BOSTON PIZZA INTERNATIONAL REMOVES FOUR PERMANENTLY CLOSED RESTAURANTS FROM THE BOSTON PIZZA ROYALTIES INCOME FUND ROYALTY POOL

VANCOUVER, BC, January 4, 2022 /CNW/ – Boston Pizza Royalties Income Fund (the “Funds“) (TSX: BPF.UN) and Boston Pizza International Inc. (“BPI1“) announced today that effective January 1, 2022, the Fund’s royalty pool (the “Royalty pool“) has been adjusted to remove four Boston Pizza restaurants that were permanently closed between January 1, 2021 and December 31, 2021 (the “PeriodNo new Boston Pizza restaurants were opened during the period. With the adjustment for these closures in 2021, the royalty pool now includes 383 Boston Pizza restaurants.

The Fund effectively receives 5.5% of the franchise revenue from the Boston Pizza restaurants in the Royalty Pool less the prorated portion payable to BPI in respect of its retained interest in the Fund.2 On January 1 of each year (each, a “Adjustment date“), an adjustment is made to add new Boston Pizza restaurants that have opened to the royalty pool (“New restaurants“) and remove all Boston Pizza restaurants that have permanently closed since the last adjustment date (the “Restaurants closedIn return for adding new royalty and distribution revenue from new restaurants after subtracting lost royalty and distribution revenue from closed restaurants3 (such a difference, “Net royalties and distribution income“), BPI receives the right to indirectly acquire additional units of the Fund (the “Additional rightsThe additional royalty calculation is designed to be accretive to Fund unitholders, as the expected increase in franchise sales of new restaurants added to the royalty pool minus the decrease in franchise sales of closed restaurants is assessed at 7.5% The additional fee is calculated at 92.5% of the estimated royalty and distribution revenue expected to be generated by new restaurants minus the actual royalty and distribution revenue lost by closed restaurants, multiplied by one. less the estimated effective tax rate payable by the Fund, divided by the Fund’s return, divided by the weighted average unit price over a specified period BPI indirectly receives 80% of the additional rights initially, with the balance received when performance real over the full year of the new restaurants and the real effective tax rate paid by the Fund are known with certainty (the “DetentionBPI receives 100% of additional royalty distributions throughout the year. Once new restaurants have been part of the royalty pool for a full year, an audit of those restaurants’ franchise sales is conducted. and The tax rate paid by the Fund is then determined, and an adjustment is made to reconcile the distributions paid to BPI with the additional fees received by BPI.

Actual franchise sales received from the four Boston Pizza restaurants that permanently closed in 2021 during the first 12-month period immediately following their addition to the royalty pool are $6.2 millions. As there were no new restaurants in 2021, net royalty and distribution income with respect to the adjustment date of January 1, 2022 is negative $0.3 million (the “Deficiency“, i.e. 5.5% negative $6.2 million franchise sales). On the adjustment date of January 1, 2021, there was a deficit of $00.8 million due to the estimated annual net sales of the franchises of the two Boston Pizza restaurants in 2020 ($30.3 million) being less than the actual franchise sales received from the 11 Boston Pizza restaurants that closed permanently in 2020 during the first 12-month period immediately following their addition to the royalty pool ($18.5000000). As a result, there is currently a cumulative deficit of $1.2 millions. A summary of the above is as follows:

Adjustment date

Estimated deductible
Sales New
Restaurants for
Adjustment date
(in millions)

Actual deductible
Closed Sales
Restaurants for
Adjustment date
(in millions)

net deductible
Sales for
Adjustment date
(in millions)

Deficiency, i.e. 5.5% of Net
Franchise sales
(in millions)

January 1, 2021

$3.3

$18.5

($15.2)

($0.8)

January 1, 2022

$6.2

($6.2)

($0.3)

Cumulative

$3.3

$24.7

($21.4)

($1.2)

Since there is a Deficit, BPI has not received any Additional Rights as of January 1, 2022. However, BPI has not lost any of the Additional Rights it has received in respect of previous years. Instead, BPI will be required to meet the accumulated deficit of $10.2 million in future years by first adding income net of royalties and distributions in an amount equal to the accumulated deficit before receiving other additional rights. BPI continues to hold a 13.2% interest in the Fund.

See the Fund’s Annual Information Form dated February 9, 2021 for a detailed description of the annual adjustment made to the royalty account.

Certain information contained in this press release constitutes “forward-looking information” that involves known and unknown risks, uncertainties, future expectations and other factors that may affect the actual results, performance or achievements of the Fund, Boston Pizza Holdings Trust, Boston Pizza Royalties Limited Limited Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, Boston Pizza Canada Limited Partnership, Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings Partnership, Boston Pizza restaurants or industry results, may differ materially from any future results, performance or achievements expressed or implied by such forward-looking information. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Fund or BPI’s management expect or anticipate will occur or may occur in the future, including adjustments to the royalty pool on the adjustment date, calculation and timing of payment of additional fees and holdback, an audit of pending franchise revenue, and an adjustment to reconcile distributions indirectly paid to BPI and additional rights indirectly received by BPI, the estimated effective tax rate that will be paid by the Fund for 2022, and other similar matters are forward-looking information. When used in this press release, forward-looking information may include words such as “estimate”, “will”, “expect” and other similar terms. Important factors and assumptions used to prepare the forward-looking information contained in this press release include the following: future results being similar to historical results, as adjusted for the expected impact of the continuing COVID pandemic -19, expectations related to general future economic conditions, business plans, receipt of franchise fees and other amounts, franchisees’ access to financing, pace of commercial real estate development, protection of Boston Pizza’s intellectual property rights Royalties Limited Partnership, no changes in laws, no changes in contracts and Toronto Stock Exchange granting final approval to issue additional rights. The risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information contained herein, relate (among other ) to the ongoing COVID-19 pandemic, competition, demographic trends, consumer preferences and discretionary spending habits, business and economic conditions, laws and regulations, distributable cash and dependence on with respect to operating revenues, accounting policies and practices, the results of operations and the financial condition of BPI and the Fund, as well as the factors discussed under the heading “Risks and Uncertainties” in the discussions and analyzes of the direction of the Fund for the third quarter of 2021. This information reflects the current expectations s regarding future events and operating performance and speak only as of the date of this press release. Except as required by law, the Fund and BPI assume no obligation to update forward-looking information previously disclosed. For a complete list of risks associated with forward-looking information and our business, please refer to the “Risks and Uncertainties” and “Note Regarding Forward-Looking Information” sections included in the Fund’s MD&A for the third quarter of 2021. available at www.sedar.com and http://bpincomefund.com/.

The Trustees of the Fund have approved the contents of this press release.

® Boston Pizza Royalties Limited Partnership. All registered Canadian trademarks of Boston Pizza and unregistered Canadian trademarks containing the words “Boston”, “BP” and/or “Pizza” are trademarks owned by Boston Pizza Royalties Limited Partnership and licensed to Boston Pizza Royalty. Limited partnership to Boston Pizza International Inc.

______________________________________________________________

1

In this press release, BPI includes its subsidiaries where applicable.

2

The Fund indirectly owns the Boston Pizza trademarks and trade names used by Boston Pizza restaurants in Canada. In 2002, the Fund licensed these marks to BPI for 99 years and in return, BPI pays the Fund a 4% royalty on franchise revenue (“Franchise sales“) Boston Pizza restaurants in the Royalty Pool (“Royalties“). On May 6, 2015, the Fund made an indirect investment in Boston Pizza Canada Limited Partnership (a limited partnership controlled and operated by BPI) which allows the Fund to receive distribution income from Boston Pizza Canada Limited Partnership (“Distribution income“) equal to 1.5% of franchise sales of Boston Pizza restaurants in the royalty pool less the pro rata portion payable to BPI in respect of its retained interest in the Fund.

3

Lost royalty and distribution revenue from closed restaurants is calculated based on actual franchise sales received from closed restaurants during the first 12-month period immediately following their addition to the royalty pool.

SOURCE Boston Pizza Royalty Income Fund

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