Commitments and Contingencies

The Company leases certain restaurant equipment and buildings under operating leases. Future minimum lease payments, including non-operating assets, at December 29, 2015 consisted of the following (in thousands):



Fiscal year
2016	$	61,376
2017	54,925
2018	49,165
2019	39,923
2020	35,260
Thereafter	230,996
Total minimum lease commitments⁽¹⁾	$	471,645

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⁽¹⁾ Minimum lease payments have been reduced by aggregate minimum non-cancelable sublease rentals of $0.8 million.

The Company’s rent expense, including contingent rent based on a percentage of sales when applicable, is comprised of the following (in thousands):



	52 Weeks Ended				53 Weeks Ended
	December 29, 2015		December 30, 2014		December 31, 2013
Minimum rents	$	67,726	$	64,273	$	52,113
Contingent rents	917		1,003		1,290
	$	68,643	$	65,276	$	53,403

Effective August 1, 2014, PHI approved the Brand Builder Program which eliminated currently required Major Asset Actions (“MAA’s”), (defined as a rebuild, relocate, or remodel) as required under the Company’s PHI 2003 territory franchise agreements. In return, PHI is requiring that specifically identified assets be brought up to brand standard or “re-imaged”. As part of the Going Forward Franchise Agreements which govern Pizza Hut acquisitions completed after 2003, the Company is required to complete certain MAA’s, extending through February 2024. If the Company qualifies for the Asset Partner Plan described below, these required MAA’s will be eliminated under for the TFA and LFA’s; replacing the above schedule with an annual 10% requirement for all assets operated under GFFA’s. Based on the qualifying terms outlined, the Company believes that it will meet all qualifications to participate in this program.

The 2003 territory and location franchise agreements allow PHI to require the Company to perform a remodel on up to 15% of its assets annually beginning in 2016. In March 2016, PHI and the IPHFHA jointly introduced the Asset Partner Plan which will govern the future asset upgrade requirements including remodel scope and timing of such actions and supercedes the previous agreements. The scope of the proposed remodel requirements under the Asset Partner Plan vary based upon (i) the asset type, (ii) the date of the last asset action and (iii) in some cases population density. The Asset Partner Plan requires each qualifying franchisee in the system to remodel or rebuild 10% of its asset base annually through 2025; thereafter executing a minor remodel ten years after completing a major remodel and a major remodel seven years after completing a minor remodel on a continual cycle moving forward. The Company expects to incur average capital expenditures of approximately $20.0 million per annum through December 2025. The Company anticipates relocating most of its Dine-in assets to the more cost efficient Delco format in lieu of the Dine-in remodel option to ensure a more contemporary store base that better meets the needs of consumers in the markets it serves. The Delco format requires significantly less annual maintenance and operating costs . All assets constructed before 1980 will be required to be sunset no later than 2036. In the event the Company does not qualify or determines at a later time not to participate in the plan, PHI could require that we remodel or rebuild 15% of our assets annually in accordance with our franchise agreements.

In conjunction with the acquisition of Wendy’s units, NPCQB is required to complete certain agreed upon improvements to the facilities and expects to incur approximately $2.3 million during fiscal 2016 for the Salt Lake City and North Carolina acquisitions. Additionally, NPCQB is required to complete Image Activations (“IA’s”), (defined as a refresh, remodel or scrape and rebuild) at 48 of the Wendy’s units acquired during fiscal 2013 and fiscal 2014, of which 13 have been completed, and expects to incur approximately $12.8 million by December 31, 2021 for the 35 remaining IA’s.

Certain members of management purchased common stock of NPC Holdings for $4.2 million. Under the terms of the Stockholders Agreement of NPC Holdings, the common stock is required to be repurchased by NPC Holdings upon the termination of the employment of the employee. However, the amount of this liability is determined based upon the circumstances of the termination of employment. The Company does not have a contractual obligation to fund the purchase of the mandatorily redeemable stock; however, the Company could be required to provide a distribution to NPC Holdings to fund the repurchase in the event of an employee’s termination of employment from the Company. The value of this contingent obligation is subject to a formula defined in the Stockholders Agreement. Based on the financial results for fiscal 2015, the common stock held by management has a combined value of approximately $2.4 million to $4.2 million.

Upon completion of the Transactions, the Company entered into an advisory agreement with Olympus. Under the agreement Olympus or its affiliates will continue to provide financial, investment banking, management advisory and other services on the Company’s behalf for an annual fee of $1.0 million, paid in quarterly installments in arrears on the last day of each calendar quarter. See Note 13 - Related Party Transactions.