IHOP 2013 Annual Report Download - page 44

23
Applebee's IHOP
Franchise Company Total Franchise Company Area License Total
International
Brazil 13 — 13 — — — —
Canada 18 — 18 7 — 14 * 21
Chile 4 —4—— ——
Costa Rica 3 —3—— ——
Dominican Republic 1 — 1 1 — — 1
Egypt 1 —1—— ——
Guatemala 3 — 3 2 — — 2
Honduras 5 —5—— ——
Jordan 1 —1—— ——
Kuwait 5—52——2
Lebanon 1 —1—— ——
Mexico 65 —6520— —20
Philippines — — — 3 — — 3
Puerto Rico 4 — 4 2 — — 2
Qatar 6 —6—— ——
Saudi Arabia 15 — 15 1 — — 1
Singapore — — — — — — —
St. Croix, Virgin Islands — — — 1 — — 1
United Arab Emirates 5 — 5 3 — — 3
Total International 150 — 150 42 — 14 56
Totals 1,988 23 2,011 1,439 13 168 1,620
* of these restaurants 62 in Florida, 4 in Georgia and 12 in Canada have been sub-licensed by the area licensee
As of December 31, 2013, we operated 23 Applebee's restaurants and 13 IHOP restaurants. Our intention is to continue to
operate the 23 Applebee's restaurants in the Kansas City, Missouri market and 10 IHOP restaurants in the Cincinnati, Ohio
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 18 sites. We are temporarily operating the remaining
three IHOP company-operated restaurants until they are refranchised.
Of the 1,439 IHOP restaurants operated by franchisees, 61 were located on sites owned by us, 662 were located on sites
leased by us from third parties and 716 were located on sites owned or leased by franchisees. All of the IHOP restaurants
operated by area licensees and 1,987 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 substantially all 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.