Popeye's 2013 Annual Report Download - page 18

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Financial information concerning our domestic and international operations can be found in Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
Our Business Strategy
The Company’sStrategic Roadmap, launched in 2008, focuses exclusively on growing the value of our single
brand, Popeyes Louisiana Kitchen. There are four organizing pillars to our strategy which we use to select priorities
and allocate resources. These pillars are:
•Build a Distinctive Brand
•Create Memorable Experiences
• Grow Restaurant Profits
• Accelerate Quality Restaurant Openings
Within each pillar we develop strategies, determine goals and set performance metrics by which we measure our
progress.
Our people are critical to this long-term strategy and include our franchisees, restaurant crews and corporate
employees. As such, embedded in each of the strategic pillars above, is the principle that we will invest in our people
to achieve Popeyes' business goals as well as their individual personal development. Our goal is to create a culture of
servant leadership which is ultimately reflected in the experience our guests enjoy in Popeyes Louisiana Kitchen
restaurants.
Our Agreements with Popeyes Franchisees
Our strategy places a heavy emphasis on increasing the number of restaurants in the Popeyes system through
franchising activities. As of December 29, 2013, we had 338 franchisees operating restaurants within the Popeyes
system, and several preparing to become operators. Our largest domestic franchisee operates 142 restaurants and our
largest international franchisee operates 101 restaurants. The following discussion describes the standard arrangements
we enter into with our Popeyes franchisees.
Domestic Development Agreements. Our domestic franchise development agreements provide for the development
of a specified number of Popeyes restaurants within a defined geographic territory. Generally, these agreements call
for the development of the restaurants over a specified period of time, usually three to five years, with targeted opening
dates for each restaurant. Our Popeyes franchisees currently pay a development fee ranging from $7,500 to $12,500
per restaurant. Typically these development fees are paid when the agreement is executed and are non-refundable.
International Development Agreements. Our international franchise development agreements are similar to our
domestic franchise development agreements, though the development time frames can be longer with development
fees of up to $15,000 for each restaurant developed. Depending on the market, limited sub-franchising rights may also
be granted.
Domestic Franchise Agreements. Following the execution of adevelopment agreement, we enter into a franchise
agreement with our franchisee that conveys the right to operate a specific Popeyes restaurant at a site to be selected by
the franchisee and approved by us within 180 days from the execution of the franchise agreement. Our current franchise
agreements generally providefor payment of a franchise fee of $35,000 per location. Based on our development incentive
programs, in some circumstances the franchise fee could be reduced or eliminated altogether.
These agreements generally require franchisees to pay a 5% royalty on net restaurant sales. In addition, franchisees
must contribute to national and local advertising funds. Payments to the advertising funds are generally 4% of net
restaurant sales. Some of our institutional and older franchise agreements provide for lower royalties and advertising
fund contributions.
International Franchise Agreements. The terms of our international franchise agreements are substantially similar
to those included in our domestic franchise agreements, except that these agreements may be modified to reflect the
multi-national nature of the transaction and to comply with the requirements of applicable local laws. Our current
international franchise agreements generally provide for payment of a franchise fee of up to $30,000 per location. In