Pizza Hut 2013 Annual Report Download - page 106

YUM! BRANDS, INC.-2013 Form10-K10
Form 10-K
PART I
ITEM 2 Properties
As of year end 2013, the Company’s Concepts owned approximately 850 units
and leased land, building or both for approximately 7,275 units worldwide.
These units are further detailed as follows:
• The China Division leased land, building or both in approximately 5,000 units.
• The International Division owned approximately 150 units and leased
land, building or both in approximately 1,175 units.
•
The U.S. Division owned approximately 675 units and leased land,
building or both in approximately 900 units.
•
The India Division leased land, building or both in approximately 200 units.
Company-owned restaurants in China are generally leased for initial terms
of 10 to 15 years and generally do not have renewal options. Historically,
the Company has either been able to renew its China Division leases or
enter into competitive leases at replacement sites without a significant
impact on our operations, cash flows or capital resources� Company-owned
restaurants in the U�S� with leases are generally leased for initial terms of
15or 20 years and generally have renewal options; however, Pizza Hut
delivery/carryout units in the U.S. generally are leased for significantly
shorter initial terms with shorter renewal options. Company-owned
restaurants outside of China and the U.S. with leases have initial lease
terms and renewal options that vary by country. The Company currently
has approximately 825 units worldwide that it leases or subleases to
franchisees, principally in the U.S., U.K. and Mexico.
The China Division leases their corporate headquarters and research
facilities in Shanghai, China. The Pizza Hut U.S. and YRI corporate
headquarters and a research facility in Plano, Texas are owned by Pizza
Hut. Taco Bell leases its corporate headquarters and research facility in
Irvine, California. The KFC U.S. and YUM corporate headquarters and
a research facility in Louisville, Kentucky are owned by the Company. In
addition, YUM leases office facilities for the U.S. Division shared service
center in Louisville, Kentucky. YUM sub-leases a portion of its shared
service office facility in Louisville, Kentucky to a company that performs
certain of our information technology, accounting and payroll services.
Additional information about the Company’s properties is included in the
Consolidated Financial Statements in Part II, Item 8, pages 36 through 71.
The Company believes that its properties are generally in good operating
condition and are suitable for the purposes for which they are being used.
ITEM 3 Legal Proceedings
The Company is subject to various lawsuits covering a variety of allegations.
The Company believes that the ultimate liability, if any, in excess of amounts
already provided for these matters in the Consolidated Financial Statements,
is not likely to have a material adverse effect on the Company’s annual
results of operations, financial condition or cash flows. The following is a
brief description of the more significant of the categories of lawsuits and
other matters we face from time to time. Descriptions of specific claims
and contingencies appear in Note 19, Contingencies, to the Consolidated
Financial Statements included in Part II, Item 8, which Note is incorporated
by reference into this item.
Franchisees
A substantial number of the restaurants of each of the Concepts are franchised to independent businesses. In the course of the franchise relationship,
occasional disputes arise with franchisees relating to a broad range of subjects, including, without limitation, marketing, operational standards, quality,
service and cleanliness issues, grants, transfers or terminations of franchise rights, territorial disputes and delinquent payments.
Suppliers
The Company and its Concepts purchase food, paper, equipment and other restaurant supplies as well as certain services from numerous independent
suppliers throughout the world. Disputes arise from time-to-time with suppliers on a number of issues, including, but not limited to, general performance,
compliance with product specifications and terms of procurement and service requirements.
Employees
At any given time, the Company or its Concepts employ hundreds of thousands of persons, primarily in its restaurants. In addition, each year thousands of
persons seek employment with the Company and its Concepts. From time to time, disputes arise regarding employee hiring, compensation, termination
and promotion practices.
Like other retail employers, the Company and its Concepts have been faced with allegations of class-wide wage and hour, employee classification and
other labor law violations.