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Related Parties
12 Months Ended
Dec. 29, 2013
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]
Transactions with Related Parties
As part of the 2012 acquisition, the Company issued to BKC 100 shares of Series A Convertible Preferred Stock which is convertible into 9,414,580 shares of Carrols Restaurant Group Common Stock ("Carrols Common Stock"), or 28.9% of the outstanding shares of common stock calculated on the date of the closing of the 2012 acquisition on a fully diluted basis. See Note 16—Preferred Stock for further information. As a result of the 2012 acquisition, BKC has two representatives on the Company's board of directors.
Each of the Company's restaurants operates under a separate franchise agreement with BKC. These franchise agreements generally provide for an initial term of twenty years and currently have an initial franchise fee of $50. Any franchise agreement, including renewals, can be extended at the Company's discretion for an additional 20 year term, with BKC's approval, provided that, among other things, the restaurant meets the current Burger King image standard and the Company is not in default under terms of the franchise agreement. In addition to the initial franchise fee, the Company generally pays BKC a monthly royalty at a rate of 4.5% of sales. Royalty expense was $27.7 million, $22.7 million, and $14.0 million for the years ended December 29, 2013, December 30, 2012 and January 1, 2012, respectively.
The Company is also generally required to contribute 4% of restaurant sales from the Company's restaurants to an advertising fund utilized by BKC for its advertising, promotional programs and public relations activities, and amounts for additional local advertising in markets that approve such advertising. Advertising expense associated with these expenditures was $28.9 million, $21.3 million and $14.0 million for the years ended December 29, 2013, December 30, 2012 and January 1, 2012, respectively.
As of December 29, 2013 and December 30, 2012, the Company leased 295 and 297 of its restaurant locations from BKC, respectively. As of December 29, 2013, for 196 of the restaurants, the terms and conditions of the lease with BKC are identical to those between BKC and the third-party lessor. As of January 1, 2012, the Company leased 20 of its restaurant locations from BKC. Aggregate rent under these BKC leases for the years ended December 29, 2013, December 30, 2012 and January 1, 2012 was $26.7 million, $16.6 million, and $1.8 million, respectively. The Company believes the related party lease terms have not been significantly affected by the fact that the Company and BKC are deemed to be related parties.
As of December 29, 2013, the Company owed BKC $2.4 million associated with its purchase of the right of first refusal related to the 2012 acquisition and $3.5 million related to the payment of advertising, royalties and rent, which is remitted on a monthly basis.