WeightWatchers 2006 Annual Report Download - page 16

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 self-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 plans.
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 traditional 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
offered as a promotion during certain times of the year. We also offer prepayment plans consisting of pre-paid
meeting vouchers and coupons.
In fiscal 2006, we introduced two commitment plans throughout NACO – Season Pass and Monthly Pass.
Beginning in the winter diet season of 2006, we offered the Season Pass commitment plan to all of our members
across NACO. Members who chose to buy Season Pass prepaid for meetings for a pre-defined 17-week period
for an upfront fee of about $155, on average. In fiscal 2006, Season Pass was offered twice for approximately
four weeks each at the beginning of the winter and spring diet seasons. In order to focus our leaders and members
on the introduction of Monthly Pass, we did not offer a Season Pass in the fall diet season of 2006.
The Monthly Pass commitment plan was first offered throughout NACO in the fall diet season of fiscal
2006. Monthly Pass was offered at an approximate 20% discount to the typical “pay-as-you-go” weekly fee,
allowing members to sign up to meetings for $39.95 per month. Monthly Pass is charged automatically to the
member’s credit card on a monthly basis until the member elects to cancel. Unlike Season Pass, which can only
be bought in a narrow sales window at the beginning of each diet season, Monthly Pass will be available for
purchase throughout the year. As part of the Monthly Pass, members receive unlimited access to meetings at this
discounted monthly price plus free access to Weight Watchers eTools, the Internet weight management
companion for Weight Watchers meetings members.
As of the end of fiscal 2006, less than 20% of our total worldwide attendance was represented by franchised
operations. We estimate that, in fiscal 2006, these franchised operations attracted attendance of over 15 million.
Franchisees typically pay us a fee equal to 10% of their meeting fee revenues. 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 expect to continue to do so.
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.
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