WeightWatchers 2010 Annual Report Download - page 19

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eetings 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 weigh
t
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 certai
n
r
ange. Successful members also become eligible to apply for positions as leaders. Field management and current
leaders constantly identify potential new leaders from members who have strong interpersonal skills. Leaders ar
e
usually paid on a commission basis.
Our traditional payment structure in our meetings 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 fre
e
r
egistration is offered as a promotion during certain times of the year. We also offer prepayment plans consisting
o
f pre-paid meeting vouchers and coupons.
I
n fiscal 2006, we introduced the Monthly Pass commitment plan in NACO. We subsequently introduce
d
Monthly Pass in eight additional markets, including the United Kingdom, Germany and Australia. Monthly Pas
s
is generally offered at an approximate 20% to 2
5
% discount to the typical “pay-as-you-go” weekly fee depending
o
n the country. Under the terms of Monthly Pass, a fee is charged automatically to the member’s credit card on
a
monthly basis until the member elects to cancel. Monthly Pass is available for purchase throughout the year. A
s
p
art of Monthly Pass, members receive unlimited access to meetings at this discounted monthly price plus fre
e
access to Weight Watchers eTools, the Internet weight management companion for Weight Watchers meeting
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members. More than half of our member attendances, and more than three quarters of our meeting paid weeks
,
were attributable to Monthly Pass in each of the markets where it has been offered for at least a year
.
A
s of the end of fiscal 2010, less than 17% of our total worldwide attendance was represented by franchised
o
perations. We estimate that, in fiscal 2010, these franchised operations attracted attendance of approximately
10 million people. Franchisees typically pay us a fee equal to 10% of their meeting fee revenues. We hav
e
enjoyed a mutually beneficial relationship with our franchisees over many years. In our early years, we used a
n
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 opportunistically.
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
o
bligated to adhere strictly to our program content guidelines, with the freedom to control pricing, clas
s
locations, operational structure and local promotions. Franchisees provide local operational expertise, advertising
and
p
ublic relations. Franchisees are re
q
uired to kee
p
accurate records that we audit on a
p
eriodic basis. Most
f
ranchise agreements are perpetual and can be terminated only upon a material breach or bankruptcy of the
f
ranchisee.
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