Acquisitions and Purchase Accounting

12 Months Ended

Dec. 29, 2015

Business Combinations [Abstract]

Acquisitions and Purchase Accounting

Acquisitions and Purchase Accounting

2014 Acquisition

Effective July 14, 2014, NPCQB completed the acquisition of 56 Wendy’s restaurants, including 20 fee-owned properties, from a Wendy’s franchisee for $56.8 million, including an adjustment for working capital. This acquisition was funded with $40.0 million of incremental term loan borrowings, borrowings from the Company’s revolving credit facility and cash on hand. All of the acquired Wendy’s restaurants are owned and operated by NPCQB and are located in North Carolina and Virginia.

The acquisition was accounted for using the purchase method of accounting. As a result of this acquisition, purchase accounting adjustments were made to the underlying assets based upon the valuation. The purchase price, net of cash acquired, was allocated as follows (in thousands):

Assets held for sale	$	5,121
Facilities and equipment	32,511
Franchise rights	16,570
Goodwill	1,998
Favorable leases	873
Other	(232		)
Total purchase price	$	56,841

All of the goodwill recognized will be deductible for income tax purposes. The weighted average amortization period assigned to the acquired franchise rights was approximately 16 years.

Subsequent to the closing, the Company sold 13 fee-owned properties (11 of the fee-owned properties acquired in the acquisition and two formerly leased properties acquired post acquisition for $1.7 million) for $24.2 million and leased them back over an initial lease term of 20 years with fourfive-year renewal options.

2013 Acquisitions

On July 22, 2013, NPCQB, completed the acquisition of 22 Wendy’s restaurants from the Wendy’s Company for $10.4 million, including initial franchise fees and amounts for working capital. NPCQB subsequently acquired two additional restaurants under development by the Wendy’s Company during the fourth quarter of 2013 for approximately $3.2 million, thereby increasing the number of restaurants acquired to 24.

On July 29, 2013, NPCQB completed the acquisition of 13 Wendy’s restaurants from a Wendy’s franchisee, Value Foods Company, LLC, for $11.1 million, including amounts for working capital. All of the acquired restaurants are located in and around the Kansas City metropolitan area.

On December 9, 2013, NPCQB completed the acquisition of 54 Wendy’s restaurants from the Wendy’s Company for $31.2 million, including initial franchise fees and amounts for working capital. Included in this acquisition was one unit under development by the Wendy’s Company which opened on December 27, 2013.

As a result of these asset acquisitions, purchase accounting adjustments were made to the underlying assets based upon the appraisals associated with the valuation of certain assets. The purchase price, net of cash acquired, was allocated as follows (in thousands):

Receivable from Wendy’s	$	1,200
Facilities and equipment	17,906
Franchise rights	32,786
Goodwill	2,121
Favorable (unfavorable) leases, net	470
Other	1,439
Total purchase price	$	55,922

All of the goodwill recognized for these acquisitions will be deductible for income tax purposes. The weighted average amortization period assigned to the franchise rights acquired during 2013 was approximately 18.0 years.