IHOP 2014 Annual Report Download - page 28

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9
The market for high quality commercial real estate is also very competitive. We and our franchisees compete with other
restaurant chains and retail businesses for suitable sites for the development of new restaurants. We also compete against other
franchisors both within and outside the restaurant industry for new franchise developers. For further information regarding
competition, see Item 1A, Risk Factors.
Trademarks and Service Marks
We and our affiliates have registered certain trademarks and service marks with the United States Patent and Trademark
Office and various international jurisdictions, including “DineEquity®” and “Great Franchisees. Great Brands.®” We own
trademarks and service marks used in the Applebee's system, including “Applebee's®,” “Applebee's Neighborhood Grill &
Bar®” and variations of each. In addition, we own trademarks and service marks used in the IHOP system, including “IHOP®,”
“International House of Pancakes®” and variations of each.
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. Depending upon the jurisdiction, trademarks and service
marks generally are valid as long as they are used and/or registered. We generally intend to renew our trademarks and service
marks as they 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.
Information Technology
We utilize programmed point of sale systems, kitchen data management, and back-of-the house systems for accounting,
labor and inventory management in our company restaurants. In addition, we are developing several consumer-facing
technology initiatives focused on improving our customers' experience. Sales and product mix information is transmitted to our
restaurant support centers on a daily basis and this information supports our operations and marketing initiatives. We mitigate
the potential impact from operational interruption of our information technology systems through a disaster recovery plan that
is updated on a regular basis. We believe that technology is and will continue to be a key component of our long-term plans and
are committed to providing system stability and targeted innovation. Our use of technology, particularly in terms of managing
electronic payments and confidential information, also represents security and operational risks that we must manage and may
result in additional costs incurred.
We accept credit cards, third party gift cards, and branded gift cards as payment in our restaurants. We submit our systems
to regular audit and review, as required by Payment Card Industry Standards, including periodic scanning of our networks to
check for vulnerability. In addition, we participate in annual audits of our financial and human resources systems to verify that
measures are in place to protect our employees' personally identifiable information. As a franchisor, we are not responsible for
ensuring that our franchisees maintain compliance; however, we regularly encourage them to take similar steps to maintain
compliance and to mitigate risk. For further information regarding Information Technology, see Item 1A, Risk Factors.
Research and Development
We do not engage in any material amount of research and development activity from a financial perspective. We do engage
in ongoing culinary development and testing, in addition to consumer research into customers’ preferences and opinions as well
as overall industry trends.
Seasonality
We do not consider our operations to be seasonal to any material degree. We do experience a slight increase in system-wide
sales in the first quarter due to redemptions of gift cards sold during the December holiday season. Over the past five years, 26%
of our annual system-wide sales (retail sales reported to us by our franchisees plus sales at our company-operated restaurants)
occurred in the first quarter. Sales at restaurants owned by franchisees are not attributable to the Company.