Speaking of fraudulence, did you notice drdesouza's comment on the StreetSweeper article which was published on Seeking Alpha? I think the author of the article should make the necessary corrections. I will paste the comment below.
"$14.5 million EBITDA stream into a meager $2.6 million contribution"
This is an incorrect analysis as you are comparing a 4-wall EBITDA (pre-corporate overhead) to a net contribution figure (post-corporate overhead).
The two possible comparisons are:
1) pre-corporate expenses, in which case one would use 4-wall EBITDA of $14.5MM and royalty fees of $4.2MM
2) post-corporate expenses (aka contribution margin), in which a store generates $6MM-$8MM ($14.5MM - (~9%*revenue of $85.5MM)) and a franchise generates $2.6MM
(note, my only assumption here is corporate expense as a percent of revenue for corporate stores. all other figures are per the article)
Continuing with scenario 2, a corporate store generates ~$4.5MM more in overall EBITDA (post-corporate overhead) than a franchise. At 10x, this "stream" is worth $45MM.
Therefore, if JMBA can capitalize this "stream" now and sell stores for $45MM or more, then it makes sense to sell. And this ignores the benefits of greater business visibility, stability, and a higher multiple for asset-light restaurant franchises.
One may then point to the refranchise effort generating only $20MM (your base case), however, your assumptions are faulty and ~$40MM is a better base case.
While the refranchise sale price is subject to debate, the key element to the valuation outlined above is not and significantly damages the thesis.
If the author listened to the last conference call she wouldn't be so mystified by all those "buried" and "overlooked" charges --- Luey accounts for every expense on the call. It's funny to take a look at her evidence for all this alleged misconduct, link after link to the the latest 10-Q, without any specific line or direction for the reader to follow. You'd think she would be more precise in her accusations after suggesting that management "cooked the books". She claims the stores they are selling are top performers even though the company hasn't told anyone which stores are for sale! She claims that the company is buying back shares at "higher multiples" when the only public disclosure of the company's buybacks to date was the business update on December 4th, at which time management stated that as of December 1, 2014, they had repurchased 477,356 shares of common stock for a total of $6.0 million under the repurchase program (that's an average of 12.56 cents a share) a much lower multiple than today's price. What I find most amusing is how she suggests the whole idea of shifting to an asset light model is somehow desperate or even suspicious...did she write a hit piece on Burger King or Jack or Yum Brands when they started their major refranchising efforts? It goes on and on, laughable if you follow the company or actually listen to the calls. And then she ends with her personal attacks on Karen Luey, who was a controller for a company which went out of business many years ago, and this somehow bodes poorly for Jamba today. What about the author's last employment...ready for this, Jim Cramer's The Street, Inc. --- that's been a real winner for shareholders. Anyway, this is a great example of cynical self-interest...don't forget her disclosure at the end of the article: The owners of TheStreetSweeper established a short position in Jamba (Nasdaq: JMBA) and stand to profit on any future declines in the company's stock price.