Jamba Juice 2013 Annual Report Download - page 26

TABLE OF CONTENTS
applicable laws, are likely to be attributed to our system-wide operations in the eyes of consumers 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 franchisees 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.
RISKS RELATED TO THE FOOD SERVICE BUSINESS
Litigation and publicity concerning food quality, health claims, and other issues can result in liabilities, increased expenses,
distraction of management, and can also cause customers to avoid our products, which could adversely affect our results of
operations, business and financial condition.
Food service businesses can be adversely affected by litigation and complaints from customers or government authorities resulting from
food quality, health claims, allergens, illness, injury or other health concerns or operating issues stemming from one retail location or a
number of retail locations. Adverse publicity about these allegations may negatively affect us, regardless of whether the allegations are true,
by discouraging customers from buying our products.
Our customers occasionally file complaints or lawsuits against us alleging that we are responsible for some illness or injury they
suffered at or after a visit to our stores, or that we have problems with food quality or operations. We are also subject to a variety of other
claims arising in the ordinary course of our business, including false advertising claims, personal injury claims, contract claims and
claims alleging violations of federal and state law regarding workplace and employment matters, discrimination and similar matters, and we
could become subject to class action or other lawsuits related to these or different matters in the future. Regardless of whether any claims
against us are valid, or whether we are ultimately held liable, claims may be expensive to defend and may divert time and money away from
our operations and hurt our performance. A judgment significantly in excess of our insurance coverage, or for which we are not covered by
insurance, could materially and adversely affect our financial condition or results of operations. Any adverse publicity resulting from these
allegations may also materially and adversely affect our reputation or prospects, which in turn could adversely affect our results.
In addition, the food services industry has been subject to a growing number of claims based on the nutritional content of food products
they sell, and disclosure and advertising practices. We may also be subject to this type of proceeding in the future and, even if not, publicity
about these matters (particularly directed at the quick-service and fast-casual segments of the industry) may harm our reputation or
prospects and adversely affect our results.
We are also impacted by trends in litigation, including class-action allegations brought under various consumer protection and
employment laws, including wage and hour laws. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot
accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have a material adverse impact on our
business, financial condition and results of operations. In addition, regardless of the outcome of any litigation or regulatory proceedings,
these proceedings could result in substantial costs and may require that we devote substantial resources to defend our Company and could
affect the future premiums we would be required to pay on our insurance policies. Further, changes in governmental regulations could have
adverse effects on our business and subject us to additional regulatory actions.
Food safety concerns and instances of food-borne illnesses could harm our customers, result in negative publicity and cause the
temporary closure of some stores and, in some cases, could adversely affect the price and availability of fruits and vegetables, any
of which could harm our brand reputation, result in a decline in revenue or an increase in costs.
We consider food safety a top priority and dedicate substantial resources toward ensuring that our customers enjoy high-quality, safe
and wholesome products. However, we cannot guarantee that our internal
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