What Will The New Jamba Juice Look Like?

The juice giant added an activist hedge fund manager with history of shaking things up to its board. What does this mean for Jamba’s future?

It's a new day for beloved '00s juice icon Jamba Juice, or at least for its board. Under pressure for the last six months from an activist investor, the company finally caved Tuesday, giving hedge fund manager Glenn Welling of Engaged Capital and James Pappas of JCP Investments a seat in the company's board room.

The agreement between Jamba and Welling, which also includes an additional Jamba seat that a current board member will vacate, sets the stage for some major changes to the brand in the coming future. Welling is an activist that pushes hard for changes at the companies he invests in. Most recently he battled it out with struggling retailer Abercrombie and Fitch to replace Mike Jeffries as its CEO, a proxy fight that ultimately proved successful.

At Jamba, Welling's targets for change aren't as high as the CEO, who oversaw missed earnings in recent quarters. Rather, Welling is pushing for "franchise-heavy, asset-light" structure that will leave the day-to-day operational responsibilities of Jamba Juice stores up to independent owners, or franchisees.

A source close to the situation said eventually, 95% of Jamba Juice outlets will be owned and operated by franchisees, leaving less than 50 under the company's control. The company's efforts in consumer products like home smoothie-making kits and branded blenders have yet to pay off, and it will likely move away from that part of the business, the source said.

Engaged's interest in the franchise push at Jamba dates to last July, when it took its 8.2% stake in the company and called for it to exit or franchise its New York City stores, and also questioned Jamba's focus on "non-core" products in its stores.

"We appreciate Jamba's constructive approach and the recent steps that have been taken to enhance shareholder value," Welling said in a statement. "Jamba's commitment to transition to a franchise focused company has the potential to create meaningful value for shareholders, and I look forward to being a part of the team that makes that happen."

Jamba, for its part, appears to acknowledge the need for change in the form of pushing for increased franchising at its nearly 900 stores throughout the world. In a presentation Tuesday, the company stated that it was "accelerating profitable growth through refranchising and renewed franchise recruitment," and that doing so would result in "increased earnings and earnings stability."

The company went on to say that its goal was to franchise 80% of its stores by the end of 2015, and said it planned to add 500 new locations over the next five years, and that all will fall under the franchise model.

At this rate, it appears the dream of Jamba Juice ownership may soon become a reality for potential franchisees looking to squeeze the day in 2015.

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