Popeye's 2014 Annual Report Download - page 26

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• information security and data protection;
• minimum wage, overtime, immigration, unions and other labor issues;
• compliance with the Americans with Disabilities Act; and
• working and safety conditions.
If we fail to comply with existing or future regulations, we may be subject to governmental or judicial fines or sanctions, or we
could suffer business interruption or loss. In addition, our capital expenses could increase due to remediation measures that may
be required if we are found to be noncompliant with any of these laws or regulations.
We are also subject to regulation by the Federal Trade Commission and to state and foreign laws that govern the offer, sale and
termination of franchises and the refusal to renew franchises. The failure to comply with these regulations in any jurisdiction or
to obtain required approvals could result in a ban or temporary suspension on future franchise sales or fines or require us to make
a rescission offer to franchisees, any of which could adversely affect our business and operating results.
Failure to protect our information systems against cyber attacks or information security breaches, including failure to protect
the integrity and security of individually identifiable data of our customers, franchisees and employees, could expose us to
litigation, damage our reputation and have a material adverse effect on our business.
We and our franchisees rely on computer systems and information technology to conduct our business. These systems are
inherently vulnerable to disruption or failure, as well as internal and external security breaches, or other disruptive problems caused
by hackers. A failure of these systems could cause an interruption in our business which could have a material adverse effect on
our results of operations and financial condition.
In addition, we receive and maintain certain personal information about our customers, franchisees and employees. The use of
this information by us is regulated by applicable law. If our or our franchisees' security and information systems are compromised
or our business associates fail to comply with these laws and regulations and this information is obtained by unauthorized persons
or used inappropriately, it could adversely affect our reputation, as well as our restaurant operations and results of operations and
financial condition. Additionally, we could be subject to litigation or the imposition of penalties. As privacy and information
security laws and regulations change, we may incur additional costs to ensure we remain in compliance.
Currency, economic, political and other risks associated with our international operations could adversely affect our operating
results.
We also face currency, economic, political, and other risks associated with our international operations. As of December 28,
2014, we had 509 franchised restaurants in Puerto Rico, Guam, the Cayman Islands and 26 foreign countries. Business at these
operations is conducted in the respective local currency. The amount owed to us is based on a conversion of the royalties and other
fees to U.S. dollars using the prevailing exchange rate. In particular, the royalties are based on a percentage of net sales generated
by our foreign franchisees’ operations. Consequently, our revenues from international franchisees are exposed to the potentially
adverse effects of our franchisees’ operations, currency exchange rates, local economic conditions, political instability and other
risks associated with doing business in foreign countries. We expect that our franchise revenues generated from international
operations will increase in the future, thus increasing our exposure to changes in foreign economic conditions and currency
fluctuations.
Disruptions in the financial markets may adversely affect the availability and cost of credit and changes in economic conditions
may impact consumer spending patterns.
The ability of our franchisees and prospective franchisees to obtain financing for development of new restaurants or reinvestment
in existing restaurants depends in part upon financial and economic conditions which are beyond their control. If our franchisees
are unable to obtain financing on acceptable terms to develop new restaurants or reinvest in existing restaurants, our business and
financial results could be adversely affected.
Disruptions in the financial markets and adverse changes to economic conditions may also affect consumer spending patterns.
There can be no assurances that governmental or other responses to economic challenges will restore or maintain consumer
confidence, stabilize the markets or increase or maintain liquidity and the availability of credit. Declines in or displacement of our
guests’ discretionary spending could reduce traffic in our system’s restaurants and/or limit our ability to raise prices.
Shortages or interruptions in the supply or delivery of fresh food products could adversely affect our operating results.
We and our franchisees are dependent on frequent deliveries of fresh food products that meet our specifications. Shortages or
interruptions in the supply of fresh food products caused by unanticipated demand, natural disasters, problems in production or