design of our Company Stores is important to maintaining a positive consumer association with the Jamba
Juice brand. While we intend for such remodeling efforts to inure to the benefit of the Company, the associated costs may be higher than
expected, and our revenues and expenses could be negatively impacted.
We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect
our business.
Our intellectual property is material to the conduct of our business. Our ability to implement our business plan successfully depends in
part on our ability to build further brand recognition using our trademarks, service marks, trade dress and other proprietary intellectual
property, including our name and logos and the unique ambiance of our stores, both domestically and overseas. We have secured the
ownership and rights to our marks in the United States and have filed or obtained registrations in select classes including restaurant
services in most other significant foreign jurisdictions. We undertake similar efforts to protect our brands in other relevant consumer
product categories in relevant jurisdictions. If our efforts to protect our intellectual property are inadequate, or if any third party
misappropriates or infringes on our intellectual property, the value of our store brand and our consumer products brands may be harmed,
which could have a material adverse effect on our business. While we have not encountered claims from prior users of intellectual property
relating to restaurant services in areas where we operate or intend to conduct material operations in the near future, there can be no
assurances that we will not encounter such claims. If so, this could harm our image, brands or competitive position and cause us to incur
significant penalties and costs.
Our business could be adversely affected by increased labor or healthcare costs. Self-insurance plan claims could materially
impact our results.
Labor is a primary component in the cost of operating our business. We compete with other employers in our markets for hourly
workers and may become subject to higher labor costs as a result of such competition. We devote significant resources to recruiting and
training our team members. A considerable number of the team members employed by us are paid at rates related to the federal minimum
wage. In 2009, the federal minimum wage increased to $7.25 per hour. Additionally, many of our Company Store team members work in
stores located in states where the minimum wage is greater than the federal minimum wage and receive compensation equal to the state’s
minimum wage. The current California minimum wage is $8.00 per hour, and it will increase to $9.00 per hour effective July 1, 2014, and
to $10.00 per hour effective January 1, 2016.
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