IHOP 2012 Annual Report Download - page 43

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25
Applebee's IHOP
Franchise Company Total Franchise Company Area License Total
International
Brazil 13 — 13 — — — —
Canada 19 — 19 7 — 13* 20
Chile 4 — 4 — — — —
Costa Rica 3 — 3 — — — —
Dominican Republic — — — 1 — — 1
Greece 1 — 1 — — — —
Guatemala 3 — 3 2 — — 2
Honduras 5 — 5 — — — —
Jordan 1 — 1 — — — —
Kuwait 5 — 5 — — — —
Lebanon 1 — 1 — — — —
Mexico 66 — 66 16 — — 16
Puerto Rico 3 — 3 2 — — 2
Qatar 6 — 6 — — — —
Saudi Arabia 14 — 14 — — — —
Singapore 1 — 1 — — — —
St. Croix, Virgin Islands — — — 1 — — 1
United Arab Emirates 4 — 4 2 — — 2
Total International 149 — 149 31 — 13 44
Totals 2,011 23 2,034 1,404 12 165 1,581
* of these restaurants 63 in Florida, 4 in Georgia and 11 in Canada have been sub-licensed by the area licensee
As of December 31, 2012, we operated 23 Applebee's restaurants and 12 IHOP restaurants for a total of 35 company-operated
restaurants. Our intention is to continue to operate the 23 Applebee's restaurants in the Kansas CIty market and 10 IHOP restaurants
in the Cincinnati market. Of these restaurants, we leased the building for five sites, owned the building and leased the land for 11
sites, owned the land and building for two sites and leased the land and building for 17 sites.
Of the 1,404 IHOP restaurants operated by franchisees, 61 were located on sites owned by us, 678 were located on sites leased
by us from third parties and 665 were located on sites owned or leased by franchisees. All of the IHOP restaurants operated by
area licensees and 2,010 of the franchisee-operated Applebee's restaurants were located on sites owned or leased by the area
licensees or the franchisees. We owned one site on which a franchisee-operated Applebee's restaurant was located.
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 five to
20 years. In addition, a substantial number 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 occupy 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 located in Kansas City, Missouri under a lease expiring in
October 2021.