Burger King 2012 Annual Report Download - page 26

Table of Contents
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Class action lawsuits have been filed, and may continue to be filed, against various quick service restaurants alleging, among other things, that quick
service restaurants have failed to disclose the health risks associated with high-fat or high-sodium foods and that quick service restaurant marketing practices
have targeted children and encouraged obesity. Adverse publicity about these allegations may negatively affect us and our franchisees, regardless of whether the
allegations are true, by discouraging customers from buying our products. In addition, we face the risk of lawsuits and negative publicity resulting from
illnesses and injuries, including injuries to infants and children, allegedly caused by our products, toys and other promotional items available in our
restaurants or our playground equipment. In addition to decreasing our revenue and profitability and diverting our management resources, adverse publicity or
a substantial judgment against us could negatively impact our business, results of operations, financial condition and brand reputation, hindering our ability
to attract and retain franchisees and grow our business in the United States and internationally.
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In the United States, each of our Company and franchise restaurants is subject to licensing and regulation by health, sanitation, safety and other
agencies in the state and/or municipality in which the restaurant is located. State and local government authorities may enact laws, rules or regulations that
impact restaurant operations and the cost of conducting those operations. In many of our markets, including the United States and Europe, we and our
franchisees are subject to increasing regulation regarding our operations, which may significantly increase the cost of doing business. In developing markets,
we face the risks associated with new and untested laws and judicial systems. Among the more important regulatory risks regarding our operations we face are
the following:
• the impact of the Fair Labor Standards Act, which governs such matters as minimum wage, overtime and other working conditions, family leave
mandates and a variety of other laws enacted by states that govern these and other employment matters;
• the impact of immigration and other local and foreign laws and regulations on our business;
• disruptions in our operations or price volatility in a market that can result from governmental actions, including price controls, currency and
repatriation controls, limitations on the import or export of commodities we use or government-mandated closure of our or our vendors’ operations;
• the impact of the United States federal menu labeling law which requires the listing of specified nutritional information on menus and menu
boards on consumer demand for our products;
• the risks of operating in foreign markets in which there are significant uncertainties, including with respect to the application of legal requirements
and the enforceability of laws and contractual obligations;
• the impact of the Patient Protection and Affordable Care Act on the businesses of our U.S franchisees, many of whom are small business owners
who may have significant difficulty absorbing the increased costs or may need to revise the ways in which they conduct their business; and
• the impact of costs of compliance with privacy, consumer protection and other laws, the impact of costs resulting from consumer fraud and the
impact on our margins as the use of cashless payments increases.
We are also subject to a Federal Trade Commission rule and to various state and foreign laws that govern the offer and sale of franchises. Various state
and foreign laws regulate certain aspects of the franchise relationship, including terminations and the refusal to renew franchises. The failure to comply with
these laws and regulations in any jurisdiction or to obtain required government approvals could result in a ban or temporary suspension on future franchise
sales, fines, other penalties or require us to make offers of rescission or restitution, any of which could adversely affect our business and operating results. We
could also face lawsuits by our franchisees based upon alleged violations of these laws.
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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