Jamba Juice 2013 Annual Report Download - page 71

TABLE OF CONTENTS
JAMBA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2013, JANUARY 1, 2013 AND
JANUARY 3, 2012
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued)
disallowed. In situations in which a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the
reporting date under the tax law of a jurisdiction or the tax law of a jurisdiction does not require it, and the Company does not intend to use
the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statement as a liability and should
not be combined with deferred tax assets. This guidance becomes effective for fiscal years beginning after December 15, 2013, and will be
applied on a prospective basis. The Company does not anticipate the adoption of this guidance will have a material impact on its financial
statements.
2. DEVELOPMENT AGREEMENTS
The Company’s wholly owned subsidiary, Jamba Juice Company, has entered into multi-unit license agreements with area developers to
develop stores in certain geographic regions. Under typical multi-unit license agreements, the area developer generally pays one-half of the
initial nonrefundable fee multiplied by each store to be developed as a nonrefundable development fee upon execution of the multi-unit
development agreement. The agreements are generally for a term of 10 years. Each time a store is opened under the multi-unit license
agreement, the Company credits the franchisee one-half of the initial fee paid as part of the development fee and the franchisee is required to
pay the remaining one-half of the initial fee.
The following table summarizes data about the development agreements for Franchise and International Stores as of December 31, 2013
and January 1, 2013:
December 31,
2013
January 1,
2013
Number of developers with Franchise Store contractual commitments 35 21
Number of Franchise Stores for which commitments exist 161 95
Number of developers with International Stores contractual commitments 5 3
Number of International Stores for which commitments exist 432 285
The Company generally executes franchise agreements for each store that establishes the terms of its arrangement with the franchisee.
The franchise agreements typically require the franchisee to pay an initial, non-refundable fee and continuing fees based upon a percentage
of sales. Subject to the Company’s approval and the franchisee’s payment of a renewal fee, a franchisee may generally renew the franchise
agreement upon its expiration.
Franchise revenue consists of royalties, and fees from franchisees and revenue from sales of products sold at JambaGO and Smoothies
Station locations.
The Company recognizes initial fees received from a franchisee as revenue when it has performed substantially all initial services
required by the franchise agreement, which is generally upon the opening of a store. The Company recognizes continuing royalties based
upon a percentage of franchisee revenue as earned and revenue from sales of certain Jamba-branded products when they are delivered to the
express format franchisees. The Company is not required to contribute capital as part of multi-unit development agreements or franchise
agreements.
Deferred franchise revenue is included in other current liabilities and other long-term liabilities on the consolidated balance sheets. As of
December 31, 2013 and January 1, 2013 deferred franchise revenue included $1.3 million and $0.8 million, respectively, relating to non-
refundable development fees and initial fees paid by domestic franchisees whose stores have not yet opened. In addition, deferred franchise
revenue as of December 31, 2013 and January 1, 2013 included $0.9 million and $0.7 million, respectively, relating to non-refundable
international development fees.
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