Lee Sanders, CFE President and CEO

1. Lee Sanders, CFEPresident and CEO

2. International Expansion A Proven Strategy in Times of Economic Uncertainty

3. Recap • Rationale For International Expansion • Advantages • Disadvantages • Example: Proven Strategy For Tough Times? • Next Steps

4. International Rationale • Simple: Hedge Your Bets • Eventually your brand will penetrate USA and you will need new growth vehicle • New consumers / guests • New development territory and franchisees • USA reaching capacity / over-built in many categories: e.g. burgers, casual dining • Some brands stronger in international than domestic

5. International Rationale • Many countries have increasing affluence and an emerging middle class required to support many American brands / concepts • Positive currency conversions • Limited home-grown international franchises • Consumer demand for US brands strong • May have lower legal hurdles than domestic franchising

6. Advantages • Many, many countries are available for development of your brand • Many countries generally under-penetrated • Limited competition from other franchises • Strong consumer demand for American brands • Due to exchange rates, American brands may be a value • Many countries have limited / no regulations

7. Advantages • Flexible business models: • Direct franchising • Sell country rights • Master franchisees / sub-franchising • Area Development Agreements • Single Franchises • Allows simultaneous development of two lines of business: international and domestic

8. Advantages • Limited legal start-up cost in some cases • Many economies are countercyclical to USA; they are up when we are down

9. Disadvantages • Distracts from core business; siphons resources from other efforts • Requires a dedicated line of business, not like another domestic market • Unlikely to simply copy domestic systems and processes • Where regulated, different regulations by country • Concept, products must be adapted to local preferences

10. Disadvantages • Cultural differences in franchise sales, guest service, marketing, pricing, etc. • Exchange rates may reduce actual income; get paid in dollars; e.g. supply chain • Due to exchange rates, best to get paid in dollars • Initial entry may require company units to establish brand • Influence peddling and favoritism; paid introductions

11. Disadvantages • Often necessary to retain local agent or broker to source developers / franchisees • Longer lead time than opening a new domestic market • Legal protection of rights and marks difficult and expensive; litigation is risky • In current economy international is becoming “Me Too Bandwagon”

12. Proven Strategy For Tough Times? • A brand which lead American franchises into international • Began current international push with 1998 strategy • Currently 61% of units are international; ~ 20,200 of ~ 33,500 McDonalds Case Study

13. Proven Strategy For Tough Times? • For Q1 2008 SSS: • USA 1.9% • Europe 8.2% • Asia/Pacific 7.8% • 5.7% globally • USA is 35% of sales, 39% of units • Q1 2008: profit $ .81 / share, “$ .05 / share from foreign currency gains” McDonalds Case Study

14. Next Steps

15. Abu Dhabi Bahrain Canada (partial) Costa Rica Dominican Republic Dubai Egypt Iraq Jordan Kuwait Lebanon Mexico (partial) Oman Panama Philippines Puerto Rico Qatar Royal Caribbean Saudi Syria Turkey Rockets International Development Sold

18. Johnny Rockets Development Sold • Canada

20. Q & A