WeightWatchers 2011 Annual Report Download - page 22

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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.
Our Product Sales
We sell a range of products, including bars, snacks, cookbooks, food and restaurant guides with PointsPlus
values, Weight Watchers magazines and PointsPlus calculators, which complement our weight management
plans and help our customers in their weight management efforts. We have focused on selling 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 sell our products primarily through our meeting operations and to our franchisees. We have grown our
product sales per attendee in our meeting operations by updating our selection of products. In fiscal 2011, sales
of our proprietary products in our meeting operations represented approximately 15% of our revenues. We intend
to continue to optimize our product offerings by updating existing products, selectively introducing new products
and sharing best practices across geographies.
Revenues from WWI, including revenues from meetings and product sales, contributed 77.8% of our total
revenues in fiscal 2011, 83.4% of our total revenues in fiscal 2010 and 85.9% of our total revenues in fiscal 2009.
Our WeightWatchers.com Offerings
Through WeightWatchers.com, we are well positioned to benefit from the large self-help weight
management market as well as several trends taking place in the global Internet marketplace, including an
increased willingness of consumers to access and pay for web content, the proliferation of broadband access and
the growth of e-Commerce and Internet advertising. According to the U.S. Census Bureau, U.S. retail
eCommerce sales as a percent of total U.S. retail sales more than doubled between the third quarter of 2004 and
the third quarter of 2011. We offer two Internet subscription products—Weight Watchers Online and Weight
Watchers eTools. We have offered these products in the United States since 2001 and subsequently have
launched them in ten other countries, including the United Kingdom, France, Germany and Australia. While
these products have similar functionality across markets, each is tailored specifically to the local market.
Revenues from WeightWatchers.com contributed 22.2% of our total revenues in fiscal 2011, 16.6% of our
total revenues in fiscal 2010 and 14.1% of our total revenues in fiscal 2009.
Subscription Products
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. As of the end of fiscal 2011, WeightWatchers.com had over
1.5 million active Weight Watchers Online subscribers.
Weight Watchers eTools is an Internet weight management product available 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 plans online, discover different food options, stay informed and motivated,
and keep track of their weight management efforts.
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