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Summary Of Refranchisings, Franchisee Development And Acquisitions | 9 Months Ended
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Jul. 09, 2017
Summary Of Refranchisings, Franchisee Development And Acquisitions [Abstract] |
Summary Of Refranchisings, Franchisee Development And Acquisitions | SUMMARY OF REFRANCHISINGS, FRANCHISEE DEVELOPMENT AND ACQUISITIONS Refranchisings and franchisee development — The following table summarizes the number of restaurants sold to franchisees, the number of restaurants developed by franchisees, and the related fees and gains recognized in each period (dollars in thousands):
| Quarter |  | Year-to-date
| July 9, 2017 |  | July 3, 2016 |  | July 9, 2017 |  | July 3, 2016
Restaurants sold to Jack in the Box franchisees | 58 |  |  | — |  |  | 118 |  |  | 1 |
New restaurants opened by franchisees: |  |  |  |  |  |  |
Jack in the Box | 2 |  |  | 4 |  |  | 15 |  |  | 9 |
Qdoba | 1 |  |  | 1 |  |  | 13 |  |  | 11 |
Initial franchise fees | $ | 2,352 |  |  | $ | 205 |  |  | $ | 5,354 |  |  | $ | 710 |
Proceeds from the sale of company-operated restaurants (1) | $ | 31,534 |  |  | $ | 413 |  |  | $ | 62,923 |  |  | $ | 1,434 |
Net assets sold (primarily property and equipment) | (9,532 | ) |  | — |  |  | (19,838 | ) |  | (196 | )
Lease commitment charges (2) | (3,203 | ) |  | — |  |  | (10,854 | ) |  | — |
Goodwill related to the sale of company-operated restaurants | (4,453 | ) |  | (5 | ) |  | (4,795 | ) |  | (15 | )
Other (3) | (1,096 | ) |  | 1 |  |  | (6,270 | ) |  | 1 |
Gains on the sale of company-operated restaurants | $ | 13,250 |  |  | $ | 409 |  |  | $ | 21,166 |  |  | $ | 1,224 |
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(1) | Amounts in 2017 include additional proceeds of $0.1 million year-to-date, and none in the quarter, related to restaurants sold in a prior year. Amounts in 2016 include additional proceeds of $0.4 million and $1.4 million in the quarter and year-to-date, respectively, related to the extension of the underlying franchise and lease agreements from the sale of restaurants in prior years.
(2) | Charges are for operating restaurant leases with lease commitments in excess of our sublease rental income.
(3) | Amounts in year-to-date 2017 primarily represent impairment of $3.2 million and equipment write-offs of $1.4 million related to restaurants closed in connection with the sale of the related markets. In the 2017 quarter, amounts primarily represent maintenance and repair charges related to the sales. As of July 9, 2017, there was $8.8 million of property related to these closed restaurants classified as assets held for sale on our condensed consolidated balance sheet.
As of the end of the 2017 quarter, we had signed non-binding letters of intent with franchisees to sell an additional 63 company-operated restaurants. Pre-tax gross proceeds related to these sales are estimated at $35.0 million to $40.0 million. Equipment of $10.6 million related to these sales has been classified as assets held for sale on our July 9, 2017 condensed consolidated balance sheet. Franchise acquisitions —During year-to-date 2017 and 2016, we acquired 50 and one Jack in the Box franchise restaurants, respectively. Of the 50 restaurants acquired in 2017, we took over 31 restaurants in the third quarter as a result of an agreement with an underperforming franchisee who was in violation of franchise and lease agreements with the Company. Under this agreement, the franchisee voluntarily agreed to turn over the restaurants. The acquisition of the additional 19 restaurants in 2017 was the result of a legal action filed in September 2013 against a franchisee in which we obtained a judgment in January 2017 granting us possession of the restaurants. Of the 50 restaurants acquired in 2017, we sold eight of the restaurants to a franchisee and closed three during the quarter. We plan to sell the remaining restaurants acquired in 2017 as part of our refranchising strategy. Refer to Note 6, Impairment and Other Charges, Net, for additional information regarding impairment charges related to the restaurants closed subsequent to acquisition. We account for the acquisition of franchised restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The goodwill recorded primarily relates to the sales growth potential of the markets acquired and is expected to be deductible for income tax purposes. Total consideration in each year is non-cash, and in 2017 is primarily comprised of $2.2 million and $10.1 million in the quarter and year-to-date, respectively, of receivables that were eliminated in the acquisition accounting. In 2017, consideration also includes accounts payable of $0.4 million and $4.2 million in the quarter and year-to-date, respectively, that was recorded in acquisition accounting and is primarily due to third parties to waive their liens and security interest on certain assets acquired. The following table provides detail of the acquisitions in each period (dollars in thousands):
| Quarter |  | Year-to-date
| July 9, 2017 |  | July 3, 2016 |  | July 9, 2017 |  | July 3, 2016
Restaurants acquired from franchisees | 31 |  |  | — |  |  | 50 |  |  | 1 |
Goodwill (gain on bargain purchase) | $ | 1,891 |  |  | $ | — |  |  | $ | 11,712 |  |  | $ | (289 | )
Intangible assets | 793 |  |  | — |  |  | 1,260 |  |  | 37 |
Inventory | 189 |  |  | — |  |  | 189 |  |  | — |
Property and equipment | — |  |  | — |  |  | 2,238 |  |  | 58 |
Cash | — |  |  | — |  |  | — |  |  | 324 |
Liabilities assumed | (302 | ) |  | — |  |  | (1,116 | ) |  | — |
Total consideration | $ | 2,571 |  |  | $ | — |  |  | $ | 14,283 |  |  | $ | 130 |

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