Supercuts 2008 Annual Report Download - page 24

Item 1A. Risk Factors
If we are not able to increase our number of salons, we may not be able to grow our revenue and earnings.
The key driver of our revenue and earnings growth is the number of salons we and our franchisees acquire or construct. Acquiring and
constructing new salons is subject to the ability of our company and our franchisees to identify suitable sites and obtain financing for
development. While we believe that substantial future acquisition and organic growth opportunities exist, any inability to identify and
successfully complete future acquisitions or increase our same-store sales would have a material adverse effect on our revenue and earnings
growth.
Changes in the general economic environment may impact our business and results of operations.
Changes to the United States, Canadian, United Kingdom and other European economies have an impact on our business. As a result of our
entrance into the Asian market, changes in the Asian economies may also impact our business. General economic factors that are beyond our
control, such as interest rates, recession, inflation, deflation, tax rates and policy, energy costs, unemployment trends, and other matters that
influence consumer confidence and spending, may impact our business. In particular, visitation patterns to our salons and hair restoration centers
can be adversely impacted by changes in unemployment rates and discretionary income levels.
Changes in our key relationships may adversely affect our operating results.
We maintain key relationships with certain companies, including Wal-
Mart. Termination or modification of any of these relationships could
significantly reduce our revenues and have an adverse impact on our ability to grow or future operating results.
Changes in fashion trends may impact our revenue.
Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair
may reduce the number of visits to, and therefore, sales at our salons.
Changes in regulatory and statutory laws may result in increased costs to our business.
With approximately 13,550 locations and 65,000 employees worldwide, our financial results can be adversely impacted by regulatory or
statutory changes in laws. Due to the number of people we employ, laws that increase minimum wage rates or increase costs to provide
employee benefits may result in additional costs to our company. Compliance with new, complex and changing laws may cause our expenses to
increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our
ability to market certain products, which could adversely affect our business, financial condition and results of operations. We are also subject to
laws that affect the franchisor-franchisee relationship.
If we are not able to successfully compete in our business segments, our financial results may be affected.
Competition on a market by market basis remains strong. Therefore, our ability to raise prices in certain markets can be adversely impacted
by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be
impaired.
If our joint ventures are unsuccessful our financial results may be affected.
We have entered into joint venture arrangements with other companies in the hair salon and beauty school businesses in order to maintain
and expand our operations in the United States, Asia and continental Europe. If our joint venture partners are unwilling or unable to devote their
financial
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