IHOP 2009 Annual Report Download - page 47

Applebee’s IHOP
Company- Company- Area
Franchise Operated Total Franchise Operated License Total
International
Bahrain .......................... 1 — 1 — — — —
Brazil ........................... 9 — 9 — — — —
Canada .......................... 25 — 25 2 — 12 14
Chile ............................ 2 — 2 — — — —
China ........................... — 1 1 — — — —
Costa Rica ........................ 1 — 1 — — — —
Greece .......................... 8 — 8 — — — —
Guatemala ........................ 3 — 3 — — — —
Honduras ......................... 7 — 7 — — — —
Jordan ........................... 1 — 1 — — — —
Kuwait ........................... 5 — 5 — — — —
Lebanon ......................... 1 — 1 — — — —
Mexico .......................... 56 — 56 7 — — 7
Puerto Rico ....................... 2 — 2 1 — — 1
Qatar ........................... 4 — 4 — — — —
Saudi Arabia ....................... 12 — 12 — — — —
United Arab Emirates ................. 2 — 2 — — — —
St. Croix, Virgin Islands ................ — — — 1 — — 1
Total International .................. 139 1 140 11 — 12 23
Totals ........................ 1,609 399 2,008 1,279 13 164 1,456
As of December 31, 2009, we operated 399 Applebee’s restaurants and 13 IHOP restaurants for a
total of 412 company-operated restaurants. Of these restaurants, we leased the building for 55 sites,
owned the building and leased the land for 183 sites, owned the land and building for 12 sites and
leased the land and building for 162 sites.
Of the 1,279 franchisee-operated IHOP restaurants, 62 were located on sites owned by us, 696
were located on sites leased by us from third parties and 521 were located on sites owned or leased by
franchisees. All of the IHOP restaurants operated by the area licensee and all of the franchisee-
operated Applebee’s restaurants were located on sites owned or leased by the area licensee or the
franchisee.
Leases of IHOP restaurants generally provide for an initial term of 20 to 25 years, with most
having one or more five-year renewal options. Leases of Applebee’s restaurants generally have an
initial term of 10 to 20 years, with renewal terms of 5 to 20 years. In addition, a substantial portion of
the leases for both IHOP and Applebee’s restaurants include provisions calling for the periodic
escalation of rents during the initial term and/or during renewal terms. The leases typically provide for
payment of rents in an amount equal to the greater of a fixed amount or a specified percentage of
gross sales and for payment of taxes, insurance premiums, maintenance expenses and certain other
costs. Historically, it has been our practice to seek to extend, through negotiation, those leases that
expire without renewal options. However, from time to time, we choose not to renew a lease or are
unsuccessful in negotiating satisfactory renewal terms. When this occurs, the restaurant is closed and
possession of the premises is returned to the landlord.
Under our Applebee’s franchise agreements, we have certain rights to gain control of a restaurant
site in the event of default under the franchise agreement. Because most IHOP franchised restaurants
developed by us under our Previous Business Model are subleased to the franchisees, IHOP has the
ability to regain possession of the subleased restaurant if the franchisee defaults in the payment of rent
or other terms of the sublease.
We currently lease our principal corporate offices and IHOP restaurant support center in
Glendale, California, under a lease expiring in June 2020. The Applebee’s restaurant support center is
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