IHOP 2008 Annual Report Download - page 22

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development agreements generally provide for a series of two-year development commitments after the
initial development period.
Contractual
Opening of
Restaurants
by Year
2009 2010
Domestic development agreements .................................. 19 15
International development agreements ................................ 23 18
42 33
The actual number of openings may differ from our expectations due to various factors, including
economic conditions, franchisee access to capital, and the impact of currency fluctuations on our
international franchisees. The timing of new restaurant openings may also be affected by various factors
including weather-related and other construction delays and difficulties in obtaining regulatory
approvals.
Composition of Franchise System
The number of restaurants held by individual franchisees ranges from one to 189 restaurants. The
table below sets forth information regarding the number of Applebee’s restaurants owned by domestic
franchisees as of December 31, 2008 as well as the total number of restaurants falling into each of the
listed ownership ranges.
Franchisees Restaurants
Percent Percent
Number of Restaurants Held by Franchisee Number of Total Number of Total
One to Ten ......................................... 10 23% 60 4%
Eleven to Twenty-Five ................................. 13 30% 239 16%
Twenty-Six to Fifty .................................... 11 26% 406 28%
Fifty-One to One Hundred .............................. 7 16% 472 32%
One Hundred-One and over ............................. 2 5% 293 20%
Total .............................................. 43 100% 1,470 100%
There were 32 international franchisees with 128 restaurants open as of December 31, 2008. All of
these franchisees had fewer than 25 restaurants open as of December 31, 2008. In addition, two
international franchisees had not yet opened a restaurant as of December 31, 2008.
Menu
Applebee’s restaurants offer a diverse menu of moderately-priced food and beverage items
consisting of traditional favorites and signature dishes. The restaurants feature a broad selection of
entrees prepared in a variety of cuisines, as well as appetizers, salads, sandwiches, specialty drinks and
desserts. Substantially all Applebee’s restaurants offer beer, wine, liquor and premium specialty drinks.
During 2004, Applebee’s began a five-year exclusive strategic alliance with Weight Watchers
International, Inc. to offer Weight Watchersbranded menu items to our guests. At the conclusion of
the agreement the parties entered into a new, non-exclusive endorsement agreement which became
effective on January 5, 2009. Under the new agreement, Applebee’s and participating franchisees pay
Weight Watchers a royalty equal to 2.5% of the proceeds from the sale of Weight Watchers branded
items on the Applebee’s menu. The initial term of the agreement is one year and Applebee’s has the
option to extend the agreement for an additional year.
8