Burger King 2009 Annual Report Download - page 30

Table of Contents
Leasing and ownership of a significant portfolio of real estate exposes us and our franchisees to potential losses and liabilities and
we or our franchisees may not be able to renew leases, control rent increases and control real estate expenses at existing restaurant
locations or obtain leases or purchase real estate for new restaurants.
Many of our Company restaurants are presently located on leased premises. In addition, our franchisees generally lease their
restaurant locations. At the end of the term of the lease, we or our franchisees might be forced to find a new location to lease or close
the restaurant. If we are able to negotiate a new lease at the existing location or an extension of the existing lease, the rent may increase
significantly. With respect to the land and buildings that are owned by us or our franchisees, the value of these assets could decrease or
costs could increase because of changes in the investment climate for real estate, demographic trends, increases in insurance and taxes
and liability for environmental conditions. Any of these events could adversely affect our profitability or our franchisees’ profitability.
Some leases are subject to renewal at fair market value, which could involve substantial rent increases, or are subject to renewal with
scheduled rent increases, which could result in rents being above fair market value. We compete with numerous other retailers and
restaurants for sites in the highly competitive market for retail real estate and some landlords and developers may exclusively grant
locations to our competitors. As a result, we may not be able to obtain new leases or renew existing ones on acceptable terms, which
could adversely affect our sales and brand−building initiatives. In the U.K., we have approximately 45 leases for properties that we
sublease to franchisees in which the lease term with our landlords is longer than the sublease. As a result, we may be liable for lease
obligations if such franchisees do not renew their subleases or if we cannot find substitute tenants.
We may not be able to adequately protect our intellectual property, which could harm the value of our brand and branded products
and adversely affect our business.
We depend in large part on our brand, which represents 33% of the total assets on our balance sheet as of June 30, 2009, and we
believe that our brand is very important to our success and our competitive position. We rely on a combination of trademarks,
copyrights, service marks, trade secrets and similar intellectual property rights to protect our brand and branded products. The success
of our business depends on our continued ability to use our existing trademarks and service marks in order to increase brand awareness
and further develop our branded products in both domestic and international markets. We have registered certain trademarks and have
other trademark registrations pending in the United States and foreign jurisdictions. Not all of the trademarks that we currently use have
been registered in all of the countries in which we do business, and they may never be registered in all of these countries. We may not
be able to adequately protect our trademarks, and our use of these trademarks may result in liability for trademark infringement,
trademark dilution or unfair competition. The steps we have taken to protect our intellectual property in the United States and in foreign
countries may not be adequate. In addition, the laws of some foreign countries do not protect intellectual property rights to the same
extent as the laws of the United States.
We may, from time to time, be required to institute litigation to enforce our trademarks or other intellectual property rights, or to
protect our trade secrets. Such litigation could result in substantial costs and diversion of resources and could negatively affect our
sales, profitability and prospects regardless of whether we are able to successfully enforce our rights.
We may experience significant fluctuations in our operating results due to a variety of factors, many of which are outside of our
control.
We may experience significant fluctuations in our operating results due to a variety of factors, many of which are outside of our
control. Our operating results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any
year and sales, comparable sales, and average restaurant sales for any future period may decrease. Our results of operations may
fluctuate significantly because of a number of factors, including but not limited to, our ability to retain existing guests, attract new
guests at a steady rate and maintain guest satisfaction; the announcement or introduction of new or enhanced products by us or our
competitors; significant marketing promotions that increase traffic to our stores; the amount and timing of operating costs and capital
expenditures relating to expansion of our business; operations and infrastructure; governmental regulation; and the risk factors
discussed in this section. Moreover, we may not be able to successfully implement the business
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