Baskin Robbins 2011 Annual Report Download - page 41

executive officers and key personnel or attract additional qualified management personnel to replace executives
who retire or resign. Failure to retain our leadership team and attract and retain other important personnel could
lead to ineffective management and operations, which could materially and adversely affect our business and
operating results.
If we or our franchisees or licensees are unable to protect our customers’ credit card data, we or our
franchisees could be exposed to data loss, litigation, and liability, and our reputation could be significantly
harmed.
Privacy protection is increasingly demanding, and the introduction of electronic payment methods exposes us
and our franchisees to increased risk of privacy and/or security breaches as well as other risks. In connection with
credit card sales, our franchisees (and we from our company-operated restaurants) transmit confidential credit
card information by way of secure private retail networks. Although we use private networks, third parties may
have the technology or know-how to breach the security of the customer information transmitted in connection
with credit card sales, and our franchisees’ and our security measures and those of our technology vendors may
not effectively prohibit others from obtaining improper access to this information. If a person is able to
circumvent these security measures, he or she could destroy or steal valuable information or disrupt our
operations. Any security breach could expose us to risks of data loss, litigation, liability, and could seriously
disrupt our operations. Any resulting negative publicity could significantly harm our reputation and could
materially and adversely affect our business and operating results.
Catastrophic events may disrupt our business.
Unforeseen events, including war, terrorism and other international, regional or local instability or conflicts
(including labor issues), embargos, public health issues (including tainted food, food-borne illnesses, food
tampering, or water supply or widespread/pandemic illness such as the avian or H1N1 flu), and natural disasters
such as earthquakes, tsunamis, hurricanes, or other adverse weather and climate conditions, whether occurring in
the U.S. or abroad, could disrupt our operations or that of our franchisees, or suppliers; or result in political or
economic instability. For example, the March 2011 earthquake and tsunami in Japan resulted in the temporary
closing of a number of Baskin-Robbins restaurants, two of which remained closed as of December 31, 2011.
These events could reduce traffic in our restaurants and demand for our products; make it difficult or impossible
for our franchisees to receive products from their suppliers; disrupt or prevent our ability to perform functions at
the corporate level; and/or otherwise impede our or our franchisees’ ability to continue business operations in a
continuous manner consistent with the level and extent of business activities prior to the occurrence of the
unexpected event or events, which in turn may materially and adversely impact our business and operating
results.
Risks related to our common stock
We are a “controlled company” within the meaning of the NASDAQ Marketplace Rules and, as a result, we
qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not
have the same protections afforded to stockholders of companies that are subject to such requirements.
The Sponsors continue to control a majority of the voting power of our outstanding common stock. As a result,
we continue to be a “controlled company” within the meaning of the corporate governance standards of The
NASDAQ Global Select Market. Under these rules, a company of which more than 50% of the voting power is
held by an individual, group or another company is a “controlled company” and may elect not to comply with
certain corporate governance requirements, including:
• the requirement that a majority of the board of directors consist of independent directors;
• the requirement that we have a nominating/corporate governance committee that is composed entirely
of independent directors with a written charter addressing the committee’s purpose and responsibilities,
or otherwise have director nominees selected by vote of a majority of the independent directors;
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