Buffalo Wild Wings 2015 Annual Report Download - page 9

9
All of our franchise agreements require that each franchised restaurant operate in accordance with our defined operating
procedures, adhere to the menu established by us, meet applicable quality, service, health and cleanliness standards and comply
with all applicable laws. We ensure these high standards are being followed through a variety of means including mystery
shoppers and announced and unannounced quality assurance inspections by our franchise consultants. We may terminate the
franchise rights of any franchisee who does not comply with our standards and requirements. We believe that maintaining
superior food quality, an inviting and energetic atmosphere and excellent guest service are critical to the reputation and success
of our concept; therefore, we consistently enforce the contractual requirements of our franchise agreements.
The area development agreement establishes the number of restaurants that must be developed in a defined geographic
area and the deadlines by which these restaurants must open. For area development agreements covering three to seven
restaurants, restaurants are often required to open in approximately 12-month intervals. For larger development agreements, the
interval is typically shorter. The area development agreement can be terminated by us if, among other reasons, the area
developer fails to open restaurants on schedule.
We work hard to maintain positive and productive relationships with our franchisees. We have formed and maintain the
FAC, which, as described previously, is an advisory council made up of twelve franchisees that engage with BWW on matters
of system-wide importance; six of these FAC members are elected by their peers, and the remaining six are appointed jointly by
existing FAC members and us. The FAC meets several times per year in person, and more frequently via conference calls, with
our senior leaders. We also have other councils of franchisees with whom we consult periodically on specific matters.
Information Technology
We utilize a standard point-of-sale system in all of our company-owned and franchised Buffalo Wild Wings® restaurants,
which is integrated to our central offices through a secure, high-speed connection. Visibility to sales, cost of sales, labor and
other operating metrics is provided to company-owned restaurant management through web-based decision support and
analysis tools. Franchisees are required to report sales on a daily basis through an on-line reporting network and submit their
restaurant-level financial statements on a quarterly and annual basis. Our international franchised restaurants also utilize this
point-of-sale system, allowing their sales information to be automatically obtained by our central office systems on a daily
basis. Our online ordering system allows guests to place orders online or through our mobile app. Orders taken online are sent
directly to the point-of-sales system and routed to the kitchen management system based on item cook times and time of
customer order pickup. The online ordering system is available for all company-owned locations and substantially all
franchised locations.
Competition
The restaurant industry is intensely competitive. We compete on the basis of the taste, quality and price of food offered,
guest service, ambience, location, and overall guest experience. We believe that our attractive price-value relationship, the
atmosphere of our restaurants, our sports viewing experience, our focus on our guest and the quality and distinctive flavor of
our food enable us to differentiate ourselves from our competitors. We believe we compete primarily with local and regional
sports bars and national casual dining and quick casual establishments, and to a lesser extent with quick service restaurants
such as wing-based take-out concepts. Many of our direct and indirect competitors are well-established national, regional or
local chains and some have greater financial and marketing resources than we do. We also compete with other restaurant and
retail establishments for site locations and restaurant Team Members.
Proprietary Rights
We own the rights to the “Buffalo Wild Wings®” and “Rusty Taco®” service marks and to certain other service marks
and trademarks used in our system in the U.S., Canada, and other countries where we have restaurants or anticipate opening
restaurants in the future, and we are in the process of registering the “R Taco®” service mark. We also own certain rights to the
“PizzaRev” trademark. We protect our sauce recipes as trade secrets by, among other things, requiring a confidentiality
agreement with our sauce supplier and executive officers. It is possible that competitors could develop recipes and procedures
that duplicate or closely resemble our recipes and procedures. We believe that our trademarks, service marks and other
proprietary rights have significant value and are important to our brand-building efforts and the marketing of our restaurant
concept. We vigorously protect our proprietary rights. We cannot predict, however, whether steps taken by us to protect our
proprietary rights will be adequate to prevent misappropriation of these rights or the use by others of restaurant features based
upon, or otherwise similar to, our concept. It may be difficult for us to prevent others from copying elements of our concept and
any litigation to enforce our rights will likely be costly and may not be successful. Although we believe that we have sufficient
rights to all of our trademarks and service marks, we may face claims of infringement that could interfere with our ability to