Burger King 2012 Annual Report Download - page 13

Table of Contents
from third-party landlords and sublease to franchisees, leases generally provide for fixed rental payments and may provide for contingent rental payments
based on a restaurant’s annual gross sales. Franchisees who lease land only or land and building from us do so on a “triple net” basis. Under these triple net
leases, the franchisee is obligated to pay all costs and expenses, including all real property taxes and assessments, repairs and maintenance and insurance. As
of December 31, 2012, we leased or subleased to franchisees 1,741 properties in the U.S. and Canada and 132 properties in EMEA, primarily sites located in
the U.K. and Germany. These properties represented approximately 24% and 4%, respectively, of our total franchise restaurant count in such regions. As of
December 31, 2012, we did not own or lease any properties to franchisees in APAC or LAC.

 We establish the standards and specifications for most of the goods used in the development and operation of our restaurants and for the direct
and indirect sources of supply of most of those items. These requirements help us assure the quality and consistency of the products sold at our restaurants
and protect and enhance the image of the  system and the Brand.
In general, we approve the manufacturers of the food, packaging and equipment products and other products used in restaurants, as well
as the distributors of these products to  restaurants. Franchisees are generally required to purchase these products from approved suppliers and
distributors. We consider a range of criteria in evaluating existing and potential suppliers and distributors, including product and service consistency, delivery
timeliness and financial condition.
 Restaurant Services, Inc., or RSI, is a not-for-profit, independent purchasing cooperative formed in 1992 to leverage the purchasing
power of the  system in the United States. As the purchasing agent for the  system in the United States, RSI negotiates the purchase
terms for most equipment, food, beverages (other than branded soft drinks) and other products such as promotional toys and paper products used in our
restaurants. RSI is also authorized to purchase and manage distribution services on behalf of the Company restaurants and franchisees who appoint RSI as
their agent for these purposes. As of December 31, 2012, RSI was appointed the distribution manager for approximately 91% of the restaurants in the United
States. A subsidiary of RSI acts as purchasing agent for food and paper products for our Company and franchise restaurants in Canada under a contract with
us. As of December 31, 2012, four distributors serviced approximately 85% of U.S. system restaurants and the loss of any one of these distributors would
likely adversely affect our business.
In Fiscal 2000, we entered into long-term exclusive contracts with The Coca-Cola Company and Dr Pepper/Snapple, Inc. to supply Company
restaurants and franchise restaurants with their products and which obligate  restaurants in the United States to purchase a specified number of
gallons of soft drink syrup. These volume commitments are not subject to any time limit. As of December 31, 2012, we estimate that it will take
approximately 12 years to complete the Coca-Cola and Dr Pepper/Snapple, Inc. purchase commitments. If these agreements were terminated, we would be
obligated to pay an aggregate amount equal to approximately $555.0 million as of December 31, 2012 based on an amount per gallon for each gallon of soft
drink syrup remaining in the purchase commitments, interest and certain other costs.
 There is currently no designated purchasing agent that represents franchisees in our international regions. We approve suppliers and
distributors and use similar standards and criteria to evaluate international suppliers that we use for U.S. suppliers. Franchisees may propose additional
suppliers, subject to our approval and established business criteria.

We own valuable intellectual property including trademarks, service marks, patents, copyrights, trade secrets and other proprietary information. As of
December 31, 2012, we owned approximately 4,053 trademark and service mark registrations and applications and approximately 1,092 domain name
registrations around the world, some of which are of material importance to our business. Depending on the jurisdiction, trademarks and
12
Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this
information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.