Building BIG Brands in Asia Pacific Henry Saliba Director of Development.

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Building BIG Brands in Asia Pacific

Henry SalibaDirector of Development

Agenda

YUM Brands / YRI – who we are

Asia Franchise Business Unit (AFBU)

Our business philosophy

Our franchising model

How we engage

34,880 restaurants as of Dec 2009

16,143

11,681

We are the largest restaurant company in the world!

1700+ gross builds a year in 2009!

We are also the largest retail developer in the world

250 294

Over 13,000 restaurants, of which 83% are franchised

As of Q1 2010

YRI’s asset base is vast…

4000+ restaurants in Asia Pacific alone!

LARGEST

contributor toYRI’s Operating Profit

Countries : 11Franchisees : 15

AFBU covers 14 countries ; 29 franchisees and all 5 brands

Countries : 2Franchisees : 13

Countries : 1 Franchisee : 1

(Sub-Franchisees : 108)

Sales : $1.5+ billion

South East Asia/HK/Taiwan/Korea

Pacific

Hong Kong Taiwan

KoreaStores : 2500+

Sales : $1.5+ billion Stores : 1500+

Sales : $150MM+ Stores : 150+

Units Added 2000+

System Sales ($MM) Double Digit CAGR

Operating Profit ($MM) 4 x

Strong growth since spin-off – 1998 to 2009

Asia Franchise (ex-Japan) Japan

KFC is the “800 lb gorilla”!

% of Sales

Pizza Hut

Taco Bell

A&WLJS

% of Sales

KFC Company

KFC JapanFranchise

PH Company

PH Franchise

Our business

philosophy

Our business

philosophy

Our business

philosophy

We are about ACCELERATING THE BUILDING OF BIG BRANDS

How our business is organized

Development

Product

Excellence

Restaurant

ExcellenceFranchise Excellence

Organization Excellence

Finance

Excellence

Core FunctionsSupport

Functions

Building

Equity

Developing

Products

Providing

Maniacal

Customer

Service

Development

Building

Restaurants

Our franchising model

Consumer proposition Business system Commercial terms

Culture

Alignment System discipline & process

Ready for growth Constructive engagement

WORLD-CLASS

FRANCHISOR

WORLD-CLASS

FRANCHISEES

GLOBAL FRANCHISE PARTNERSHIP (GFP)

Roles & responsibilities

Dallas RSC– Globalization of Best Practices– Defining Operating Standards

Business Units & Franchisees– Creation of Best Practices

– Execution

The partnership works!

• Dominant Brands

• Dominant Market Share

• World Class Assets

• World Class Teams

And our partnership has a bold future…..

YUM = 1,700 openings per year - 4 restaurant openings per day!

Asia at almost an opening every day!!

YUM = 2,500 remodels per year - 7 remodels per day!

Asia at 2 remodels per day!!• Best looking, branded restaurants in the world

• More powerful brands

Our franchisees make this possible

New Net Openings

'05 '06 '07 '08 09

785780

Equity

Company17%

Franchise83%

Our GROWTH & LEADERSHIP mindset is key

Scale advantages– Supply chain– Media efficiency

Competitive Advantage– Raises barriers to entry

– Builds credibility with developers/landlords– Assets that separate us from the competition

Market penetration drives– Convenience– Awareness

– Market Share

Franchisee gets:– License to use our Trademarks for a defined

term – A business system

Franchisor gets: – Fees – Growth of System,

goodwill

Dynamic relationship

Our Franchising Model

There is no agency or partnership

YRI and Franchisee are independent parties

Both parties should be sensitive to information on which the other party may seek to rely

Franchisee/Franchisor Relationship

Key Terms– Right to Use the System, System Property, and Trademarks – Confidentiality protection– Protection of System Property & Goodwill of System (non-compete)– Renewal Criteria

Franchise Agreement

General Principles– Site-Specific License: no territorial exclusivity or radius protection– No Sub-Franchising

Trademarks and System Property– The Franchise Agreement includes

comprehensive provisions aimed at protecting our Trademarks and intellectual property rights

Confidentiality– The franchisee’s obligation of confidentiality extends from the terms of the

Franchise Agreement and Manuals to all other information concerning the System or YRI’s business and affairs

Franchise Agreement

Principal Operator– The franchisee is required to appoint a Principal Operator

to be primarily responsible for the management of the business and for dealing with YRI

Guarantee– The Franchise Agreement requires a guarantee to be

obtained from appropriate parties

Franchise Agreement

Contains operational details

May be amended by YRI any time by notice to franchisees in response to operational changes

Formalizes franchisee notification/receipt systems for annual updates

Is incorporated into and forms part of the Franchise Agreement

Manual

Franchise Policies Manual

During the Term, YRI must approve any franchisee involvement in any competitive food concept or business anywhere in the world

Approval may be withheld for concepts/ businesses in which chicken, pizza/pasta, Mexican, or beef/chicken burger products represent a certain % of the product mix

Non-Compete

General Principles– Applies where franchisee is granted the right to develop stores in a specified

Development Area– Franchisees are not given territorial exclusivity. A first right of refusal is a form of

territorial protection– Development rights subject to compliance with global Expansion Criteria

Development Agreement

WHY is Development so important?

Our Goals

Build & Rebuild

Build World

Class Designs

Build World

Class Designs

Build Profitable

Restaurants

Build Profitable

Restaurants

Build PeopleBuild People

Building of Big Brands

How we engage - Top 6 Franchisees ranked by System Sales

Country Brand Franchisee Ownership

Japan KFC/ PH

KFC Japan Public Listed (majority : Mitsubishi)

Malaysia/ Singapore/ Cambodia

KFC/ PH

QSR Brands/ KFC Holdings

Public Listed (majority : Kulim)

Indonesia KFC PT Fastfood Indonesia

Public Listed(family controlled)

HK/ Taiwan/ Vietnam

PH Jardines Public Listed(family controlled)

Philippines KFC High-Flyer Food

Private

Hong Kong KFC Birdland (HK) Private Equity (Navis)

AFBU Partner Engagement ModelTYPE PROCESS / METHODS DETAILS

STRATEGIC 1. HWWT2 Action Planning Meetings2. Partners Council3. Franchise Convention

One APM with each partner per year. Strategic / troubled markets have more

Partner’s council held once a year

Franchise Convention once every other year

BUILDING KNOWHOW 1. Yum Colleges2. Conferences & Workshops3. Best practice visits 4. Champs Challenge / Champions

In 2010: 2 Yum colleges held 1 workshop held 4 conferences held 7 Best practice visits arranged 2 events held

DRIVING RESULTS(ONGOING BUSINESS SUPPORT)

1. Organization structured functionally & by brand to provide markets ongoing support

Marketing, Operations – by brand

Development, Finance, SCM, QA, R&D, HR - Shared

Interested?Contact Henry Saliba: henry.saliba@yum.com

Our current franchising needs?

More than a restaurant company……

…….a global leader in Franchising

Building BIG Brands in Asia Pacific Henry Saliba Director of Development.

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