Pizza Hut 2014 Annual Report Download - page 102

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PART I
ITEM 1A Risk Factors
negatively impact reported earnings. With respect to insured claims, a
Our success depends substantially on judgment for monetary damages in excess of any insurance coverage
the value and perception of our brands. could adversely affect our financial condition or results of operations.
Any adverse publicity resulting from these allegations may also
Our success depends in large part upon our ability to maintain and adversely affect our reputation, which in turn could adversely affect
enhance the value of our brands and our customers’ connection to our our results.
brands. Brand value is based in part on consumer perceptions on a
variety of subjective qualities. Business incidents, whether isolated or In addition, the restaurant industry has been subject to claims that
recurring and whether originating from us, our franchisees or relate to the nutritional content of food products, as well as claims that
suppliers, can significantly reduce brand value and consumer trust, the menus and practices of restaurant chains have led to the obesity
particularly if the incidents receive considerable publicity or result in of some customers. We may also be subject to this type of claim in the
litigation. For example, our brands could be damaged by claims or future and, even if we are not, publicity about these matters
perceptions about the quality or safety of our products or the quality of (particularly directed at the quick service and fast-casual segments of
our suppliers, regardless of whether such claims or perceptions are the industry) may harm our reputation and adversely affect our results.
true. Any such incident could cause a decline in consumer confidence
in, or the perception of, our Concepts and/or our products and Changes in, or noncompliance with,
decrease the value of our brands as well as consumer demand for our
products, which would likely result in lower revenues and profits. governmental regulations may adversely
affect our business operations, growth
Our inability or failure to recognize, prospects or financial condition.
respond to and effectively manage the Our Concepts and their franchisees are subject to numerous laws and
accelerated impact of social media could regulations around the world. These laws change regularly and are
increasingly complex. For example, we are subject to:
materially adversely impact our business.
The Americans with Disabilities Act in the U.S. and similar state laws
There has been a marked increase in the use of social media
that give civil rights protections to individuals with disabilities in the
platforms, including weblogs (blogs), social media websites, and other
context of employment, public accommodations and other areas.
forms of Internet-based communications which allow individuals
access to a broad audience of consumers and other interested The U.S. Fair Labor Standards Act, which governs matters such as
persons. Many social media platforms immediately publish the minimum wages, overtime and other working conditions, as well as
content their subscribers and participants post, often without filters or family leave mandates and a variety of similar state laws that govern
checks on accuracy of the content posted. Information posted on such these and other employment law matters.
platforms at any time may be adverse to our interests and/or may be
inaccurate. The dissemination of information online could harm our Anti-bribery and corruption laws and regulations, such as the
business, prospects, financial condition, and results of operations, Foreign Corrupt Practices Act, the UK Bribery Act and similar laws,
regardless of the information’s accuracy. The harm may be immediate which are the subject of increasing scrutiny and enforcement around
without affording us an opportunity for redress or correction. the world.
Other risks associated with the use of social media include improper Laws and regulations in government-mandated health care benefits
disclosure of proprietary information, negative comments about our such as the Patient Protection and Affordable Care Act.
Concepts, exposure of personally identifiable information, fraud and Laws relating to state and local licensing.
out-of-date information. The inappropriate use of social media by our
customers or employees could increase our costs, lead to litigation or Laws and regulations relating to health, sanitation, food, workplace
result in negative publicity that could damage our reputation. safety, child labor, including laws prohibiting the use of certain
‘‘hazardous equipment’’ by employees younger than the age of
18 years of age, and fire safety and prevention.
We could be party to litigation that could
Laws and regulations relating to union organizing rights and
adversely affect us by increasing our activities.
expenses or subjecting us to significant
Laws relating to information security, privacy, cashless payments
monetary damages and other remedies. and consumer credit, protection and fraud.
From time to time we are involved in a number of legal proceedings, Environmental regulations.
which include consumer, employment, tort, patent, securities,
derivative and other litigation (see the discussion of Legal Federal and state immigration laws and regulations in the U.S.
Proceedings in Note 18 to the consolidated financial statements
Compliance with new or existing laws and regulations could impact
included in Item 8 of this Report). We are currently a defendant in
our operations. The compliance costs associated with these laws and
cases containing class action allegations in which the plaintiffs have
regulations could be substantial. Any failure or alleged failure to
brought claims under federal and state wage and hour, disability and
comply with these laws or regulations could adversely affect our
other laws. We are also currently a defendant in securities and
reputation, international expansion efforts, growth prospects and
derivative lawsuits alleging inadequate disclosures in violation of
financial condition or result in, among other things, litigation,
federal securities laws. Plaintiffs in these types of lawsuits often seek
revocation of required licenses, governmental investigations or
recovery of very large or indeterminate amounts, and the magnitude
proceedings, administrative enforcement actions, fines and civil and
of the potential loss relating to such lawsuits may not be accurately
criminal liability. Publicity relating to any such noncompliance could
estimated. Regardless of whether any claims against us are valid, or
also harm our reputation and adversely affect our revenues.
whether we are ultimately held liable, such litigation may be expensive
to defend and may divert resources away from our operations and
8YUM! BRANDS, INC. - 2014 Form 10-K
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Form 10-K