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10. Related Party Transactions
In 2009, the Company appointed a member who was a former franchisee, to its board of directors who qualifies as a related party. This board member is a principal of, and holds, directly or indirectly, interests of between 45% and 100% in each of three privately-held entities that hold the leases for three Company-owned restaurants. The Company acquired the three restaurants as part of a larger acquisition of franchised restaurants in 2006. As part of the acquisition, the Company assumed the existing leases for the three restaurants, which had been in place prior to the acquisition. This transaction was completed and the leases were assumed approximately three years before the director joined the Company’s board. Under the leases, the Company recognized rent and other related payments in the amounts of $320,000 and $305,000 for the twelve weeks ended July 8, 2012 and July 10, 2011, respectively, and $698,000 and $647,000 for the twenty-eight weeks ended July 8, 2012 and July 10, 2011, respectively. Future minimum lease commitments under these leases are $4.3 million as of July 8, 2012.
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