IHOP 2012 Annual Report Download - page 31

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We consider our trademarks and service marks important to the identification of our company and our restaurants and believe
they are of material importance to the conduct of our business. We generally intend to renew trademarks and service marks which
come up for renewal. We own or have rights to all trademarks we believe are material to our restaurant operations. In addition,
we have registered various domain names on the Internet that incorporate certain of our trademarks and service marks, and believe
these domain name registrations are an integral part of our identity. From time to time, we may take appropriate legal action to
defend and protect the use of our intellectual property.
Seasonal Operations
We do not consider our operations to be seasonal to any material degree.
Government Regulation
We are subject to Federal Trade Commission ("FTC") regulation and a number of state laws which regulate the offer and sale
of franchises. We also are subject to a number of state laws which regulate substantive aspects of the franchisor-franchisee
relationship. The FTC's Trade Regulation Rule on Franchising, as amended (the "FTC Rule"), requires us to furnish to prospective
franchisees a Franchise Disclosure Document containing information prescribed by the FTC Rule.
State laws that regulate the offer and sale of franchises and the franchisor-franchisee relationship presently exist in a number
of states. State laws that regulate the offer and sale of franchises require registration of the franchise offering with the state
authorities. Those states that regulate the franchise relationship generally require that the franchisor deal with its franchisees in
good faith, prohibit interference with the right of free association among franchisees, limit the imposition of unreasonable standards
of performance on a franchisee and regulate discrimination against franchisees with respect to charges, royalty fees or other fees.
Although such laws may restrict a franchisor in the termination and/or non-renewal of a franchise agreement by, for example,
requiring "good cause" to exist as a basis for the termination and/or non-renewal, advance notice to the franchisee of the termination
or non-renewal, an opportunity to cure a default and a repurchase of inventory or other compensation upon termination, these
provisions have not historically had a significant effect on our franchise operations.
Each restaurant is subject to licensing and regulation by a number of governmental authorities, which may include liquor
license authorities (primarily in the case of Applebee's restaurants), health, sanitation, safety, fire, building and other agencies in
the state or municipality in which the restaurant is located. Difficulties in obtaining, or failure to obtain, the required licenses or
approvals could delay or prevent the development of a new restaurant in a particular area or cause the temporary closure of existing
restaurants. We are also subject to new laws and regulations, which vary from jurisdiction to jurisdiction, relating to nutritional
content and menu labeling. Compliance with these laws and regulations may lead to increased costs and operational complexity
and may increase our exposure to governmental investigations or litigation.
We are subject to federal and state environmental regulations, but these have not had a material effect on our operations. More
stringent and varied requirements of local governmental bodies with respect to zoning, land use and environmental factors could
delay or prevent the development of new restaurants in particular areas.
Various federal and state labor laws govern both our own and our franchisees' relationships with our respective employees.
These include such matters as minimum wage requirements, overtime and other working conditions. Significant additional
government-imposed increases in minimum wages, paid leaves of absence, mandated health benefits or increased tax reporting
and tax payment requirements with respect to employees who receive gratuities could be detrimental to the economic viability of
our restaurants.
In March 2010, President Obama signed the Patient Protection and Affordable Care Act and the Health Care and Education
Affordability Reconciliation Act of 2010. The legislation is far-reaching and is intended to expand access to health insurance
coverage over time by adjusting the eligibility thresholds for most state Medicaid programs and providing certain other individuals
and small businesses with tax credits to subsidize a portion of the cost of health insurance coverage. The legislation includes a
requirement that most individuals obtain health insurance coverage beginning in 2014 and also a requirement that certain large
employers offer coverage to their employees or pay a financial penalty. We are evaluating the impact the new law will have on
our business. Although we cannot predict with certainty the financial and operational impacts the new law will have on us, we
expect that our expenses will increase over the long term as a result of this legislation, and any such increases could adversely
affect our business, cash flows, financial condition and results of operations.
In recent years, there has been an increased legislative, regulatory and consumer focus at the federal, state and municipal
levels on the food industry including nutrition and advertising practices. Restaurants operating in the quick-service and fast-casual
segments have been a particular focus. The State of California, New York City and a growing number of other jurisdictions around
the United States have adopted regulations requiring that chain restaurants include calorie information on their menus or make
other nutritional information available. The recently-enacted United States health care reform law included nation-wide menu
labeling and nutrition disclosure requirements as well. Initiatives in the area of nutrition disclosure or advertising, such as