WeightWatchers 2005 Annual Report Download - page 13

We facilitate this support through interactive meetings that encourage learning through group activities
and discussions.
We present our program in a series of weekly meetings of approximately one hour in duration.
Meetings are conveniently scheduled throughout the day. Typically, we hold meetings in either meeting
rooms rented from civic or other community organizations or in leased locations.
In our meetings, our leaders present our program that combines group support and education with
a structured approach to food, activity and lifestyle modification developed by credentialed weight
management experts. Our more than 15,000 leaders run our meetings and educate members on the
Weight Watchers method of successful and sustained weight management. Our leaders also provide
inspiration and motivation for our members and are examples of our program’s effectiveness because
they have lost weight and maintained their weight loss on our program.
Meetings typically begin with registration and a confidential weigh-in to track each member’s
progress. Leaders and receptionists are trained to engage the members at the weigh-in to talk about
their weight management efforts during the previous week and to provide encouragement and advice.
Part of the meeting is educational, where the leader uses personal anecdotes, games or open questions
to demonstrate some of our core weight management strategies, such as self-belief and discipline. For
the remainder of the meeting, the leader focuses on a variety of topics pre-selected by us, such as
seasonal weight management topics, achievements people have made in the prior week and celebrating
and applauding individual successes. Discussions can range from dealing with a holiday office party to
making time to exercise. The leader encourages substantial participation and discusses supporting
products and materials as appropriate. At the end of the meeting, new members are given special
instruction in our current weight management plan.
Our leaders help set a member’s weight goal within a healthy range based on body mass index.
When members reach their weight goal and maintain it for six weeks, they achieve lifetime member
status. This gives them the privilege to attend our meetings free of charge as long as they maintain
their weight within a certain range. Successful members also become eligible to apply for positions as
leaders. Field management and current leaders constantly identify new leaders from members who have
strong interpersonal skills and are personable. Leaders are usually paid on a commission basis.
Our most popular payment structure in our meeting business is a ‘pay-as-you-go’ arrangement. A
new member pays an initial registration fee and then a weekly fee for each meeting attended, although
free registration is often offered as a promotion. We also offer discounted prepayment plans.
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 to
pre-empt competition. Since then we have acquired a large number of franchises and we do not intend
to award new franchise territories. In fiscal 2005, franchised operations represented approximately 21%
of our total worldwide attendance. We estimate that, in fiscal 2005, 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 franchise class territory using the
program and marketing guidelines 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, class 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.
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