Supercuts 2012 Annual Report Download - page 17

Table of Contents
salon which has been open five years or more are approximately £210,000 in a Regis salon and £165,000 in a Supercuts salon. 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 £500,000. Average annual salon revenues for a salon
which has been open five years or more is approximately £770,000.
Salon Franchising Program:
General. The Company has various franchising programs supporting its 2,016 franchise salons as of June 30, 2012, consisting mainly
of Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, Pro-Cuts, and Roosters. 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 to 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 if the franchisee fails to comply with the Company's operational policies and procedures. See Note 10 to the
Consolidated Financial Statements for further information about the Company's commitments and contingencies, including leases.
Franchise Terms. Pursuant to their franchise agreement with the Company, each franchisee pays an initial fee for each store and
ongoing royalties to the Company. In addition, for most franchise concepts, the Company collects advertising funds from franchisees and
administers the funds on behalf of the concept. Franchisees are responsible for the costs of leasehold improvements, furniture, fixtures,
equipment, supplies, inventory, payroll costs and certain other items, including initial working capital.
Additional information regarding each of the major franchisee brands is listed below:
Supercuts (North America)
The majority of existing Supercuts franchise agreements have a perpetual term, subject to termination of the underlying lease
agreement or termination of the franchise agreement by either the Company or the franchisee. The agreements also provide the
Company a right of first refusal if the store is to be sold. The franchisee must obtain the Company's approval in all instances where
there is a sale of the franchise. The current franchise agreement is site specific and does not provide any territorial protection to a
franchisee, although some older franchise agreements do
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