The Company leases the real property from the joint ventures. Fiscal years 2001 through 2003 were restated in the Companys fiscal year 2004 Annual Report on Form 10-K to reflect the correction of errors in lease accounting. As part of the standard franchise agreement, each operating unit contributes 1% of its sales to a National Advertising Fund. As of December 31, 2005, the Back Yard Burgers system included 171 restaurants, of which 44 were Company-operated and 127 were franchised. Question 3: Who founded Back Yard Burgers? Under the terms of the contracts, the Company is required to purchase specific volumes in future years. These purchases by franchisees from vendors have no specific incremental impact to costs of the Company. In accordance with the provisions of the Companys Restated Certificate of Incorporation regarding preferred stock, each share of preferred stock is convertible into one share of common stock, at the option of the holder.
In addition, we compete with national, regional and local fast food chains, many of which specialize in or offer quick serve hamburger and chicken products. The common positions that are normally available are mainly divided into team members and managers. Our profitability depends in part on our ability to anticipate and react to changes in food costs. The Company is subject to Federal Trade Commission regulation and several state laws which regulate the offer and sale of franchises. Contingent rentals are generally based on either a percentage of restaurant sales or as a percentage of restaurant sales in excess of stipulated amounts, and thus are not included in minimum lease payments but are included in rent expense when incurred.
None of these agreements were terminated during 2005; however, the Company does anticipate the termination of at least six agreements, which relate to the development of up to 66 stores, during 2006 due to lack of required development under the agreements. Area Development and Franchise Agreements. The restaurants also include Company-approved interior and exterior decor, equipment, fixtures, furnishings, signs, parking and site improvements. Of these advertising fees, the Company spends at least 50% of these funds on the creation of marketing tools; however, in some years, the Company spends more than 50% of these fees on advertising related costs. Since that time, the Company has added a number of indoor dining facilities to its operations, including the retrofitting of many existing double drive-thru restaurants to include indoor dining. This enables the preparers to begin filling an order before the order is completed and totaled, and thereby increases the speed of service to the customer and the number of sales per hour. When I got my order, it was all stuffed in one bag 5 sandwiches and two fries.
I went to the fatburger off Rancho in law Vegas,nv. If the financial conditions of our customers or other borrowers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The manager told the person working at the window to punch out and go home while my daughter was waiting for the missing burger to be prepared. The sales performance and guest counts for our restaurants may be adversely affected in the event one or more of our competitors opens new restaurants in close proximity to our locations. As of December 31, 2005, the Companys debt coverage ratio was 2. The inability to recruit and retain these individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants, which could harm our business. I certainly think your employees need to have a pep talk about respecting their customers.
That ratio will increase as existing franchisees develop new stores within existing territories. The Company records a valuation allowance to reduce deferred tax assets to the balance that is more likely than not to be realized. Under the terms of the franchise and area development agreements, the fees are non-refundable and may be recognized as revenue should the franchisee fail to perform as agreed. These financial statements are the responsibility of the Companys management; our responsibility is to express an opinion on these financial statements based on our audits. No impairment charges were recorded by the Company during fiscal years 2004 or 2003; however, in the fourth quarter of 2005, the Company incurred a non-cash charge for the effect of three underperforming Company-operated restaurants. The increase in franchised restaurant sales was due to a net unit growth of twenty-four franchised stores during 2004.
He was playing in the playground while I was sitting at a booth adjacent to the playground within eyesight of my son. If creating a delicious product that everyone can enjoy sounds great to you, then complete a Back Yards Burgers application and find out what positions are waiting for you! Consequently, the quality of franchised restaurant operations may be diminished by any number of factors beyond our control. A new cost basis is established for impaired assets based on the fair value of these assets as of the date the assets are determined to be impaired. Each franchisee is also generally required to pay the Company a weekly royalty of 4% of the restaurants taxable sales and to pay 1% of the restaurants weekly taxable sales to the Companys national advertising fund. The woman was very sarcastic. both of the new company-operated restaurants will have playgrounds; each playground centerpiece is a tree house, which the company feels will further enhance our back yard theme and increase restaurant traffic. The impairment charge results from internal analysis which indicated that the investment for the impacted restaurants will not be fully recovered by anticipated cash flows.
During 2003 and 2004, the Company received funds from certain vendors relating to future purchases by the Company. Forward-looking statements are based upon estimates, projections, beliefs and assumptions of management at the time of such statements and should not be viewed as guarantees of future performance. There are no recourse provisions in the guaranty agreement; however, the Companys potential loss contingencies are minimal since the loan is collateralized with assets whose estimated fair value is greater that the amount of debt outstanding and based on current cash flows of the restaurant, if acquired through default, would be adequate to cover the debt payments. Because Back Yard Burgers fiscal year ends on the Saturday closest to December 31, fiscal 2003 contains 53 weeks versus 52 weeks for 2005 and 2004. Delays or failures in opening new restaurants could materially and adversely affect our planned growth.
This will help to improve moral and individual and collective store per. From Florida to Nashville, Tennessee Back Yard Burgers operates over 150 locations all across the U. Difficulties in obtaining or failure to obtain the required licenses or approvals could delay or prevent the development of a new restaurant in a particular area. The franchise agreement grants an exclusive license at a specified location to operate a restaurant in accordance with the Back Yard Burgers system and to utilize the Companys trademarks, service marks and other rights of the Company relating to the sale of its menu items. As of December 2018, there were 51 locations in the and , chiefly in Tennessee and. Labor will continue to be a critical factor in the foreseeable future. Each franchisee is required to purchase all fixtures, equipment, inventory, products, ingredients, materials and other supplies used in the operation of its restaurants from approved suppliers, all in accordance with the Companys specifications.