Baskin Robbins 2011 Annual Report Download - page 19

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venture organizations, training facilities have been established by the master franchisee or joint venture based on
our specifications. From those training facilities, the master franchisee or joint venture trains future staff
members of the international restaurants. Our master franchisees and joint venture entities also periodically send
their primary training managers to the U.S. for re-certification.
Store development agreements
We grant domestic franchisees the right to open one or more restaurants within a specified geographic area
pursuant to the terms of SDAs. An SDA specifies the number of restaurants and the mix of the brands
represented by such restaurants that a franchisee is obligated to open. Each SDA also requires the franchisee to
meet certain milestones in the development and opening of the restaurant and, if the franchisee meets those
obligations, we agree, during the term of such SDA, not to operate or franchise new restaurants in the designated
geographic area covered by such SDA. In addition to an SDA, a franchisee signs a separate franchise agreement
for each restaurant developed under such SDA.
Master franchise model and international arrangements
Master franchise arrangements are used on a limited basis domestically (the Baskin-Robbins brand has five
“territory” franchise agreements for certain Midwestern and Northwestern markets) but more widely
internationally for both the Baskin-Robbins brand and the Dunkin’ Donuts brand. In addition, international
arrangements include single unit franchises in Canada (both brands), the United Kingdom and Australia (Baskin-
Robbins brand) as well as joint venture agreements in Korea (both brands) and Japan (Baskin-Robbins brand).
Master franchise agreements are the most prevalent international relationships for both brands. Under these
agreements, the applicable brand grants the master franchisee the exclusive right to develop and operate a certain
number of restaurants within a particular geographic area, such as selected cities, one or more provinces or an
entire country, pursuant to a development schedule that defines the number of restaurants that the master
franchisee must open annually. Those development schedules customarily extend for five to ten years. If the
master franchisee fails to perform its obligations, the exclusivity provision of the agreement terminates and
additional franchise agreements may be put in place to develop restaurants.
The master franchisee is required to pay an upfront initial franchise fee for each developed restaurant and, for the
Dunkin’ Donuts brand, royalties. For the Baskin-Robbins brand, the master franchisee is typically required to
purchase ice cream from Baskin-Robbins or an approved supplier. In most countries, the master franchisee is also
required to spend a certain percentage of gross sales on advertising in such foreign country in order to promote
the brand. Generally, the master franchise agreement serves as the franchise agreement for the underlying
restaurants operating pursuant to such model. Depending on the individual agreement, we may permit the master
franchisee to subfranchise with its territory.
Our brands have presence in the following countries:
Dunkin’ Donuts Baskin-Robbins
Aruba ✓✓
Australia ✓
Azerbaijan ✓
Bahamas ✓
Bahrain ✓
Bangladesh ✓
Bulgaria ✓
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