Panera Bread 2006 Annual Report Download - page 14

If we fail to comply with governmental regulations or if these regulations change, our business could suffer.
We must comply with extensive federal, state and local laws, and if we expand internationally, foreign laws and
treaties, in connection with the operation of our business, including those related to:
• franchise relationships;
• building construction and zoning requirements;
• environmental matters;
• the preparation and sale of food; and
• employment.
Our bakery-cafes and fresh dough facilities are licensed and subject to regulation under state and local laws,
including business, health, fire and safety codes.
Various federal and state labor laws govern our operations and our relationship with our employees, including
minimum wage, overtime, accommodation and working conditions, benefits, citizenship requirements, insurance
matters, workers’ compensation, disability laws such as the federal Americans with Disabilities Act, child labor
laws and anti-discrimination laws.
While we believe we operate in substantial compliance with these laws, they are complex and vary from
location to location, which complicates monitoring and compliance. As a result, regulatory risks are inherent in our
operation. Although we believe that compliance with these laws has not had a material effect on our operations to
date, there can be no assurance that we will not experience material difficulties or failures with respect to
compliance in the future. Our failure to comply with these laws could result in required renovations to our facilities,
litigation, fines, penalties, judgments or other sanctions including the temporary suspension of bakery-cafe or fresh
dough facility operations or a delay in construction or opening of a bakery-cafe, any of which could adversely affect
our business, operations and our reputation.
If we expand into foreign markets we may be exposed to uncertainties and risks, which could negatively
impact our results of operations.
We may expand our operations into new foreign markets, which will expose us to new risks and uncertainties.
For example, we currently intend to expand our operations into Canadian markets, primarily through franchisee
agreements, in 2007. If we expand into Canada we will be subject to Canadian economic conditions and political
factors, either of which could have a material adverse affect on our financial condition and results of operations.
Economic conditions and political factors include, but are not limited to, taxation, inflation, currency fluctuations,
increased regulations and quotas, tariffs and other protectionist measures. Any future expansion into other
international markets would expose us to similar risks.
Loss of senior management or the inability to recruit and retain other associates could adversely affect our
future success.
Our success depends on the services of our senior management and other associates, all of whom are “at will”
employees. The loss of a member of senior management could have an adverse impact on our business or the
financial market’s perception of our ability to continue our growth.
Our success also depends on our continuing ability to hire, train, motivate and retain qualified associates in our
bakery-cafes, fresh dough facilities and support centers. Our failure to do so could result in higher employee
turnover and increased labor costs, and could compromise the quality of our service, all of which could adversely
affect our business.
Our failure or inability to protect our brand, trademarks or other proprietary rights could adversely affect
our business and competitive position.
We believe that our brand, intellectual property and our confidential and proprietary information is very
important to our business and our competitive position. Our primary trademarks, Panera», Panera Bread», Saint
Louis Bread Co.», Via Panera», Crispani», and Mother Bread design, along with other trademarks, copyrights,
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