IHOP 2010 Annual Report Download - page 24

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Restaurant Development
We make the design specifications for a typical restaurant available to franchisees, and we retain
the right to prohibit or modify the use of any set of plans. Each franchisee is responsible for selecting
the site for each restaurant within its territory. We may assist franchisees in selecting appropriate sites,
and any selection made by a franchisee is subject to our approval. We also conduct a physical
inspection, review any proposed lease or purchase agreement and make available to franchisees
demographic and other studies.
There are currently 78 development agreements with 37 franchise groups in place covering the
entire United States (except Hawaii and company-operated markets) and 14 development agreements
with 12 franchise groups calling for restaurant development in foreign countries. As noted above, we
are in the process of franchising the majority of our domestic company-operated restaurants. In
conjunction with the franchising of these restaurants, we expect to enter into development agreements
with the new franchisees setting forth requirements for additional development in each market.
In 2011, we expect franchisees to open a total of between 24 to 28 new Applebee’s franchise
restaurants. We currently do not plan to open any domestic company-operated restaurants. The
following table represents commitments for 2011-2012 by franchisees under development agreements to
develop Applebee’s restaurants. We disclose development commitments for only a two-year period as
the Applebee’s development agreements generally provide for a series of two-year development
commitments after the initial development period.
Contractual
Opening of
Restaurants
by Year
2011 2012
Domestic development agreements ............................ 18 16
International development agreements ......................... 9 7
Total .................................................. 27 23
The actual number of openings may differ from both our expectations and development
commitments 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 also may be affected by various factors including weather-related and other construction
delays and difficulties in obtaining regulatory approvals.
Menu
Applebee’s restaurants offer a diverse menu of high quality, moderately-priced food and beverage
items consisting of traditional favorites and signature dishes. The restaurants feature a broad selection
of entrees as well as appetizers, salads, sandwiches, specialty drinks and desserts. All Applebee’s
restaurants offer beer, wine, liquor and premium specialty drinks.
In 2009, Applebee’s entered into a non-exclusive endorsement agreement with Weight Watchers
International, Inc. (‘‘Weight Watchers’’) to offer Weight Watchersbranded menu items to our guests.
Under the agreement, Applebee’s and participating franchisees pay Weight Watchers a royalty equal to
2.5% of the proceeds from the sale of Weight Watchers-endorsed items on the Applebee’s menu. The
agreement has been extended through at least October 2011.
Marketing and Advertising
Applebee’s has historically concentrated its advertising and marketing efforts primarily on
food-specific promotions, as well as on Weight Watchers, Carside To Goand other Applebee’s
8