Our digital operations are subject to numerous risks, including  risks related to the failure of the computer systems that operate our  websites and mobile sites and their related support systems, point of  sale systems, computer viruses, telecommunications failures, and  similar disruptions. Also, we may require additional capital in the  future to sustain or grow our digital commerce. Business risks related  to digital commerce include risks associated with the need to keep  pace with rapid technological change, Internet security risks, risks  of system failure or inadequacy, governmental regulation and legal  uncertainties with respect to the Internet, and collection of sales  or other taxes by additional states or foreign jurisdictions. If any of  these risks materializes, it could have a material adverse effect on our  business.  their franchised stores. Franchisees may not operate stores in a  manner consistent with our standards and requirements, may not  hire and train qualified managers and other store personnel and  may not operate their stores profitably. As a result, our franchising  strategy may not be profitable to us. Moreover, our brand image and  reputation may suffer. When franchisees perform below expectations  we may transfer those agreements to other parties or discontinue  the franchise agreement. Furthermore, even if our international  franchising strategy is successful, the interests of franchisees  might sometimes conflict with our interests. For example, whereas  franchisees are concerned with their individual business strategies  and objectives, we are responsible for ensuring the success of the  Build-A-Bear Workshop brand and all of our stores.  The laws of the various foreign countries in which our franchisees  operate govern our relationships with our franchisees. These laws,  and any new laws that may be enacted, may detrimentally affect the  rights and obligations between us and our franchisees and could  expose us to additional liability.  Other parties have asserted in the past, and may assert in the future,  trademark, patent, copyright or other intellectual property rights  that are important to our business. We cannot assure you that others  will not seek to block the use of or seek monetary damages or other  remedies for the prior use of our brand names or other intellectual  property or the sale of our products or services as a violation of their  trademark, patent or other proprietary rights. Defending any claims,  even claims without merit, could be time-consuming, result in costly  settlements, litigation or restrictions on our business and damage our  reputation.  In addition, there may be prior registrations or use of intellectual  property in the U.S. or foreign countries for similar or competing  marks or other proprietary rights of which we are not aware. In all  such countries it may be possible for any third party owner of a  national trademark registration or other proprietary right to enjoin  or limit our expansion into those countries or to seek damages for  our use of such intellectual property in such countries. In the event a  claim against us were successful and we could not obtain a license to  the relevant intellectual property or redesign or rename our products  or operations to avoid infringement, our business, financial condition  or results of operations could be harmed. Securing registrations does  not fully insulate us against intellectual property claims, as another  party may have rights superior to our registration or our registration  may be vulnerable to attack on various grounds.  The operation of our stores is dependent on our ability to distribute  merchandise to locations throughout the United States, Canada  and Europe in a timely manner. We have a 350,000-square-foot  distribution center in Groveport, Ohio. We rely on this company- owned distribution center to receive, store and distribute  merchandise for the majority of our North America stores. We rely  on third parties to manage all of the warehousing and distribution  aspects of our business on the West Coast of the United States and  in Europe. Any significant interruption in the operation of the  distribution centers due to natural disasters and severe weather, as  well as events such as fire, accidents, power outages, system failures  or other unforeseen causes could damage a significant portion of our  inventory. These factors may also impair our ability to adequately  stock our stores and could decrease our sales and increase our costs  associated with our supply chain. We may suffer negative publicity or be sued if the manufacturers of  our merchandise violate labor laws or engage in practices that our  guests believe are unethical.  We are subject to risks associated with technology and digital  operations. Our company-owned distribution center which services the majority  of our stores in North America and our third-party distribution  center providers used in the western United States and Europe may  experience disruptions in their ability to support our stores or they  may operate inefficiently.  We may fail to renew, register or otherwise protect our trademarks  or other intellectual property and may be sued by third parties for  infringement or, misappropriation of their proprietary rights, which  could be costly, distract our management and personnel and which  could result in the diminution in value of our trademarks and other  important intellectual property.  We rely on our sourcing personnel to select manufacturers with legal  and ethical labor practices, but we cannot control the business and  labor practices of our manufacturers. If one of these manufacturers  violates labor laws or other applicable regulations or is accused  of violating these laws and regulations, or if such a manufacturer  engages in labor or other practices that diverge from those typically  acceptable in the United States, we could in turn experience negative  publicity or be sued.  2013 FORM 10-K 11 BUILD-A-BEAR WORKSHOP, INC. 