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Commitments And Contingencies
 12 Months Ended
Aug. 31, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments And Contingencies

15.  Commitments and Contingencies

 

Litigation

 

The Company is involved in various legal proceedings and has certain unresolved claims pending.  Based on the information currently available, management believes that all claims currently pending are either covered by insurance or would not have a material adverse effect on the Company’s business, operating results or financial condition.

 

Note Repurchase Agreement

 

On December 20, 2013, the Company extended a note purchase agreement to a bank that serves to guarantee the repayment of a franchisee loan, with a term through 2018, and also benefits the franchisee with a lower financing rate.  In the event of default by the franchisee, the Company would purchase the franchisee loan from the bank, thereby becoming the note holder and providing an avenue of recourse with the franchisee.  The Company recorded a liability for this guarantee which was based on the Company’s estimate of fair value.  As of August 31, 2014, the balance of the franchisee’s loan was $6.2 million.

 

Lease Commitments

 

The Company has obligations under various operating lease agreements with third-party lessors related to the real estate for certain Company Drive-In operations that were sold to franchisees.  Under these agreements, which expire through 2029, the Company remains secondarily liable for the lease payments for which it was responsible as the original lessee.  As of August 31, 2014, the amount remaining under these guaranteed lease obligations totaled $9.3 million.  At this time, the Company does not anticipate any material defaults under the foregoing leases; therefore, no liability has been provided. 

 

Purchase Obligations

 

At August 31, 2014, the Company had purchase obligations of approximately $308 million which primarily related to its estimated share of system-wide commitments for food products.  The Company has excluded agreements that are cancelable without penalty.