Acquisitions

In 2012, as part of an acquisition of restaurants from Burger King Corporation ("BKC"), the Company was assigned BKC's right of first refusal on franchisee restaurant sales in 20 states (the "ROFR"). Since the beginning of 2015, the Company has acquired an aggregate of 84 restaurants from other franchisees in the following transactions:



Closing Date		Number of Restaurants	Purchase Price		Number of Fee-Owned Restaurants (1)	Market Location
2015 Acquisitions:
March 31, 2015		4	$	794		Northern Vermont
August 4, 2015		5	663			Charlotte, North Carolina
October 1, 2015	(2)	5	5,044		1	Wheeling, West Virginia
October 20, 2015		1	709			Kalamazoo, Michigan
November 17, 2015		2	618			Evansville, Indiana
November 17, 2015	(2)	6	10,945		5	Evansville, Indiana
December 1, 2015	(2)	23	26,175		10	Detroit, Michigan
December 8, 2015		9	7,802			Northern New Jersey
		55	52,750		16
2016 Acquisitions:
February 23, 2016	(2)	12	7,127			Scranton/Wilkes-Barre, Pennsylvania
May 25, 2016		6	12,080		5	Detroit, Michigan
July 14, 2016	(2)	4	5,445		3	Detroit, Michigan
August 23, 2016		7	8,755		6	Portland, Maine
		29	33,407		14
Total 2015 and 2016 Acquisitions		84	$	86,157	30

(1)

The 2015 and 2016 acquisitions included the purchase of 30 fee-owned restaurants. Three of these fee-owned restaurants were sold in sale-leaseback transactions during 2015 for net proceeds of $4.3 million and an additional seventeen fee-owned restaurants were sold in sale-leaseback transactions in the first nine months of 2016 for net proceeds of $24.9 million. Eight of the remaining fee-owned restaurants at October 2, 2016 are expected to be sold in sale-leaseback transactions during the remainder of 2016, although there can be no assurance that such transactions will be completed in 2016 or at all.


(2)	Acquisitions resulting from the exercise of the ROFR.

The Company allocated the aggregate purchase price to the net tangible and intangible assets acquired in the acquisitions at their estimated fair values. The following table summarizes the allocation of the aggregate purchase price for the 2016 Acquisitions:



Inventory	$	304
Land and buildings	17,872
Restaurant equipment	772
Restaurant equipment - subject to capital lease	435
Leasehold improvements	1,070
Franchise fees	505
Franchise rights (Note 3)	12,537
Favorable leases (Note 3)	73
Goodwill (Note 3)	1,366
Capital lease obligations for restaurant equipment	(491		)
Unfavorable leases (Note 3)	(1,036		)
Net assets acquired	$	33,407

Goodwill recorded in connection with these acquisitions was attributable to the workforce of the acquired restaurants and synergies expected to arise from cost savings opportunities. Acquired goodwill that is expected to be deductible for income tax purposes was $679 in the first nine months of 2016.

The restaurants acquired in 2015 and 2016 contributed restaurant sales of $26.0 million and $68.3 million in the three and nine months ended October 2, 2016, respectively. It is impracticable to disclose net earnings for the post-acquisition period for the acquired restaurants as net earnings of these restaurants were not tracked on a collective basis due to the integration of administrative functions, including field supervision.

The unaudited pro forma impact on the results of operations for the restaurants acquired in 2016 and 2015 for the three and nine months ended October 2, 2016 and September 27, 2015 is included below. The unaudited pro forma results of operations are not necessarily indicative of the results that would have occurred had the acquisitions been consummated at the beginning of the periods presented, nor are they necessarily indicative of any future consolidated operating results. The following table summarizes the Company's unaudited pro forma operating results:



	Three Months Ended				Nine Months Ended
	October 2, 2016		September 27, 2015		October 2, 2016		September 27, 2015
Restaurant sales	$	240,370	$	244,845	$	716,008	$	709,171
Net income (loss)	$	4,950	$	9,705	$	17,691	$	(727	)
Basic and diluted net income (loss) per share	$	0.11	$	0.22	$	0.39	$	(0.02	)

This unaudited pro forma financial information does not give effect to any anticipated synergies, operating efficiencies or cost savings or any integration costs related to the acquired restaurants. The unaudited pro forma financial information reflects $0.5 million and $0.1 million of transaction costs incurred by the Company during the the three months ended October 2, 2016 and September 27, 2015, respectively, and $1.1 million and $0.3 million during the nine months ended October 2, 2016 and September 27, 2015, respectively.

On October 4, 2016, the Company completed the acquisition of three Burger King restaurants in the Raleigh, North Carolina market for a cash purchase price of $1.6 million.