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COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Mar. 31, 2012
Commitments And Contingencies  
COMMITMENTS AND CONTINGENCIES

(9) COMMITMENTS AND CONTINGENCIES:

 

Guarantees

 

We guarantee various leases for franchisees and locations sold in prior years. Remaining rental commitments required under these leases are approximately $114,000. In the event of a default under any of these agreements, we will have the right to repossess the premises and operate the business to recover amounts paid under the guarantee either by liquidating assets or operating the business.

 

We account for such lease guarantees in accordance with FASB ASC Topic 460, “Guarantees”. Under FASB ASC Topic 460, we would be required to recognize the fair value of guarantees issued or modified after December 31, 2002, for non-contingent guarantee obligations, and also a liability for contingent guarantee obligations based on the probability that the guaranteed party will not perform under the contractual terms of the guaranty agreement.

 

We do not believe it is probable that we will be required to perform under the remaining lease guarantees and therefore, no liability has been accrued in our condensed consolidated financial statements.

 

Litigation

From time to time, we are a defendant in litigation arising in the ordinary course of our business, including claims resulting from “slip and fall” accidents, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. To date, none of this litigation, some of which is covered by insurance, has had a material effect on us.