Popeye's 2013 Annual Report Download - page 26

10
have a material adverse effect on our business, including the failure of our Popeyes brand and branded products to
achieve and/or maintain market acceptance.
Also, certain branding names, phrases, and designs that we use have not been registered in all of the countries in
which we do business and may never be registered in all of these countries. In addition, the laws of some foreign
countries do not protect intellectual property rights to the same extent as the laws of the U.S. We cannot be certain that
we will be able to adequately protect our use of various marks or that their use will not result in liability for trademark
infringement, trademark dilution or unfair competition.
As the franchisor of the Popeyes system, we try to ensure that the quality of our Popeyes brand and branded
products is maintained by all of our franchisees, but cannot be certain that franchisees or others will not take actions
that adversely affect the value of our intellectual property or reputation.
There can be no assurance that all of the steps we have taken to protect our intellectual property in the U.S. and
foreign countries will be adequate. Further,through acquisitions of third parties, we may acquire brands and related
trademarks that are subject to the same risks as the brand and trademarks we currently own.
Our 2013 Credit Facility may limit our ability to expand our business, and our ability to comply with the repayment
requirements, covenants, tests and restrictions contained in the 2013 Credit Facility may be affected by events that
are beyond our control.
The 2013 Credit Facility contains financial and other covenants, including covenants which require us to maintain
various financial ratios, limit our ability to incur additional indebtedness, restrict the amount of capital expenditures
that may be incurred, restrict the payment of cash dividends and limit the amount of debt which can be loaned to our
franchisees or guaranteed on their behalf. This facility also limits our ability to engage in mergers or acquisitions, sell
certain assets, repurchase our stock and enter into certain lease transactions. The 2013 Credit Facility includes customary
events of default, including, but not limited to, the failure to maintain the financial ratios described above, the failure
to pay any interest, principal or fees when due, the failure to perform certain covenant agreements, inaccurate or false
representations or warranties, insolvency or bankruptcy, change of control, the occurrence of certain ERISA events and
judgment defaults. The restrictive covenants in our 2013 Credit Facility may limit our ability to expand our business,
and our ability to comply with these provisions may be impacted by events beyond our control. Afailure to comply
with any of the financial and operating covenants included in the 2013 Credit Facility would result in an event of default,
permitting the lenders to accelerate the maturity of outstanding indebtedness. This acceleration could also result in the
acceleration of other indebtedness that we may have outstanding at that time. Were we to default on the terms and
conditions of the 2013 Credit Facility and the debt were accelerated by the facility’s lenders, such developments would
have a material adverse impact on our financial condition and our liquidity.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
We own, lease or sublease the land and buildings for our company-operated restaurants. In addition, we own, lease
or sublease land and buildings which we lease or sublease to our franchisees and third parties.
We typically lease our restaurants under triple net leases that require us to pay minimum rent, real estate taxes,
maintenance costs and insurance premiums and, in some cases, percentage rent based on sales in excess of specified
amounts. Generally, our leases have initial terms of 20 years, with options to renew for one or more additional periods,
although the terms of our leases vary depending on the facility.
The following table sets forth the locations by state of our company-operated restaurants as of December 29, 2013: