Supercuts 2008 Annual Report Download - page 15

revenues in a Promenade Salon which has been open five years or more are approximately $239,000. During fiscal year 2009, the
Company plans to open approximately 20 new Promenade Salons.
Other Franchise Concepts. This group of franchise salons includes primarily First Choice Haircutters, Magicuts and Pro-Cuts.
These concepts function primarily in the high volume, value priced hair care market segment, with key selling features of value,
convenience, quality and friendliness, as well as a complete line of professional hair care products. In addition to these franchise salons,
the Company operates company-owned First Choice Haircutters and Magicuts salons, as previously discussed above under Strip Center
Salons. During fiscal year 2009, the Company anticipates that franchisees will open approximately 20 new franchise salons.
International Salons. The Company's international salons are comprised of company-owned salons operating in the United Kingdom
primarily under the Supercuts, Regis, Trade Secret and Sassoon concepts. These salons offer similar levels of service as the North American
salons previously mentioned. However, the initial capital investment required is typically between £135,000 and £145,000 for a Regis salon,
between £55,000 and £65,000 for a Supercuts salon and between £130,000 and £140,000 for a Trade Secret salon. Average annual salon
revenues for a salon which has been open five years or more are approximately £222,000 in a Regis salon, £200,000 in a Supercuts salon and
£503,000 in Trade Secret salon. During fiscal year 2009, the Company plans to open approximately 13 new company-owned international
salons. Sassoon is one of the world's most recognized names in hair fashion and appeals to women and men looking for a prestigious full service
hair salon. Salons are usually located on prominent high-street locations and offer a full range of custom hairstyling, cutting, coloring and
waving, as well as professional hair care products. The initial capital investment required is approximately £450,000. Average annual salon
revenues for a salon which has been open five years or more is approximately £900,000. The Company is exploring suitable locations for
potential new salons in fiscal year 2009.
Salon Franchising Program:
General. The Company has various franchising programs supporting its 2,163 franchise salons as of June 30, 2008, consisting mainly of
Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, and Pro Cuts. These salons have been included in the discussions regarding salon
counts and concepts on the preceding pages.
The Company provides its franchisees with a comprehensive system of business training, stylist education, site approval and lease
negotiation, professional marketing, promotion and advertising programs, and other forms of support designed to help the franchisee build a
successful business.
Standards of Operations. The Company does not control the day to day operations of its franchisees, including hiring and firing,
establishing prices to charge for products and services, business hours, personnel management and capital expenditure decisions. However, the
franchise agreements afford certain rights to the Company, such as the right to approve location, suppliers and the sale of a franchise.
Additionally, franchisees are required to conform to the Company's established operational policies and procedures relating to quality of service,
training, design and decor of stores, and trademark usage. The Company's field personnel make periodic visits to franchise stores to ensure that
the stores are operating in conformity with the standards for each franchising program. All of the rights afforded the Company with regard to the
franchise operations allow the Company to protect its brands, but do not allow the Company to control the franchise operations or make
decisions that have a significant impact on the success of the franchise salons.
To further ensure conformity, the Company may enter into the lease for the store site directly with the landlord, and subsequently sublease
the site to the franchisee. The franchise agreement and sublease provide the Company with the right to terminate the sublease and gain
possession of the store
13