What changed in this filing

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Item 1A. Risk Factors

2023-03-01 compared with 2022-02-24 · 97 added, 56 removed, 299 unchanged (34% of the section changed)

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Before you invest in our securities you should carefully consider these risk factors together with all other information included in our publicly filed documents.

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Business and Operational Risks

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A significant portion of our revenue is derived from fees based on room revenues at hotels franchised under our brands.

We also derive revenue from management fees from our managed hotels.

As such, our business is subject, directly or through our franchisees, to the following risks common in the lodging and franchising industry, among others:

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• increases in operating costs that may not be able to be offset by increases in room rates, such as through increases in minimum wage levels;

• increases in corporate-level operating costs resulting in lower operating margins;

• increases in corporate-level operating costs, including increases in employee compensation and benefits, resulting in lower operating margins;

• over-building in one or more sectors of the hotel industry and/or in one or more geographic regions, could lead to excess supply compared to demand, and to decreases in hotel occupancy and/or room rates;

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• travelers’ fears of exposure to contagious diseases, such as the recent coronavirus, or insect infestations in hotel rooms and certain geographic areas;

• changes in governmental regulations that influence or determine wages, benefits, prices or increase operating, maintenance or construction costs of our franchisees;

• changes in governmental regulations that influence or determine wages, benefits, prices or increase operating, maintenance or construction costs of us and our franchisees;

• changes by governmental agencies and within relevant legal systems of prevailing opinion and interpretation of new or existing rules, regulations and legal doctrine, particularly those limiting the liability of franchisors for employment and general liability claims involving franchisees;

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• changes in exchange rates or economic weakness in the United States (affecting domestic travel) and internationally could also unfavorably impact future results.

The current COVID-19 pandemic has negatively affected and is expected to continue to negatively affect our business, financial condition and results of operations.

The COVID-19 pandemic, including resurgences and new variants, has resulted in significant disruptions and additional risks to our business, the global hospitality industry and the global economy and additional risks to our business, the global hospitality industry and the global economy.

The COVID-19 pandemic has negatively affected and may continue to negatively affect our business, financial condition and results of operations.

The COVID-19 pandemic, including resurgences and new variants, has resulted in significant disruptions and additional risks to our business, the global hospitality industry and the global economy.

The COVID-19 pandemic has led governments and other authorities around the world to impose or recommend measures intended to control its spread, including travel bans, business and school closures, quarantines, shelter-in-place orders and implementation of other social distancing measures.

As a result, the COVID-19 pandemic and its consequences have dramatically reduced travel and demand for hotel rooms which has had, and is expected to continue to have, a material adverse impact on our business, financial condition and results of operations.

As the COVID-19 pandemic continues to spread, federal, state and local governments, as well as businesses, have implemented significant restrictions in an attempt to mitigate this public health crisis.

Although currently more than 99% of our hotels are open, operations at properties may be temporarily suspended in the future depending on the length and severity of COVID-19 and any federal, state and local health restrictions.

If operations at our hotels are suspended, we cannot give any assurance as to when they will resume operations at a full or reduced level.

The extent, duration and magnitude of the COVID-19 pandemic’s effects is highly uncertain and will continue to depend on future developments, all of which are difficult to predict, including the continuation or worsening of the COVID-19 pandemic and travel and other restrictions;

our ability to reopen hotels that are temporarily closed in a timely manner;

new information which may emerge concerning the severity or resurgence of the COVID-19 pandemic;

changes in consumer demand and confidence, which could extend beyond the end of the COVID-19 pandemic, including the impact of the COVID-19 pandemic on unemployment rates, consumer discretionary spending and the demand for travel and transient and group business;

the impact of the COVID-19 pandemic on the global hospitality industry, particularly on the U.S.

leisure travel market;

the development and distribution of effective vaccines and treatments;

the performance of our brands and categories in any recovery from the COVID-19 pandemic disruption;

changes to general, domestic, and foreign economic conditions, including access to liquidity and capital as a result of COVID-19;

and any future resurgence of COVID-19.

The resulting economic uncertainty is expected to make it difficult for us, as well as our franchisees and others in the hospitality industry, to meaningfully forecast and plan future business activity.

However, in general, we expect that the longer the pandemic and related travel and other restrictions remain in place, the more severe the health impacts of the pandemic are, and if repeat resurgent or cyclical outbreaks of the virus beyond the one being currently experienced occur, the more adverse the effect will be on our business, financial condition and results of operations.

The extent, duration and magnitude of the COVID-19 pandemic’s effects is highly uncertain and will continue to depend on future developments, all of which are difficult to predict.

The resulting uncertainty may make it difficult for us, as well as our franchisees and others in the hospitality industry, to meaningfully forecast and plan future business activity.

However, in general, we expect that the more severe the health impacts of the pandemic are, and if repeat resurgent or cyclical outbreaks of the virus beyond the one being currently experienced occur, the more adverse the effect will be on our business, financial condition and results of operations.

The COVID-19 pandemic has subjected our business to a number of significant risks, which include:

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• Risks Related to the Traveling Public:

During various phases of the pandemic, the occupancy at our franchised hotels that have remained open has been significantly and materially adversely impacted.

We expect that certain of our hotels will continue to struggle to attract guests if closures of attractions that promote leisure travel continue or if there is a

prevailing unwillingness of guests to travel and stay in hotels due to actual or perceived risks of contracting COVID-19.

During various phases of the pandemic, the occupancy at our franchised hotels that remained open has been significantly and materially adversely impacted.

We expect that certain of our hotels will struggle to attract guests if closures of attractions that promote travel continue or if there is a prevailing unwillingness of guests to travel and stay in hotels due to actual or perceived risks of contracting COVID-19.

We cannot predict whether the COVID-19 pandemic will result in temporary or permanent changes to the travel preferences, expectations and behavior of hotel guests;

however, if these changes continue to result in reduction in travel or a decreased willingness of the traveling public to stay in hotels, these changes could have a significant negative impact on our franchised hotels and our business.

• Risks Related to the Health of our Franchised Hotel Operations:

COVID-19 has at times resulted in decreases in demand, occupancy and system-wide RevPAR, accompanied by forced or voluntary hotel closures and disruptions, which has affected the revenues and profitability of our franchised properties and, in turn, the amount of royalty and other fees (which are primarily based on hotel revenue) that we are able to generate and collect from our franchisees.

Even if the COVID-19 pandemic subsides or becomes more manageable, our franchisees may continue to experience increased operating costs, including the need to invest in new equipment, technology, amenities, products, and services in order to satisfy newly issued heath, hygiene, and safety regulations and requirements or to conform to evolving guest expectations.

If franchisees are unable to make these investments, their ability to continue operations or generate revenue may be adversely impacted, which would in turn have an adverse effect on our revenue and cash flow.

however, if these changes result in reduction in travel or a decreased willingness of the traveling public to stay in hotels, these changes could have a significant negative impact on our business.

• Risks Related to the Health of our Hotel Operations:

COVID-19 has at times resulted in decreases in demand, occupancy and system-wide RevPAR, accompanied by forced or voluntary hotel closures and disruptions, which has affected the revenues and profitability of our properties and, in turn, the amount of royalty and other fees (which are primarily based on hotel revenue) that we are able to generate and collect.

Even if the COVID-19 pandemic subsides or becomes more manageable, our franchisees as well as our owned and managed hotels may continue to experience increased operating costs, including the need to invest in new equipment, technology, amenities, products, and services in order to satisfy newly issued heath, hygiene, and safety regulations and requirements or to conform to evolving guest expectations.

These increased costs may negatively impact operations or profitability, which would in turn have an adverse effect on our revenue and cash flow.

• Risks Related to Financial Condition and Indebtedness:

Our overall level of indebtedness may increase substantially in the future as we continue to manage through the effects of the pandemic.

Our overall level of indebtedness may continue to increase as we continue to manage through the effects of the pandemic.

A default under our debt obligations may enable the lenders to terminate their commitments thereunder and could trigger a cross-default, acceleration or other consequences under our other indebtedness or financial instruments.

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The global stock markets, as well as the price of our common stock, have experienced, and may continue to experience, significant volatility as a result of the COVID-19 pandemic.

The COVID-19 pandemic and the significant uncertainties it has caused and continues to cause for the global economy, business activity and business confidence have had, and is likely to continue to have, a significant effect on the market price of securities generally, including our securities, and may adversely impact our ability to access capital markets in the future.

The COVID-19 pandemic and the significant uncertainties it has caused and continues to cause for the global economy, business activity and business confidence have had, and are likely to continue to have, a significant effect on the market price of securities generally, including our securities, and may adversely impact our ability to access capital markets in the future.

The COVID-19 pandemic, including resurgences and new variants, could also have the effect of heightening many of the other factors set forth herein including, but not limited to, operating risks common in the lodging and franchising industries, our ability to grow our franchise system, compete effectively and manage the reputation of our brands, our handling of disputes with the owners of our franchised hotels or their formal or informal representative franchisee associations, risks related to our development or ownership of operating hotels and development and brand support activities that involve our co-investment or financing and guaranty support for third parties, growth of alternative internet reservation channels outside of our system, performance of our information technology systems and risks related to cybersecurity, risks of doing business outside of the U.S.

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We depend on the skill, ability and decisions of third-party operators.

The Company utilizes third-party operators to provide significant franchise services, such as providing general reservation call center services, providing loyalty member call center support, providing data center co-location services, inspecting its franchisees and providing support, hardware and data for the use of its property management and central reservation services systems.

In addition, the Company relies on third-party providers to provide market and competitor information that is utilized in the Company's strategic decision making process.

We utilize third-party operators to provide significant services, such as providing general reservation call center services, providing loyalty member call center support, providing data center co-location services, inspecting our franchisees and providing support, hardware and data for the use of our property management and central reservation services systems.

In addition, we rely on third-party providers to provide market and competitor information that is utilized in our strategic decision-making process.

The failure of any third-party operator or provider to make decisions, perform their services, discharge their obligations, deal with regulatory agencies, provide accurate information and comply with laws, rules and regulations could result in material adverse consequences to our business.

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We are subject to certain risks related to our indebtedness.

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We cannot assure you that we will be able to refinance any of our debt on attractive terms, commercially reasonable terms or at all.

Our future operating performance

and our ability to service, extend or refinance our indebtedness will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Our future operating performance and our ability to service, extend or refinance our indebtedness will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Our present indebtedness and future borrowings could have important adverse consequences to us, such as:

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We are subject to certain risks related to litigation filed by or against us.

Legal or governmental proceedings brought by or on behalf of franchisees, third-party owners of managed properties, employees or customers may adversely affect our financial results.

We cannot predict with certainty the cost of defense, the cost of prosecution or the ultimate outcome of litigation filed by or against us, including, remedies or damage awards.

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Our international operations are subject to political and monetary risks.

We have franchised properties open and operating in nearly 40 countries and territories outside of the United States.

We have franchised hotels open and operating in approximately 50 countries and territories outside of the United States.

We also have, and may in the future make, investments in foreign hotel franchisors.

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foreign policy interests.

If we are found liable for violations of anti-corruption or sanctions laws, we could incur criminal or civil liabilities which could have a material and adverse effect on our results of operations, our financial condition and our reputation.

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and our reputation.

Furthermore, the creation of new restrictions in these areas could increase our cost of operations, reduce our profits or cause us to forgo development opportunities that would otherwise contribute to our profitability.

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entities to pay dividends and remit earnings to affiliated companies unless specified conditions have been met.

In addition, revenues from international jurisdictions typically are earned in local

currencies, which subjects us to risks associated with currency fluctuations.

In addition, revenues from international jurisdictions typically are earned in local currencies, which subjects us to risks associated with currency fluctuations.

Currency devaluations and unfavorable changes in international monetary and tax policies could have a material adverse effect on our profitability and financing plans, as could other changes in the international regulatory climate.

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We intend to continue to expand internationally, which would make the risks related to our international operations more significant over time.

Labor shortages could restrict our ability and the ability of franchisees to operate hotel properties or grow our business or result in increased labor costs that could adversely affect the results of operations.

Our success depends in part on our ability to attract, retain, train, manage and engage employees.

The COVID-19 pandemic has negatively affected the labor market for employers.

If we or our franchisees are unable to attract, retain, train, manage and engage skilled individuals, the ability to staff and operate the hotels that we manage, own or franchise could be diminished, which could reduce customer satisfaction and adversely affect the reputation of our brands.

Staffing shortages in various parts of the world also could hinder our ability to grow and expand our businesses.

In addition, the efforts and abilities of our senior executives are important elements of maintaining our competitive position and driving future growth, and the loss of the services of one or more of our senior executives could result in challenges executing our business strategies or other adverse effects on our business.

Climate change and sustainability related concerns could have a material adverse effect on our business and results of operations.

We are subject to the risks associated with the physical effects of climate change (including changes in sea levels, water shortages, droughts, and natural disasters) and with changes in laws and regulations related to climate change and sustainability.

Compliance with future climate-related legislation and regulation, and our efforts to achieve science-based emissions reduction targets, could be difficult and costly.

Consumer travel preferences may also shift due to sustainability related concerns or costs.

As a result of the foregoing, we may experience significant increased operating and compliance costs, operating disruptions or limitations, reduced demand, constraints on our growth, and physical damage to our hotels, all of which could adversely affect our profits.

Risks Related to Our Franchise System

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In addition, an excess supply of hotel rooms or unfavorable borrowing conditions may discourage potential franchisees from expanding or constructing new hotels, thereby limiting a source of growth of the franchise fees received by us.

In addition, each of our hotel brands competes with major hotel chains in national and international markets and with independent companies in regional markets.

Also, each of our hotel brands competes with major hotel chains in national and international markets and with independent companies in regional markets.

Our ability to remain competitive and to attract and retain business and leisure travelers depends on our success in distinguishing our products and services from those offered by our competitors.

If we are unable to compete successfully in these areas, this could adversely affect our market share and our results of operations.

An adverse incident involving our franchisees or their guests, and any media coverage resulting therefrom, could also damage our brands and reputation.

An adverse incident

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involving our franchisees or their guests, and any media coverage resulting therefrom, could also damage our brands and reputation.

Many factors influence our reputation and the value of our hotel brands including the perception held by guests, our franchisees, our other key stakeholders and the communities in which we do business.

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• our ability to attract and retain qualified domestic and international franchisees.

In addition, we are currently planning to expand our international operations in many of the markets where we currently operate, as well as in selected new markets.

In addition, as a result of the Radisson transaction, we have expanded our international operations in several markets.

We are currently planning to further expand in many of the international markets where we currently operate, as well as in select new markets.

This may require considerable management time as well as start-up expenses for market development before any significant revenues and earnings are generated.

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These agreements may be terminated, renegotiated or expire but typically have an initial term of between ten and thirty years.

These agreements also typically contain provisions permitting either party to terminate the franchise agreement upon designated anniversaries of the agreement under certain circumstances and depending on the particular hotel brand that is licensed to the franchisee.

These agreements also typically contain

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provisions permitting either party to terminate the franchise agreement upon designated anniversaries of the agreement under certain circumstances and depending on the particular hotel brand that is licensed to the franchisee.

While our franchise agreements provide for liquidated damages to be paid to us by franchisees whose agreements have been terminated as the result of a violation of the provisions of the agreement, these damage amounts are typically less than the fees we would have received if the terminated franchisee fulfilled its contractual obligations.

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In addition, at times, the Company provides financial support to our franchisees via notes and guaranties.

Factors that may

adversely affect the operating results and financial condition of these franchisees may result in the Company incurring losses related to this financial support.

Factors that may adversely affect the operating results and financial condition of these franchisees may result in the Company incurring losses related to this financial support.

We may not be able to recover advances for system services that we may at certain times provide to our franchisees.

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Franchisees may be unable to access capital or unwilling to spend available capital when necessary, even if required by the terms of our franchise agreements.

If our franchisees fail to make investments necessary to maintain or improve the properties we franchise, our brand preference and reputation could suffer.

If our franchisees fail to make investments necessary to maintain or improve the properties

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we franchise, our brand preference and reputation could suffer.

In addition, if franchisees breach the terms of our agreements with them, we may elect to exercise our termination rights, which would eliminate the revenues we earn from these properties and cause us to incur expenses related to terminating these relationships.

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Further, there can be no assurance that disruptions of the operation of these systems will not occur as a result of failures related to our internal or third-party systems and support.

Radisson Hotels Americas Acquisition Risks

We may not fully realize the anticipated benefits from the Radisson Hotels Americas acquisition (the "Transaction"), and our integration process may take longer or be more difficult than anticipated.

We have and plan to continue to devote management's attention and resources to integrating our and Radisson Hotels Americas’ business practices so that we can fully realize the anticipated benefits of the Transaction, which was completed on August 11, 2022.

Notwithstanding these efforts, the business and assets acquired may require greater resources and investments than originally anticipated.

The Transaction could also result in the assumption of unknown or contingent liabilities, and because Radisson Hotels Americas operates in the same sector that we do, the Transaction could also exacerbate a number of risks that currently apply to us.

Additional potential difficulties associated with the Transaction that we may encounter include the following:

• the inability to successfully combine our and Radisson Hotels Americas’ businesses in a manner that permits us to realize the full anticipated benefits and value of the Transaction in the time frame currently anticipated;

• the failure to fully integrate internal systems, technology, programs, and controls;

• the application of different accounting policies, assumptions, or judgments to Radisson Hotel Americas’ operational results that Radisson Hotels Americas applied in the past;

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• changes in laws and regulations that may impact our or Radisson Hotels Americas’ business, financial condition, results of operations, and growth prospects;

• the loss of franchises, sales and other commercial relationships;

• performance shortfalls as a result of a diversion of management's attention in integrating the Transaction;

• the complexities associated with integrating a line of business with a history and strategy different to our own;

• the loss of key employees that may be difficult to replace or possess critical institutional knowledge around systems and processes.

Any of these risks, if realized, could adversely affect our future operational results or our ability to maintain relationships with guests, customers, vendors, colleagues, and other commercial relationships.

As a result, the anticipated benefits of the Transaction may not be fully realized, may take longer to realize or may cost more than expected.

We have incurred additional expenses and indebtedness related to the Transaction and expect to incur additional integration expenses.

In connection with closing of the Transaction, we incurred $39.6 million in integration expenses through December 31, 2022.

We expect to incur additional expenses as we integrate aspects of the business, practices, policies, and procedures of Radisson Hotels Americas in connection with the Transaction.

While we have assumed that a certain level of integration expenses will be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of integration expenses.

Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.

In addition, to fund the Transaction, we drew $175 million on our existing $600 million unsecured credit facility, and funded the remainder with cash on hand.

On the closing date, we acquired approximately $10.4 million in restricted cash based on provisions of an assumed mortgage on an acquired hotel property.

Risks Related to Our Brands

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Moreover, some of these internet travel intermediaries hope that consumers will eventually develop brand loyalties to their reservations systems rather than to our lodging brands and our existing distribution channels.

As the internet travel intermediary industry continues to consolidate, and/or if well-known or well-financed companies decide to enter the internet travel intermediary space, the resources that the internet travel intermediaries have available and may be willing to apply toward their own marketing and customer loyalty could significantly exceed the resources that we are able to apply for the same purposes.

As the internet travel intermediary industry continues to consolidate, and/or if well-known or well-financed companies decide to enter the internet travel

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intermediary space, the resources that the internet travel intermediaries have available and may be willing to apply toward their own marketing and customer loyalty could significantly exceed the resources that we are able to apply for the same purposes.

The increasing use of alternative internet reservation channels influences the way in which we utilize and market the benefits of our existing distribution channel.

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Finally, there can be no assurance that we will be able to maintain stable commercial or contractual relationships with every significant internet travel intermediary, and any resulting instability may have a significant adverse impact on our business, if for example, our brands are not available through one or more of such intermediaries.

Relatedly, we may not be able to

negotiate mutually acceptable agreements or renegotiate extensions of agreements with existing internet travel intermediaries upon their expiration, and any such renegotiated or extended agreement may not be entered into on terms as favorable as the provisions that existed before such expiration, replacement or renegotiation.

Relatedly, we may not be able to negotiate mutually acceptable agreements or renegotiate extensions of agreements with existing internet travel intermediaries upon their expiration, and any such renegotiated or extended agreement may not be entered into on terms as favorable as the provisions that existed before such expiration, replacement or renegotiation.

Development and brand support activities that involve our co-investment or financing and guaranty support for third parties or development of hotels may result in losses.

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While our business model is primarily asset-light, franchising focused business, there are instances where, typically to support the growth of new hotel brands, we may acquire existing operating hotels and acquire real estate for the purpose of developing new hotels.

We currently own six Cambria hotels.

We currently own six Cambria hotels and three legacy Radisson Hotels Americas hotels.

As a result, fluctuations in values could require us to record a significant non-cash impairment charge in our financial statements in a particular period which may negatively impact our results of operations and shareholders' equity.

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Although we actively seek to minimize these risks prior to acquiring real estate, there is no assurance that we will be able to recover the costs of our investments in which case we will experience losses which could be material.

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Failure to protect our trademarks and other intellectual property could impact our business.

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We cannot assure you that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be adequate to prevent imitation of our trademarks by others.

The unauthorized

reproduction of our trademarks could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.

The unauthorized reproduction of our trademarks could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.

Risks Related to Different Lines of Business

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We are focused on expanding our platform business to provide value-added travel related services to our guests and generate revenues for the Company.

As platform revenue has increased, as reflected in our procurement services revenue, we are increasingly dependent on various vendors who make low-cost products available to our franchisees and partners who market their services directly to our guests.

As platform revenue has increased, as reflected in our procurement services revenue, we are increasingly dependent on various vendors who make low-cost products available to us and our franchisees and partners who market their services directly to our guests.

There can be no assurance that we will be able to retain our relationships with such parties or be able to renew arrangements on favorable terms.

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Consequently, actions by a member might subject us to additional risk, require greater financial support from the Company than initially forecasted (including but not limited to buying out a partner in an affiliate resulting in hotel ownership by the Company) or result in actions that are inconsistent with our business interests or goals.

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Risks Related to Cybersecurity and Data Privacy

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Accordingly, an extended interruption in any of our systems or the systems of our franchisees could significantly curtail, directly and indirectly, our ability to conduct our business and generate revenue.

Like most large multinational companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and attempts to disrupt or gain access to our systems and those

operated by our franchisees, and attempts to affect the confidentiality, availability, and integrity of our data, none of which are known to be material to the Company to date.

Like most large multinational companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and attempts to disrupt or gain access to our systems and those operated by our franchisees, and attempts to affect the confidentiality, availability, and integrity of our data, none of which are known to be material to the Company to date.

We seek to minimize the impact of these cybersecurity incidents through the use of various technologies, processes and practices designed to help protect our networks, systems, computers and data from attack, damage or unauthorized access.

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or international privacy and data protection laws could adversely affect our operations, including our ability to transfer guest data, which could adversely impact guest bookings.

For example, the California Consumer Protection Act (CCPA), which went into effect on January 1, 2020, creates new compliance requirements on businesses that collect personal information from California residents and is enforced by the state attorney general.

Compliance with requirements imposed by the CCPA, the European Union General Data Protection Regulation (GDPR) and similar laws, or any future changes in such laws or additional restrictions, could result in significant costs and require us to change some of our business practices.

For example, the California Privacy Rights Act (CPRA), which went into effect on January 1, 2023, imposes new compliance requirements on businesses that collect personal information from California residents.

Compliance with requirements imposed by the CPRA, the European Union General Data Protection Regulation (GDPR) and similar laws, or any future changes in such laws or additional restrictions, could result in significant costs and require us to change some of our business practices.

Failure to comply could expose the Company to fines, litigation, or other expenses or sanctions as well as reputational harm.

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We also rely on a variety of direct marketing techniques, including telemarketing, SMS, email, and postal mailings.

Any future restrictions in laws such as Telemarketing Sales Rule, CANSPAM Act, and various United States state laws, or new federal laws regarding marketing and solicitation or international data protection laws that govern these activities could adversely affect the continuing effectiveness of telemarketing, SMS, email, and postal mailing techniques and could force changes in our marketing strategies.

Any future restrictions in laws such as Telemarketing Sales Rule, Controlling the Assault of Non-Solicited Pornography & Marketing Act (CAN-SPAM Act), and various United States state laws, or new federal laws regarding marketing and solicitation or international data protection laws that govern these activities could adversely affect the continuing effectiveness of telemarketing, SMS, email, and postal mailing techniques and could force changes in our marketing strategies.

If this occurs, we may not be able to develop adequate alternative marketing strategies, which could impact the amount and timing of our revenues.

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The FTC requires franchisors to make extensive disclosure to prospective franchisees but does not require registration.

states in which our franchisees operate require registration and disclosure in connection with franchise offers and sales.

A number of states in which our franchisees operate require registration and disclosure in connection with franchise offers and sales.

In addition, several states in which our franchisees operate have “franchise relationship laws” that limit the ability of the franchisor to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements.

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At this time, while we expect the decrease in the federal corporate tax rates to provide increased cash flow compared to prior years, we cannot predict the ultimate impact of the tax legislation on our business or results of operations.

We may be deemed to be a joint employer with our franchisees under certain new laws, rules and regulations.

Companies that operate franchise systems may be subject to liabilities and claims relating to the franchisor/franchisee relationship, such as for allegedly being a joint employer with a franchisee.

Changes in laws or regulations relating to this relationship could result in a determination that we are a “joint employer” with our franchisees or that our franchisees are part of one unified system subject to joint and several liability.

Such a determination could subject us to liability for employment-related and other liabilities of our franchisees and could cause us to incur other costs that have a material adverse effect on our results of operations and profit.

Anti-takeover and Control Risks

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These provisions together with the concentration of our share ownership could discourage tender offers or other bids for our common stock at a premium over market price.

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The concentration of share ownership may influence the outcome of certain matters.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors