Popeye's 2015 Annual Report Download - page 18

Our second strategic pillar, Passionate Teams, represents our belief in people as the driver of profitability. Engaged passionate
teams will deliver a superior guest experience that results in more loyal customers that revisit our Popeyes restaurants more
often, driving sales and profits for our franchisees and shareholder returns for our investors. This pillar will be measured by
positive increases in engagement in each aspect of our chain of influence - the franchisee, the restaurant leader, the restaurant
team, and the guest.
Our third strategic pillar, Routine Excellence, is about delivering operational consistency in our restaurants. The measure of
this pillar will be a new restaurant evaluation protocol with higher frequency of restaurant visits to coach our restaurants to
operational consistency and excellence. To execute this new protocol, we will invest in additional operations field team members
allowing us to double the number of restaurant visits, while providing improved quality coaching to our restaurant leaders. This
new protocol of operating standards, frequent restaurant visits, and quality coaching will help our restaurants become routinely
excellent.
The three strategic pillars will be supported by ONE Technology, an initiative to build a common technology platform for
the Popeyes system that will bring together innovative systems to better support our restaurant general managers, while improving
the experience of our team members and guests.
We will continue to accelerate our international unit growth. Our primary focus will be the traditional franchising model,
supported with brand-building media and innovative new products to create awareness and trial of our Louisiana Heritage. We
will selectively consider direct capital investments where opportunities exist to unlock new unit growth. We are also adding
supply chain resources to assist in local sourcing, to keep our margins and returns strong for our franchise owners.
Additionally, we will continue to make select investments in domestic Company-operated restaurants to lead the system on
matters such as real estate selection, store design and layout, and people practices.
Binding our culture and our new roadmap together is our brand purpose, “Food That Ignites the Desire to Serve” . “Food
That Ignites” reflects our Louisiana culinary and hospitality heritage, and the “Desire to Serve” will be evident in the routine
excellence of our operations. Our brand purpose and the principles that support it are a meaningful belief system that defines
our food, our people and our focus on the guest. The beliefs will guide our franchisees, restaurant general managers, and team
members in a way that will sustain superior performance results, going forward.
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 27, 2015, we had 360 franchisees operating restaurants within the Popeyes system, and several
preparing to become franchisee operators. Our largest domestic franchisee operates 143 restaurants and our largest international
franchisee operates 144 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.
Domestic Franchise Agreements. Following the execution of a development agreement, we enter into franchise agreements
with our franchisees that convey 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
provide for payment of a franchise fee of $35,000 per location.
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 franchise agreements provide for lower royalties and advertising fund contributions.
Development Incentive Programs. We have established development incentive programs to encourage franchisees to develop
and open new Popeyes restaurants. Based on the terms of the programs, franchise fees can be waived or reduced in addition to
royalty rate percentages reductions.
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