WeightWatchers 2004 Annual Report Download - page 12

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In the United States during 2001, our affiliate and licensee, WeightWatchers.com, launched two
online paid subscription products, Weight Watchers eTools and Weight Watchers Online. Weight Watchers
eTools is designed to supplement and strengthen the Weight Watchers classroom business. Weight
Watchers eTools is a suite of electronic tools available only to Weight Watchers members, designed to
help them achieve greater success by making it even easier to follow TurnAround and by reinforcing our
weight-loss approach between meetings. Weight Watchers Online offers information on the TurnAround
program, POINTS values, content on various weight-loss subjects, professionally-developed low-POINTS
recipes and weekly meal plans for different POINTS ranges. In addition, Weight Watchers Online
provides an online journal, an online POINTS calculator, a recipe POINTS calculator, a weight tracker
and progress charts and targeted messages to help subscribers achieve their weight-loss goals. This
product targets self-help dieters.
Our Corporate Solutions line of weight-loss offerings also includes prepaid local meeting coupons,
Weight Watchers online subscriptions and the At Home kit.
Product Sales
We sell a range of proprietary products, including snack bars, books, CD-ROMS and POINTS
calculators that are consistent with our brand image. We sell our products primarily through our
classroom operations and to our franchisees. In fiscal 2004, sales of our proprietary products
represented 27% of our revenues. We have focused on a group of products that complement the
Weight Watchers program. We intend to continue to optimize our product offerings by updating
existing products and selectively introducing new products.
Company-Owned Operations
Our North American operations consist of approximately 4,100 meeting locations that generated
$373.1 million in meeting fee revenue for the fiscal year ended January 1, 2005. North America
attendance was 32.3 million for the fiscal year ended January 1, 2005.
International operations consist of approximately 10,000 meeting locations outside the United
States that generated $256.0 million in meeting fee revenue for the fiscal year ended January 1, 2005.
International attendance was 27.6 million for the fiscal year ended January 1, 2005.
Franchise Operations
We have enjoyed a mutually beneficial relationship with our franchisees over many years. In our
early years, we used an aggressive franchising strategy to quickly establish a meeting infrastructure
throughout the world to pre-empt competition. Our franchised operations represented approximately
22% of our total worldwide attendance for fiscal 2004. We estimate that, in fiscal 2004, these franchised
operations attracted attendance of over 16 million. Franchisees typically pay us a fee equal to 10% of
their meeting fee revenues.
Our franchisees are responsible for operating classes in their territory using the program and
marketing materials we have developed. We provide a central support system for the program and our
brand. Franchisees purchase products from us at wholesale prices for resale directly to members.
Franchisees are obligated to adhere strictly to our program content guidelines, with the freedom to
control pricing, meeting locations, operational structure and local promotions. Franchisees provide local
operational expertise, advertising and public relations. Franchisees are required to keep accurate
records that we audit on a periodic basis. Most franchise agreements are perpetual and can be
terminated only upon a material breach or bankruptcy of the franchisee.
We do not intend to award new franchise territories. From time to time, we repurchase franchise
territories.
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