WeightWatchers 2006 Annual Report Download - page 17

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Please find page 17 of the 2006 WeightWatchers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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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.
Product Sales
We sell a range of products, including bars, snacks, cookbooks, POINTS value guides, Weight Watchers
magazines and POINTS calculators, that complement our weight management plans and help our customers in
their weight management efforts. Our emphasis has been on consumables that drive recurring purchases. Our
products are designed to be high quality, offer benefits related to the Weight Watchers plans, be competitively
priced and be easy to merchandise. We continuously update our products and share best practices around the
globe.
We sell our products primarily through our meeting operations and to our franchisees. Recently, we have
grown our product sales per attendee by updating our selection of products. In fiscal 2006, sales of our
proprietary products represented 24% of our revenues. We intend to continue to optimize our product offerings
by updating existing products and selectively introducing new products.
Our WeightWatchers.com Offerings
Through WeightWatchers.com, we are well positioned to benefit from the large self-help market as well as
several trends taking place in the Internet marketplace including an increased willingness to access and pay for
web content, the proliferation of broadband access and the growth of e-Commerce and Internet advertising.
According to comScore, the U.S. paid Internet content market has nearly quadrupled from 2001 to 2005,
increasing from $700 million in 2001 to over $2 billion in 2005, with over 78% of U.S. Internet content revenue
coming from subscriptions as opposed to individual sales.
Since 2001, we have offered two Internet subscription products in the United States — Weight Watchers
Online and Weight Watchers eTools.
Weight Watchers Online
Weight Watchers Online is a product based on the Weight Watchers approach to weight management and is
designed to attract self-help-inclined consumers. Weight Watchers Online helps consumers adopt a healthier
lifestyle, with a view toward long-term behavior modification—a key aspect of the Weight Watchers approach
toward sustainable weight loss. Weight Watchers Online allows consumers to learn how to make healthier food
choices and lead a more active lifestyle by providing them with online content, functionality, resources and
interactive web-based weight management plans.
Weight Watchers eTools
Weight Watchers eTools is an Internet weight management offering available only to consumers who are
Weight Watchers meetings members. Weight Watchers eTools allows users to interactively manage the
day-to-day aspects of their weight management plan online, discover different food options, stay informed and
motivated, and keep track of their weight management efforts.
In the third quarter of 2002, WeightWatchers.com launched its two Internet subscription products on our
U.K. and Canadian websites. In January 2004, WeightWatchers.com launched its Internet subscription products
on our German website, and, in December 2005, WeightWatchers.com launched its Internet subscription
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