1. Building BIG Brands in Asia Pacific Director of Development
April 1, 2017
Building BIG Brands in Asia Pacific
Henry Saliba
Director of Development

8. China

9. Agenda YUM Brands / YRI – who we are
Asia Franchise Business Unit (AFBU)
Our business philosophy
Our franchising model
How we engage

10. April 1, 2017

11. We are the largest restaurant company in the world!
34,880 restaurants as of Dec 2009

12. We are also the largest retail developer in the world
1700+ gross builds a year in 2009! US
YRI
CHINA

13. YRI’s asset base is vast…
Over 13,000 restaurants, of which 83% are franchised
As of Q1 2010

14. 4000+ restaurants in Asia Pacific alone!
LARGEST
contributor toYRI’s
Operating Profit 14

15. AFBU covers 14 countries ; 29 franchisees and all 5 brands
April 1, 2017
AFBU covers 14 countries ; 29 franchisees and all 5 brands
South East Asia/HK/Taiwan/Korea
Pacific
Sales :
$1.5+ billion
Korea
Stores :
2500+
Sales :
$150MM+
Stores :
150+
Countries : 2
Hong Kong
Taiwan
Franchisees : 13
Japan
Sales :
$1.5+ billion
Stores :
1500+
Countries : 11
Franchisees 15
Countries : 1
Franchisee : 1
(Sub-Franchisees :
108)

16. Strong growth since spin-off – 1998 to 2009
AFBU
Units
Added 2000+
System Sales ($MM)
Double Digit CAGR
Operating Profit ($MM)
4 x

17. Asia Franchise (ex-Japan)
KFC is the “800 lb gorilla”!
April 1, 2017
Asia Franchise (ex-Japan)
Japan
KFC
Pizza Hut
Taco Bell
A&W
LJS
KFC Company
KFC Japan
Franchise
PH Company
PH Franchise
% of Sales
% of Sales

18. Our business philosophy

19. Our business philosophy

20. Our business philosophy

21. We are about ACCELERATING THE
BUILDING OF BIG BRANDS

22. How our business is organized Organization Excellence
Support
Functions
Core Functions
Brand
Development
Restaurant
Excellence
Product
Excellence
Asset
Development
Franchise Excellence
Organization Excellence
Building
Brand
Equity
Providing
Maniacal
Customer
Service
Developing
Great
Products
Building
Great
Restaurants
Finance
Excellence

23. Our franchising model GLOBAL FRANCHISE PARTNERSHIP (GFP)
WORLD-CLASS
FRANCHISOR
WORLD-CLASS
FRANCHISEES
Consumer proposition
Business system
Commercial terms
Culture
Alignment
System discipline & process
Ready for growth
Constructive engagement

24. Roles & responsibilities Business Units & Franchisees
Dallas RSC
Globalization of Best Practices
Defining Operating Standards
Business Units & Franchisees
Creation of Best Practices
Execution

25. The partnership works! Dominant Brands Dominant Market Share
World Class Assets
World Class Teams

26. And our partnership has a bold future…..
Overview of Development, GFP and the YRI Way
May 2009
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
*We have tools and we have process.
*Standards Library - records our best practice.
*College - teaches it.
*Policies - guide our relationships with our partners.
*Inventory Tracking - Development is not about openings -it is about the milestones which lead to openings.
© 2009 Yum Restaurant Services Group, Inc.

27. Our franchisees make this possible
New Net Openings
924
900
852
780
785
Equity FZ 27

28. Our GROWTH & LEADERSHIP mindset is key
Overview of Development, GFP and the YRI Way
May 2009
Our GROWTH & LEADERSHIP mindset is key
Scale advantages
Supply chain
Media efficiency
Market penetration drives
Convenience
Awareness
Market Share
Competitive Advantage
Raises barriers to entry
Builds credibility with developers/landlords
Assets that separate us from the competition
© 2009 Yum Restaurant Services Group, Inc.

29. Franchising Principles and Review of Standard Agreement (IFA)
Our Franchising Model
Franchisee gets:
License to use our Trademarks for a defined term
A business system
Franchisor gets:
Fees
Growth of System, goodwill
Dynamic relationship

30. Franchisee/Franchisor Relationship
Franchising Principles and Review of Standard Agreement (IFA)
Franchisee/Franchisor Relationship
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

31. Franchising Principles and Review of Standard Agreement (IFA)
Franchise Agreement
Key Terms
Right to Use the System, System Property, and Trademarks
Confidentiality protection
Protection of System Property & Goodwill of System (non-compete)
Renewal Criteria
Grant of right to use the system, system property and trademarks at the outlet only. No right to contiguous space, etc. without a Development Agreement.
Confidentiality Agreement - Information provided to us and vice versa is provided confidentially. Some Franchisees are publicly traded. SEC styled implications. Without one in place you should not provide any information to prospective Franchisee.
General Principles
Site-Specific License: no territorial exclusivity or radius protection
No Sub-Franchising

32. Franchising Principles and Review of Standard Agreement (IFA)
Franchise Agreement
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
Failure to properly control the use of our trademarks and other intellectual property can jeopardize our ownership rights and puts the entire franchise system at risk.
In order to ensure that the system remains vibrant and contemporary over the 10-year term, YRI must retain the right to change the trademarks and introduce new trademarks.
Any improvements to the trademarks or the system, including new products, will become YRI’s exclusive property, regardless of whether they were initiated by a franchisee.
The broad confidentiality is necessary to protect YRI’s ownership/copyright in the trademarks, intellectual property and know-how associated with the system and also to maintain our competitive edge.
Where franchisees are public companies, it will be necessary to exclude from this clause information required to be disclosed to the local Stock Exchange. This exclusion should be added in Schedule C.

33. Franchising Principles and Review of Standard Agreement (IFA)
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
For single unit and smaller franchisees, the Principal Operator should be one of the guarantors. Under the guarantee document, this person should also covenant to direct, supervise and manage the operation of the outlet and to devote his or her whole business time and efforts to the franchise business.
The need to obtain personal or corporate guarantees will vary from country to country and deal to deal, as will the legal form of any guarantee.
Personal guarantees will be mandatory in the case of small, single-unit operators and the guarantee document should include personal undertakings to comply with all provisions of the Franchise Agreement.
Where the franchisee has a complex corporate structure, the guarantee document is also a means of ensuring the non-compete and transfer provisions of the Franchise Agreement bind all associated/parent companies in the corporate group.

34. Franchise Policies Manual
Franchising Principles and Review of Standard Agreement (IFA)
Franchise Policies Manual
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
Notwithstanding the 10-year franchise term, the detailed operational requirements of our franchise systems will necessarily change and evolve daily/weekly, etc. The franchise relationship must be structured to give YRI the maximum flexibility to adapt to those changes.
While franchisees may express concern about our ability to change the operational requirements in the Manuals, this is standard to all franchise relationships and unless we keep our system relevant to the consumer, it will lose its value, for franchisees as well as for us.
We have committed that the implementation period required by us for any change to Standards will reflect the nature of the change. Franchisees should take comfort that this prevents us from imposing unreasonable implementation time frames on the franchisees.
The Manuals contain the essential know-how which, along with the brands, are the franchisor’s most valuable asset, and we must be able to require the franchisee to return all copies of the Manuals to us at any time, including upon termination.
In order for YRI to retain copyright in all Manuals and thereby prevent wholesale copying by competitors, we must restrict use and copying of the Manuals by our franchisees.
For multi-unit franchisees, we provide the franchisee with one copy of all Manuals and allow the franchisee to make a single copy for each store, provided that the franchisee allocates a serial number for each copy and keeps central records of the location of each copy.

35. Franchising Principles and Review of Standard Agreement (IFA)
Non-Compete
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
Franchisees operating competitive brands have a conflict of interest: the competitiveness of the food industry means we cannot afford to allow our franchisees’ competitive systems advance access to our marketing/product initiatives, etc.
Franchisees with additional resources should be encouraged to invest in YRI’s 3 diversified restaurant concepts.
The preferred approach with franchisees who have pre-existing competitive businesses is to agree to a timetable of divestment of the competitive business as a precondition to any further expansion or renewal of their YRI franchises.

36. Development Agreement
Franchising Principles and Review of Standard Agreement (IFA)
Development Agreement
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

37. WHY is Development so important?

38. Overview of Development, GFP and the YRI Way
Our Goals
May 2009
Building of Big Brands
Build & Rebuild
Units
Build World
Class Designs
Build Profitable
Restaurants
Build People
© 2009 Yum Restaurant Services Group, Inc.

39. 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
QSR Brands/ KFC Holdings
(majority : Kulim)
Indonesia
KFC
PT Fastfood Indonesia
(family controlled)
HK/ Taiwan/ Vietnam PH
Jardines
Philippines
High-Flyer Food
Private
Hong Kong
Birdland (HK)
Private Equity
(Navis)

40. AFBU Partner Engagement Model
TYPE
PROCESS / METHODS
DETAILS
STRATEGIC
HWWT2 Action Planning Meetings
Partners Council
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
Yum Colleges
Conferences & Workshops
Best practice visits
Champs Challenge / Champions Club
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)
Organization structured functionally & by brand to provide markets ongoing support
Marketing, Operations – by brand
Development, Finance, SCM, QA, R&D, HR - Shared

41. Our current franchising needs?
Franchising Principles and Review of Standard Agreement (IFA)
Our current franchising needs?
Interested?
Contact Henry Saliba:

42. More than a restaurant company…… …….a global leader in Franchising