Papa Johns 2001 Annual Report Download - page 15

11
Competition
The restaurant industry is intensely competitive with respect to price, service, location and food quality,
and there are many well-established competitors with substantially greater financial and other resources
than Papa John’s. Competitors include a large number of international, national and regional restaurant
chains, as well as local pizza operators. Some of our competitors have been in existence for a
substantially longer period than us and may be better established in the markets where our restaurants are,
or may be, located. Within the pizza segment of the restaurant industry, we believe our primary
competitors are the international pizza chains, including Pizza Hut, Domino’s and Little Caesars, and
several regional chains. A change in the pricing or other marketing strategies of one or more of our
competitors could have an adverse impact on our sales and earnings.
Changes in consumer tastes, national, regional or local economic conditions, demographic trends, traffic
patterns and the type, number and location of competing restaurants often affect the restaurant business.
In addition, factors such as inflation and economic recession, increased cheese and other commodity
costs, fuel costs, labor and benefits costs, utility costs and the lack of experienced management and hourly
team members may adversely affect the restaurant industry in general and our restaurants in particular.
With respect to the sale of franchises, we compete with many franchisors of restaurants and other
business concepts. In general, there is also active competition for management personnel and attractive
commercial real estate sites suitable for our restaurants.
Government Regulation
We, along with our franchisees, are subject to various federal, state and local laws affecting the operation
of our respective businesses. Each Papa John’s restaurant is subject to licensing and regulation by a
number of governmental authorities, which include health, safety, sanitation, building and fire agencies in
the state or municipality in which the restaurant is located. Difficulties in obtaining, or the failure to
obtain, required licenses or approvals could delay or prevent the opening of a new restaurant in a
particular area. Our full-service QC Centers are licensed and subject to regulation by state and local
health and fire codes, and the operation of our trucks is subject to Department of Transportation
regulations. We are also subject to federal and state environmental regulations.
We are subject to Federal Trade Commission (“FTC”) regulation and various state laws regulating the
offer and sale of franchises. Several state laws also regulate substantive aspects of the franchisor-
franchisee relationship. The FTC requires us to furnish to prospective franchisees a franchise offering
circular containing prescribed information. Substantive state laws that regulate the franchisor-franchisee
relationship presently exist in a substantial number of states, and bills have been introduced in Congress
from time to time which would provide for federal regulation of the franchisor-franchisee relationship in
certain respects. The state laws often limit, among other things, the duration and scope of non-
competition provisions and the ability of a franchisor to terminate or refuse to renew a franchise. Some
foreign countries also have disclosure requirements and other laws regulating franchising and the
franchisor-franchisee relationship. As we expand internationally, we will be subject to applicable laws in
each jurisdiction where franchised units are established.
We are also subject to the Americans with Disabilities Act of 1990, which, among other things, may
require renovations to restaurants to meet federally mandated requirements. The cost of these renovations
is not expected to be material. Further government initiatives could adversely affect Papa John’s as well
as the restaurant industry.
Trademarks