Papa Johns 2001 Annual Report Download - page 14

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including population, density, income, age and traffic. We provide design plans, fixtures and equipment
for most franchisee locations.
Franchisee Loan Program. We have a program under which selected franchisees can borrow funds
principally for use in the construction and development of their restaurants. Loans made under the
program typically bear interest at fixed or floating rates (ranging from 4.5% to 9.5% at December 30,
2001, with an average of 6.0%) and are secured by the fixtures, equipment and signage (and where
applicable, the land) of the restaurant and the ownership interests in the franchisee. At December 30,
2001, loans outstanding under the franchise loan program totaled $17.6 million, net of estimated
allowance for doubtful collection of certain notes. We do not plan to significantly expand the franchisee
loan program. See “Note 7” of “Notes to Consolidated Financial Statements” for additional information.
We have a commitment to lend up to $7.6 million to BIBP Commodities, Inc. (“BIBP”), an independent
franchisee-owned corporation. At December 30, 2001, no amounts were outstanding from BIBP. See
“Note 11” of “Notes to Consolidated Financial Statements” for additional information.
Franchise Insurance Program. We provide our franchisees an opportunity to purchase various insurance
policies, such as non-owned automobile and workers compensation, through our insurance agency, Risk
Services Corp. In October 2000, we established a captive insurance company located in Bermuda, RSC
Insurance Services, Ltd., to accommodate this business. We have specific and aggregate reinsurance to
limit the exposure to the captive insurance company. See “Note 8” of “Notes to Consolidated Financial
Statements” for additional information.
Franchise Training and Support. Every franchisee is required to have a principal operator approved by
us who satisfactorily completes our required training program and who devotes his or her full business
time and efforts to the operation of the franchisee’s restaurants. Each franchise restaurant manager is also
required to complete our Company-certified management training program. We provide an on-site
training crew three days before and three days after the opening of a franchisee’s first two restaurants.
Ongoing supervision of training is monitored by the corporate franchise training team. Multi-unit
franchisees are encouraged to hire a full-time training coordinator certified to deliver Company-approved
programs in order to train new team members and management candidates for their restaurants. Our area
franchise directors maintain open communication with the franchise community, relaying operating and
marketing information and new ideas between franchisees and us.
Franchise Operations. All franchisees are required to operate their Papa John’s restaurants in compliance
with our policies, standards and specifications, including matters such as menu items, ingredients,
materials, supplies, services, fixtures, furnishings, decor and signs. Each franchisee has full discretion to
determine the prices to be charged to its customers.
Franchise Advisory Council. We have a Franchise Advisory Council that consists of Company and
franchisee representatives. The Advisory Council and subcommittees hold regular meetings to discuss
new marketing ideas, operations, growth and other relevant issues.
Reporting. We collect weekly and monthly sales and other operating information from Papa John’s
franchisees. We have agreements with most Papa John’s domestic franchisees permitting us to
electronically debit the franchisees’ bank accounts for the payment of royalties, Marketing Fund
contributions and QC Center purchases. This system significantly reduces the resources needed to process
receivables, improves cash flow and virtually eliminates past-due accounts related to these items. During
2002, we plan to expand this payment collection methodology to other areas, including printing and
promotional items. Franchisees generally are required to purchase and install the Papa John’s PROFIT
System in their restaurants (see Company Operations — Point of Sale Technology).