WeightWatchers 2013 Annual Report Download - page 18

approximately seven million people. 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
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 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 from time to time. 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, PointsPlus calculators, fitness kits and ActiveLink, an activity monitor and
web experience that tracks activity throughout the day. These products complement our weight management
plans and help our customers in their weight management efforts. We have focused on selling products that drive
recurring purchases. Our products are designed to be high quality, offer benefits related to the Weight Watchers
plans and be easy to merchandise.
We sell our products primarily through our meeting operations and to our franchisees. Excluding sales to or
by our franchisees, in fiscal 2013, sales of proprietary products in our meeting operations represented
approximately 12% of our revenues. We seek to grow our product sales per attendee in our meeting operations by
continuing to optimize our product offerings by updating existing products, selectively introducing new products
and sharing best practices across geographies.
Revenues from our WWI reporting segment, including revenues from meetings and product sales,
contributed 69.4% of our total revenues in fiscal 2013, 72.2% of our total revenues in fiscal 2012 and 77.8% of
our total revenues in fiscal 2011.
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 digital content and the growth of e-Commerce and digital
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 2005 and the third quarter of 2013. 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 currently offer them in ten other countries, including the United Kingdom,
Canada, France, Germany and Australia. While these products have similar functionality across markets, each is
tailored specifically to the local market.
Revenues from our WeightWatchers.com reporting segment contributed 30.6% of our total revenues in
fiscal 2013, 27.8% of our total revenues in fiscal 2012 and 22.2% of our total revenues in fiscal 2011.
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
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