Papa Johns 2013 Annual Report Download - page 22

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14฀
฀
Our฀ expansion฀ into฀ emerging฀ or฀ under-penetrated฀ domestic฀ and฀ international฀ markets฀ may฀ present฀
increased฀risks.฀
฀
Any฀ or฀ all฀ of฀ the฀ risks฀ listed฀ above฀ could฀ be฀ even฀ more฀ harmful฀ to฀ the฀ financial฀ viability฀ of฀ our฀
franchisees฀or฀could฀significantly฀impact฀the฀operating฀results฀of฀the฀Company฀in฀markets฀where฀we฀have฀
a฀ Company-owned฀ presence,฀ such฀ as฀ China.฀ A฀ decline฀ in฀ or฀ failure฀ to฀ improve฀ financial฀ performance฀
could฀ lead฀ to฀ reduced฀ new฀ restaurant฀ openings฀ or฀ unit฀ closings฀ at฀ greater฀ than฀ anticipated฀ levels฀ and฀
therefore฀adversely฀impact฀our฀ability฀to฀achieve฀our฀targets฀for฀growth฀and฀results฀of฀operations฀as฀well฀
as฀have฀a฀negative฀impact฀on฀market฀share.฀฀
฀
Our฀ business฀ and฀ brand฀ may฀ be฀ harmed฀ should฀the฀ services฀ of฀ our฀ Founder,฀ John฀ Schnatter,฀ as฀ Chief฀
Executive฀Officer,฀Chairman฀or฀brand฀spokesman฀terminate฀for฀any฀reason.฀Failure฀to฀effectively฀execute฀
succession฀planning฀could฀harm฀our฀Company฀and฀brand.฀
฀
John฀ H.฀ Schnatter,฀ our฀ Founder,฀ Chairman฀ and฀ Chief฀ Executive฀ Officer,฀ does฀ not฀ serve฀ under฀ an฀
employment฀agreement฀and฀we฀do฀not฀maintain฀key฀man฀life฀insurance฀on฀Mr.฀Schnatter.฀We฀also฀depend฀
on฀the฀continued฀availability฀of฀Mr.฀Schnatter’s฀image฀and฀his฀services฀as฀spokesman฀in฀our฀advertising฀
and฀promotion฀materials.฀While฀we฀have฀entered฀into฀a฀license฀agreement฀with฀Mr.฀Schnatter฀related฀to฀
the฀use฀of฀certain฀intellectual฀property฀related฀to฀his฀name,฀likeness฀and฀image,฀our฀business฀and฀ brand฀
may฀ be฀ harmed฀ if฀ Mr.฀ Schnatter’s฀ services฀ were฀ not฀ available฀ to฀ the฀ Company฀ for฀ any฀ reason฀ or฀ the฀
reputation฀ of฀ Mr.฀ Schnatter฀ were฀ negatively฀ impacted.฀ In฀ addition,฀ failure฀ to฀ effectively฀ execute฀
succession฀planning฀could฀harm฀our฀Company฀and฀brand.฀฀
฀
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฀protect฀and฀promote฀our฀brand.฀We฀believe฀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฀digital฀ordering฀solutions,฀through฀which฀over฀45%฀of฀
our฀domestic฀sales฀originate.฀We฀also฀rely฀heavily฀on฀point-of-sale฀processing฀in฀our฀restaurants฀for฀data฀
collection฀and฀payment฀systems฀for฀the฀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.฀ In฀ addition,฀ we฀ anticipate฀ that฀ consumers฀ will฀
continue฀to฀have฀more฀options฀to฀place฀orders฀digitally,฀both฀domestically฀and฀internationally.฀Our฀failure฀
to฀adequately฀invest฀in฀new฀technology,฀particularly฀our฀digital฀ ordering฀capabilities,฀ could฀cause฀ us฀to฀
lose฀our฀competitive฀advantage฀and฀have฀an฀adverse฀effect฀on฀our฀results.฀
฀
Our฀systems฀could฀be฀damaged฀or฀interrupted฀by฀power฀loss฀through฀various฀technological฀failures฀or฀acts฀
of฀God.฀In฀particular,฀we฀may฀experience฀occasional฀interruptions฀of฀our฀digital฀ordering฀solutions,฀which฀
make฀online฀ordering฀unavailable฀ or฀slow฀to฀respond,฀negatively฀impacting฀sales฀and฀the฀experience฀ of฀
our฀customers.฀If฀our฀digital฀ordering฀solutions฀do฀not฀perform฀with฀adequate฀speed,฀our฀customers฀may฀
be฀less฀inclined฀to฀return฀to฀our฀digital฀ordering฀solutions,฀as฀frequently฀or฀at฀all.฀If฀our฀systems฀do฀not฀