Jack In The Box 2010 Annual Report Download - page 15

Table of Contents
operates a large number of restaurants, fails to adhere to our standards and projects an image inconsistent with our brand.
 We believe that our success will depend, in part, on our ability to attract and retain the
services of skilled personnel, including key executives. The loss of services of any such personnel could have a material adverse effect on
our business.
 See also “Item 1. Business — Regulation.” The restaurant industry is subject to extensive
federal, state and local governmental regulations. The increasing amount and complexity of regulations may increase both our costs of
compliance and our exposure to regulatory claims. We are subject to regulations including but not limited to those related to:
• The preparation, labeling, advertising and sale of food;
• Building and zoning requirements;
• Employee healthcare (we are currently assessing the potential costs of new federal healthcare legislation);
• Health, sanitation and safety standards;
• Liquor licenses;
• Labor and employment, including our relationships with employees and work eligibility requirements;
• The registration, offer, sale, termination and renewal of franchises;
• Consumer protection and the security of information. The costs of compliance, including increased investment in
technology in order to protect such information, may negatively impact our margins;
• Climate change, including the potential impact of greenhouse gases, water consumption, or a tax on carbon emissions.
  We rely on computer systems and information technology to
conduct our business. A material failure or interruption of service or a breach in security of our computer systems could cause reduced
efficiency in operations, loss of data and business interruptions. Significant capital investment could be required to rectify these
problems. In addition, any security breach involving our point of sale or other systems could result in loss of consumer confidence and
potential costs associated with consumer fraud.
 We have exposure to changes in interest rates based on our financing, investing and cash management
activities. Changes in interest rates could materially impact our profitability.
 To the extent that banks in our revolving credit facility become insolvent, this could limit our
ability to borrow to the full level of our facility.
 We maintain a documented system of internal controls, which is reviewed and
monitored by an Internal Control Committee and tested by the Company’s full time Internal Audit Department. The Internal Audit
Department reports to the Audit Committee of the Board of Directors. We believe we have a well-designed system to maintain adequate
internal controls on the business; however, we cannot be certain that our controls will be adequate in the future or that adequate controls
will be effective in preventing errors or fraud. If our internal controls are ineffective, we may not be able to accurately report our financial
results or prevent fraud. Any failures in the effectiveness of our internal controls could have a material adverse effect on our operating
results or cause us to fail to meet reporting obligations.
 As is the case with any owner or operator of real property, we are subject to a variety of
federal, state and local governmental regulations relating to the use, storage, discharge, emission and disposal of hazardous materials.
Failure to comply with environmental laws could result in the imposition of severe penalties or restrictions on operations by governmental
agencies or courts of law, which could adversely affect operations. We have engaged and may engage in real estate development projects
and own or lease several parcels of real estate on which our restaurants are located. We are unaware of any significant hazards on
properties we own or have owned, or operate or have operated, the remediation of which would result in material liability for the Company.
Accordingly, we do not have environmental liability insurance, nor do we maintain a reserve to cover such events. In the event of the
determination of contamination on such properties, the Company, as owner or operator, could be held liable for severe penalties and costs
of remediation. We also operate motor vehicles and
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