Building BIG Brands in Asia Pacific Henry Saliba Director of Development

1. 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

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

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

16. Strong growth since spin-off – 1998 to 2009

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

18. Our business philosophy

19. Our business philosophy

20. Our business philosophy

21. We are about ACCELERATINGTHE BUILDING OF BIG BRANDS

22. How our business is organized Support Functions Core Functions Restaurant Excellence Brand Development Product Excellence Franchise Excellence Asset Development Organization Excellence Providing Maniacal Customer Service Building Brand Equity 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 • 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….. • 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

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

28. 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

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

32. 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

33. 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

34. Manual 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

35. 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

36. 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. Our Goals Building of Big Brands Build & Rebuild Units Build World Class Designs Build Profitable Restaurants Build People

39. How we engage - Top 6 Franchisees ranked by System Sales

40. AFBU Partner Engagement Model

41. Our current franchising needs? Interested? Contact Henry Saliba: henry.saliba@yum.com

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