Papa Johns 2011 Annual Report Download - page 20

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We may be required to resort to litigation to protect our intellectual property rights, which could
negatively affect our results of operations.
We depend on our Papa John’s brand name and rely on a combination of trademarks, copyrights, service
marks and similar intellectual property rights to promote our brand. We believe that the success of our
business depends on our continued ability to use our existing trademarks and service marks to increase
brand awareness and further develop our brand, both domestically and abroad. We may not be able to
adequately protect our intellectual property rights and we may be required to resort to litigation to enforce
such rights. Litigation could result in high costs and diversion of resources, which could negatively affect
our results of operations, regardless of the outcome.
Disruptions of our critical business or information technology systems could harm our ability to conduct
normal business.
We rely heavily on information systems, including online and digital ordering, point-of-sale processing in
our restaurants, payment of obligations, collection of cash, credit and debit card transactions and other
processes and procedures. Our ability to efficiently and effectively manage our business depends on the
reliability and capacity of these technology systems. Domestically and internationally, we are dependent
on our technology systems operating correctly, including our enhanced online ordering system launched
in 2010 through which a significant portion of our domestic sales originates.
Our systems could be damaged or interrupted by power loss, telecommunication failures, acts of God,
computer viruses, physical or electronic break-ins, hacking or similar attacks. In particular, we may
experience occasional interruptions of our online ordering system, which makes online ordering
unavailable or slow to respond, negatively impacting sales and the experience of our customers. If our
online ordering system does not perform with adequate speed, our customers may be less inclined to
return to our online ordering system, as frequently or at all. If our systems do not operate properly, we
may need to upgrade or replace these systems, which could require material capital investment from us
and our franchisees. Part of our technology infrastructure is specifically designed for us and our
operational systems, which could cause unexpected costs, delays or inefficiencies when infrastructure
upgrades are needed. Much of our technology infrastructure is provided by third parties, and the
performance of these systems is largely beyond our control. Failure of our third party systems to
adequately perform, particularly as our online sales grow, could harm our business and the satisfaction of
our customers. In addition, we may not have or be able to obtain adequate protection or insurance to
mitigate the risks of these events or compensate for losses related to these events, which could damage
our business and reputation and be expensive and difficult to remedy or repair.
We may incur significant costs resulting from a security breach, including a breach of confidential
customer information from our online ordering business.
We are subject to a number of privacy and protection laws and regulations. Our business requires the
collection and retention of large volumes of internal and customer data, including credit card numbers and
other personally identifiable information of our employees and customers as such information is entered
into, processed, summarized and reported by the various information systems we use. The integrity and
protection of that customer, employee and Company data is critical to us. Although we take steps to
prevent security breaches, such as theft of customer and Company information, failure to prevent fraud or
security breaches could result in significant costs to us and have a material adverse effect on our business.