Papa Johns 2006 Annual Report Download - page 14

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strategies of one or more of our competitors could have an adverse impact on our sales and earnings.
Additionally, a continued increased emphasis on drive-through, carryout and curbside pickup availability
by casual dining restaurants, such as Applebee’s and Outback Steakhouse, as well as improved quality of
fresh and frozen supermarket offerings, could also have an adverse impact on our sales and earnings.
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 if enacted. 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. Further national, state and local government initiatives, such as “living
wage” or other proposed increases in minimum wage rates, could adversely affect Papa John’s as well as
the restaurant industry. As we expand internationally, we will be subject to applicable laws in each
jurisdiction where franchised units are established.
Trademarks
Our rights in our principal trademarks and service marks are a significant part of our business. We are the
owner of the federal registration of the trademark “Papa John’s.” We have also registered “Pizza Papa
John’s and design” (our logo), “Better Ingredients. Better Pizza.” and “Pizza Papa John’s Better
Ingredients. Better Pizza. and design” as trademarks and service marks. We also own federal registrations
for several ancillary marks, principally advertising slogans. We have also applied to register our primary
trademark, “Pizza Papa John’s and design,” in more than 90 foreign countries and the European
Community. We are aware of the use by other persons in certain geographical areas of names and marks
that are the same as or similar to our marks. It is our policy to pursue registration of our marks whenever
possible and to oppose vigorously any infringement of our marks.