IHOP 2011 Annual Report Download - page 24

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6
Number of Restaurants Held by Franchisee
One
Two to five
Six to ten
Eleven to twenty
Greater than twenty
Total (a)
Franchisees
Number
6
15
4
3
1
29
Percent
of Total
20.7%
51.7%
13.8%
10.3%
3.4%
100.0%
Restaurants
Number
6
45
36
39
22
148
Percent
of Total
4.1%
30.4%
24.3%
26.4%
14.9%
100.0%
_______________________________________________
(a) Percentages may not add due to rounding.
The success of further international expansion will depend on, among other things, local acceptance of the Applebee's concept
and menu offerings and our ability to attract qualified franchisees and operating personnel. Our franchisees must comply with the
regulatory requirements of the local jurisdictions.
Franchise Operations
We continuously monitor franchise restaurant operations, principally through our Franchise Area Directors and our Directors
of Franchise Operations. Company and third-party representatives make both scheduled and unannounced inspections of restaurants
to ensure that only approved products are in use and that our prescribed operations practices and procedures are being followed.
We have the right to terminate a franchise agreement if a franchisee does not operate and maintain a restaurant in accordance with
our requirements. We also monitor the financial health of our franchisees through business and financial reviews.
We maintain a domestic Franchise Business Council which provides input about operations, marketing, product development
and other aspects of restaurants for the purpose of improving the franchise system. As of December 31, 2011, the Franchise Business
Council consisted of eight franchisee representatives and three members of our senior management team. One franchisee
representative, the founder of Applebee's, is a member for life. The other franchisee representatives are elected by franchisees to
staggered two-year terms. The Franchise Business Council is also responsible for the appointment of members to advisory
committees related to marketing, restaurant operations, information technology, product development and human resources.
Company-Operated Restaurants
Historically, Applebee's company-operated restaurants have been clustered in targeted markets to increase consumer
awareness and convenience and enable us to take advantage of operational, distribution and advertising efficiencies. We plan to
continue to execute our strategy, initiated in 2008, of transitioning to a 99% franchised system through the sale of company-
operated restaurants to franchisees. The timing of completing this transition is subject to numerous variables, including
qualifications of the prospective buyers, the economic climate in general and credit markets in particular, and the attainment of
satisfactory valuations for each transaction.
As of December 31, 2011, Applebee's company-operated restaurants were located in the following areas:
Area
Kansas City, MO/KS area
Detroit, MI area
Grand Rapids, MI area
Springfield/Columbia, MO area
Memphis, TN/Paducah, MO area
Evansville/Terre Haute, IN area
Norfolk/Richmond, VA area
34
33
32
12
17
10
39
177
In 2011, we completed the refranchising and sale of related restaurant assets of 132 Applebee's company-operated restaurants,
66 of which were located in Massachusetts, New Hampshire, Maine, Rhode Island, Vermont and parts of New York state
(collectively, the New England market area), 36 of which were located in the St. Louis market area and 30 of which were located
in the Washington, D.C. market area. In October 2011, we entered into an agreement for the refranchising and sale of related