JENNY CRAIG - FDD UFOC ITEM 1 Detail
ITEM 1.���������������� THE
FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND
AFFILIATES
The franchisor is Jenny Craig
Franchising, LLC ("we", "us" or "our"). We are a Delaware limited
liability company, organized in August 2003. We do business under the name
Jenny Craig Franchising, LLC, and we do not do business under any other name.
We have not offered franchises in any business other than weight loss and
weight management.
Our principal business address
is 5770 Fleet Street, Carlsbad, California 92008. The identity of and principal
business address for our agents for service of process are disclosed in Exhibit C.
Corporate Background and our Parents
Sid Craig and Jenny Craig
started the "Jenny Craig" concept in Australia in 1982. Jenny Craig
Holdings, Inc. ("JC Holdings"), through both Jenny Craig, Inc. ("JO"), a direct subsidiary, and
indirectly through other JCI subsidiaries, owns and operates Jenny Craig Weight
Loss and Weight Management Centres ("Centres"); franchises others to own and
operate Centres; provides weight-loss and weight management products and
services through telephone consultations; procures and supplies food and other
products for Jenny Craig Weight Loss Centres; leases Centres; and provides
management and information systems services. Nestle Holdings, Inc., a
subsidiary of Nestle S.A. ("Nestle"), a Swiss business company and
world''s largest food and beverage company, headquartered in Vevey, Switzerland,
acquired JC Holdings in July 2006, and Nestle is now our ultimate parent.
Until March 28, 2007, we were
a subsidiary of Jenny Craig International, Inc. ("JC
International"). On that date, JC International transferred ownership
of us to Jenny Craig NA Franchising, Inc. (formerly known as JCCHI) ("JC NA
Franchising"). JC International itself was merged into JCI on March
29, 2007.
As a result of the mergers and
transfers described above, we are now a direct subsidiary of JC NA Franchising,
which in turn is a direct subsidiary of Jenny Craig Weight Loss Centres, Inc.,
which in turn is a direct subsidiary of JCI. JCI is a direct subsidiary of JC
Holdings, which in turn is a direct subsidiary of Nestle Holdings, Inc., which
in turn is a direct subsidiary of Nestle. (Collectively, JC NA Franchising,
Jenny Craig Weight Loss Centres, Inc., JCI, JC Holdings, Nestle Holdings, Inc.
and Nestle are our "Parents").
Our Predecessors and Affiliates
Before November 2003, our
predecessor and immediate parent company JC International held the right to
franchise the Jenny Craig System in the U.S. and Canada. In November 2003, JC
International, which was our direct parent, assigned its rights in the Jenny
Craig franchise agreements that were then in effect in the U.S. and Canada to us, and we have been the exclusive franchisor of the Jenny Craig System in the U.S. and Canada since then. As of December 31, 2006, there were 93 franchised Centres in
the U.S. (including all U.S. territories) and 9 franchised Centres in Canada
Before November 2005, JC
International both owned and franchised Centres in Australia and New Zealand through subsidiaries. In November 2005, JC International entered into master
franchise agreements with a master franchisee for Australia and New Zealand. As part of the November 2005 transaction, the master franchisee acquired the
subsidiary that owned and operated Centres in Australia and New Zealand (JC
International acquired the New Zealand Centres in 2003 from the Craigs). As of
December 31, 2006, there were 99 Centres owned by the master franchisee in Australia and 17 Centres owned by the master franchisee in New Zealand. The master
franchisee also subfranchises 20 Centres in Australia. On March 28, 2007, JC
International transferred those master franchise agreements to our affiliate,
Jenny Craig ANZ Franchising, Inc. (formerly known as Jenny Craig Australia
Holdings, Inc.) ("JC ANZ").
Our affiliates Jenny Craig
Products, Inc. ("JC Products"), also an indirect subsidiary of JCI, and Jenny Craig
Operations, Inc. ("JC Operations") offer food and nutritional supplement products for
use in Centres. Until December 31, 2007, another indirect subsidiary of JCI and
affiliate, Jenny Craig Management, Inc. ("JC Management"), provided accounting and
administrative services for us, including providing computer specifications and
software for our franchisees, tracking franchisee payments, and administrating
the billing of franchisees for food and nutritional products. JC Management also
provided information systems and other management services to JC Holdings and
its subsidiaries. JC Management was merged into JC Operations on December 31,
2007.
Except for JC International
and The Haagen-Dazs Shoppe Company, Inc. ("H-D Shoppe Company"), a subsidiary of Nestle, none
of our affiliates has offered franchises for sale in the U.S. or Canada. H-D Shoppe Company is the franchisor of H�agen-Dazs� ice cream shops in the U.S.
H-D Shoppe Company has been offering franchises since July 1993, but does not
offer franchises for the type of business that you will be operating. As of
December 31, 2007, there were 258 HSagen-Dazs� shops operating in the U.S., all of which were owned by franchisees.
The names, jurisdictions of incorporation, and
principal business addresses of our parents, predecessors and affiliates
mentioned above are set forth below:
Name
Jurisdiction/Form/ Date of Organization
Address
Jenny Craig Holdings,
Inc.������ Delaware/corporation/January 2002
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig, Inc.
Delaware/corporation/June 1989
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig Weight Loss Centres, Inc.
Delaware/corporation/October
1991
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig NA Franchising,
California/corporation/June 1996 Inc.
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig Operations,
Inc.��� Catifornia/corporation/December 1995
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig Products,
Inc.������ California/corporation/December 1995
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig Weight Loss
Centres (Canada) Company
Nova
Scotia/corporation/September 1997
5770 Fleet Street Carlsbad, CA 92008
Jenny Craig ANZ Franchising,
Inc.
Delaware/corporation/June 1989
5770 Fleet Street Carlsbad, CA 92008
Name
Jurisdiction/Form/ Date of Organization
Address
The H�agen-Dazs Shoppe Company, Inc.
New Jersey/corporation/June
1983
500 Washington Ave. South Suite 2040.
Minneapolis, MN 55415
Nestl� Holdings, Inc.
Delaware/corporation/January
1994
Merrittview, 383 Main Avenue, Norwalk, CT 06851
Nestl�, S.A.
Switzerland/chartered company/1905
Avenue Nestl� 55 1800 Vevey Switzerland
The Program
Jenny Craig offers weight loss
and weight maintenance programs through Centres (both company-owned and
franchised) and through other direct channels, such as through telephone sales
under its Jenny Direct program. The Program combines a calorie controlled,
nutritionally balanced menu with education and motivation to help clients
manage their weight. The program includes individual consultations, recommended
moderate exercise, proprietary food and food supplement products, vitamins and
minerals supplements, and other related products that change periodically (such
as cookbooks, audio and video tapes, etc.).
"Jenny
Craig"-branded foods and nutritional supplements are made by suppliers to
specifications approved by JC Products. Jenny Craig offers a variety of
breakfast, lunch, dinner and snack food items, including prepackaged frozen
meals, shelf-stable and canned foods, snacks dried products, and meal
supplements.
The Franchise
As a franchisor, we offer
franchises to operate Centres under our format and system (the "System"). The distinguishing
characteristics of the System include individual consultations, recommended
moderate exercise; "Jenny Craig"-branded food and food supplement
products, which are proprietary ("Branded Products"), and other related food and
beverage products that we may designate; vitamins and mineral supplements;
procedures for operations; procedures for management and inventory control;
training and assistance; and advertising and promotional programs; all of which
may be changed, improved, and developed by us.
Each franchised Centre
operates under a franchise agreement ("Franchise Agreement") (the current form of which is
attached to this Franchise Disclosure Document as Exhibit C), and in accordance with our
confidential operations manual, which has several volumes (the "Confidential Operations
Manual").
We also offer franchisees the right to develop
multiple Centres within defined geographic markets under an area development
agreement ("Development
Agreement") (the current form of Development Agreement is attached to this
Franchise Disclosure Document as Exhibit D). The development schedule ("Development
Schedule") attached to each Development Agreement describes the mandatory number
of Centres you must open and the date by which each Centre must be opened and
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Jenny Craig FDD 3/2008
operational. We will negotiate
the Development Schedule with you before we enter into a Development Agreement.
We do not operate businesses
of the type being franchised and we do not engage in other business activities.
As of December 31, 2006, Jenny Craig Operations, Inc. ("JC
Operations"), an indirect subsidiary of JCI, owned and operated 406
Centres in the United States. JC Operations also provides weight loss and
weight management products and services through telephone sales in the U.S. and Canada. Since 1997, our affiliate Jenny Craig Weight Loss Centres (Canada) Company Limited ("JC Canada"), another indirect subsidiary of JCI, has
owned and operated Centres in Canada. As of December 31, 2006, there were 26
Centres owned by JC Canada.
Market and
Competition
There is an established market
for the weight loss business. You will compete with national chains such as
Weight Watchers and LA Weight Loss Centers and with regional and local weight
loss businesses. You will also compete with self-administered weight loss
regimens and books, direct marketers of weight loss programs (e.g., Nutri
System), doctors, bariatric surgery, nutritionists, dietitians, the
pharmaceutical industry, government agencies and non-profit groups which offer
weight control help using diets, exercise and drugs. There is also competition
from food manufacturers and distributors of low-calorie and diet products.
Nestle sells Lean Cuisine products and other products that focus on the weight
management and healthy living marketplaces. New methods of weight control are
continually introduced into the marketplace and will compete with you.
Industry-Specific
Regulations
Some state consumer protection
laws and regulations cover contracts for the provision of weight loss services
and/or for the rescission of consumer contracts, including within the weight
management industry. These laws and regulations may require you to include
certain language in contracts with your clients. These laws permit clients to
withdraw from the program and receive a refund within periods ranging from
three to ten days.
Some state laws and
regulations also restrict the duration of prepaid contracts for certain types
of services, including for weight loss and weight management services. You may
have to limit the duration of prepaid contracts and when and how prepaid
contracts may be renewed. Some state health club and related laws also require
businesses like Centres to post bonds for the protection of their customers.
These bonds may be in an amount equal to any prepaid amounts paid to you by customers
of the Centre.
Sales
of prepackaged foods which are part of the program are regulated in most states
by rules for retail food stores. These rules govern refrigeration and frozen
storage of foods, cleaning and sanitizing requirements, toilet facilities,
service sinks, and similar matters. You should consult your own lawyer on
federal, state and local laws and regulations that will apply to your business.
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