5.Franchise Rights

A reconciliation of the activity for franchise rights for the first half of 2017 and the first half of 2016 is as follows:

(in thousands)	Franchise rights
Balance on January 1, 2017	$	533,040
Conversion from franchise rights to distribution rights		(533,040	)
Balance on July 2, 2017	$	-

Balance on January 3, 2016	$	527,540
Lexington Expansion Territory adjustment		5,500
Balance on July 3, 2016	$	533,040

In connection with the closing of the March 2017 Expansion Transactions, the Company, The Coca-Cola Company and CCR entered into a comprehensive beverage agreement (as amended, the “Final CBA”) on March 31, 2017, and concurrently converted the Company’s franchise rights within the territories in which the Company distributed Coca‑Cola products prior to beginning the Expansion Transactions (the “Legacy Territories”) to distribution rights within Other identifiable assets, net on the consolidated condensed financial statements. Prior to this conversion, the Company’s franchise rights resided entirely within the Nonalcoholic Beverage segment.

During the second quarter of 2016, the Company recorded $5.5 million in franchise rights for an Expansion Territory previously served by CCR’s facilities and equipment located in Lexington, Kentucky (the “Lexington Expansion Territory”), which the Company acquired in an exchange transaction with CCR on May 1, 2015.