Comfort Inn 2014 Annual Report Download - page 33

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Table of Contents
We depend on the skill, ability and decisions of third party operators.
The Company utilizes third party operators to provide significant franchise services, such as providing general reservation call center services,
providing loyalty member call center support, providing data center co-location services, inspecting its franchisees and providing support for the use of its
property management system. The failure of any third-party operator to make decisions, perform their services, discharge their obligations, deal with
regulatory agencies, and comply with laws, rules and regulations could result in material adverse consequences to our business.
Our investment in SkyTouch Technology and other new business lines is inherently risky, and could disrupt our core business.
We have invested in the development of our SkyTouch operating division - a hospitality-based software and technology developer and provider.
Furthermore, we expect to continue to invest in SkyTouch, and may in the future invest in other new business strategies, products, services, and technologies.
Such endeavors generally involve significant risks and uncertainties, including distraction of management from our core franchising operations,
unanticipated expenses, inadequate return of capital on our investments, and unidentified issues and risks not discovered in our development or analysis of
such strategies and offerings. For SkyTouch, additional specific risks and uncertainties may include a limited history as a stand-alone operating business, the
willingness of our potential competitors to enter into a business relationship with one of our operating divisions, the ability to develop and offer innovative
products that appeal to hoteliers, continuing market acceptance of enterprise cloud computing, security threats to processed and stored data, intense
competition in the technology industry, protection of intellectual property rights, and claims of infringement of the intellectual property of third parties.
Because SkyTouch and similar new ventures are inherently risky, there can be no assurance that our investment in SkyTouch or similar new ventures
will be successful. If we do not realize the financial or strategic goals that are contemplated at the time we commit to significant investments in support of
these ventures, our reputation, financial condition, operating results and growth trajectory may be impacted.
We may identify material weaknesses in our internal control over financial reporting which could, if not remediated, result in a material misstatement of
our financial statements.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f)
under the Securities Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. However, our management does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and
fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives
will be met. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
 
None.
 
Our principal executive offices are located at 1 Choice Hotels Circle, Suite 400, Rockville, Maryland 20850 and are leased from a third party.
We lease one office building and own a second office building in Phoenix, AZ, which houses our reservation and property systems' information
technology operations and our SkyTouch division. The Company also leases office space for regional offices in Australia, United Kingdom, Canada,
Germany, Italy, France, India, Mexico and Chevy Chase, MD.
Management believes that the Company’s existing properties are sufficient to meet its present needs and does not anticipate any difficulty in securing
additional or alternative space, as needed, on terms acceptable to the Company. In addition, we believe that all properties owned and leased are in generally
good physical condition with the need for only routine repairs and maintenance and periodic capital improvements.
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