Papa Johns 2014 Annual Report Download - page 29

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international data protection laws that govern these activities could adversely affect the continuing
effectiveness of email, text messages and postal mailing techniques and could force changes in our
marketing strategies. If this occurs, we may need to develop alternative marketing strategies, which could
impact the amount and timing of our revenues.
We have been and will continue to be subject to various types of litigation, including collective and class
action litigation, which could subject us to significant damages or other remedies.
We and our restaurant industry competitors are subject to the risk of litigation from various parties,
including vendors, customers, franchisees, state and federal agencies, and employees. We are involved in
a number of lawsuits, claims, investigations, and proceedings consisting of intellectual property,
employment, consumer, commercial and other matters arising in the ordinary course of business. We are
currently a defendant in cases containing collective and class action allegations. Plaintiffs in these types
of lawsuits often seek recovery of very large or indeterminate amounts, and the magnitude of the potential
loss and defense costs relating to such lawsuits may not be accurately estimated. Litigation trends
involving the relationship between franchisors and franchisees, personal injury claims, employment law
and intellectual property may increase our cost of doing business. We evaluate all of the claims and
proceedings involving us to assess the expected outcome, and where possible, we estimate the amount of
potential losses to us. In many cases, particularly collective and class action cases, we may not be able to
estimate the amount of potential losses and/or our estimates may prove to be insufficient. These
assessments are made by management based on the information available at the time made and require the
use of a significant amount of judgment, and actual outcomes or losses may materially differ. Regardless
of whether any claims against us are valid, or whether we are ultimately held liable, such litigation may
be expensive to defend and may divert resources away from our operations and negatively impact
earnings. Further, we may not be able to obtain adequate insurance to protect us from these types of
litigation matters or extraordinary business losses.
If pending legal matters, including the class action litigation described in “Note 17” of “Notes to
Consolidated Financial Statements,” result in costs in excess of amounts we have accrued, our results of
operations could be materially impacted.
We may be subject to impairment charges.
Impairment charges are possible due to the nature and timing of decisions we make about
underperforming assets or markets, or if previously opened or acquired restaurants perform below our
expectations, particularly in our Company-owned China market. This could result in a decrease in our
reported asset value and reduction in our net income.
Item 1B. Unresolved Staff Comments
None.