El Pollo Loco 2015 Annual Report Download - page 27

Table of Contents
The failure to enforce and maintain our trademarks and protect our other intellectual property could materially and adversely affect our
business, including our ability to establish and maintain brand awareness.
We have registered El Pollo Loco
®
, Pollo Bowl
®
, The Crazy Chicken
®
, and certain other names used by our restaurants as trademarks or
service marks with the PTO and in approximately 42 foreign countries. Our current brand campaign, Crazy You Can Taste™, has also been
approved for registration with the PTO. In addition, the El Pollo Loco logo, website name and address, and Facebook and Twitter accounts are
our intellectual property. The success of our business strategy 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. If our efforts to protect our intellectual property are inadequate,
or if any third party misappropriates or infringes upon our intellectual property, whether in print, on the Internet, or through other media, our
brands and branded products could fail to maintain or achieve market acceptance and the value of our brands could be harmed, materially and
adversely affecting our business. There can be no assurance that all of the steps that we have taken to protect our intellectual property in the
United States and in foreign countries will be adequate. In addition, the laws of some foreign countries do not protect intellectual property rights
to the same extent as do the laws of the United States.
We maintain the recipe for our chicken marinade, as well as certain proprietary standards, specifications, and operating procedures, as trade
secrets or confidential proprietary information. We may not be able to prevent the unauthorized disclosure or use of our trade secrets or
proprietary information, despite the existence of confidentiality agreements and other measures. While we try to ensure that the quality of our
brands and branded products is maintained by all of our franchisees, we cannot be certain that these franchisees will not take actions that
adversely affect the value of our intellectual property or reputation. If any of our trade secrets or proprietary information were to be disclosed to
or independently developed by a competitor, our business, financial condition, and results of operations could be materially and adversely
affected.
We depend upon our board of directors, executive officers, and key employees.
We rely upon the accumulated knowledge, skills, and experience of the members of our board of directors, our executive officers, and our key
employees. If they were to leave us or become incapacitated, we might suffer in our planning and execution of business strategy and operations,
impacting our brand and financial results. We also do not maintain any key man life insurance policies for any of our employees.
Matters relating to employment and labor law may adversely affect our business.
Various federal and state labor laws govern our relationships with our employees and affect operating costs. These laws include employee
classifications as exempt or non-exempt, minimum wage requirements, unemployment tax rates, workers’ compensation rates, citizenship
requirements, and other wage and benefit requirements for employees classified as non-exempt. Significant additional government regulations
and new laws mandating increases in minimum wages or benefits such as health insurance could materially affect our business, financial
condition, operating results, and cash flow. Furthermore, the unionization of our employees and of the employees of our franchisees could
materially affect our business, financial condition, operating results, and cash flow.
We are also subject in the ordinary course of business to employee claims against us based, among other things, on discrimination, harassment,
wrongful termination, or violation of wage and labor laws. Such claims could also be asserted against us by employees of our franchisees. These
claims may divert our financial and management resources that would otherwise be used to benefit our operations. The on-going expense of any
resulting lawsuits, and any substantial settlement payment or damage award against us, could adversely affect our business, brand image,
employee recruitment, financial condition, operating results, or cash flows.
23