Supercuts 2012 Annual Report Download - page 18

Table of Contents
include limited territorial protection. Development agreements for new markets include limited territory protection for the Supercuts
concept. The Company has a comprehensive impact policy that resolves potential conflicts among Supercuts franchisees and/or the
Company's Supercuts locations regarding proposed salon sites.
Cost Cutters, First Choice Haircutters and Magicuts (North America)
The majority of existing Cost Cutters franchise agreements have a 15 year term with a 15 year option to renew (at the option of the
franchisee), while the majority of First Choice Haircutters franchise agreements have a ten year term with a five year option to renew.
The majority of Magicuts franchise agreements have a term equal to the greater of five years or the current initial term of the lease
agreement with an option to renew for two additional five year periods. All of 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. Franchisees may enter into development agreements with the Company
which provide limited territorial protection.
Pro-Cuts (North America)
The majority of existing Pro-Cuts franchise agreements have a ten year term with a ten year option to renew. The agreements also
provide the Company a right of first refusal if the store is to be sold or transferred. The current franchise agreement is site specific.
Franchisees may enter into development agreements with the Company which provide limited territorial protection.
Roosters (North America)
The majority of existing Roosters franchise agreements have a ten year term with a ten year renewal option. 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 franchisee. Upon the signing of a single store franchise agreement, franchisees may also enter into a multi-
unit option agreement which provides the right to open three additional stores in a non-exclusive territory.
Franchisee Training. The Company provides new franchisees with training, focusing on the various aspects of store management,
including operations, personnel management, marketing fundamentals and financial controls. Existing franchisees receive training, counseling
and information from the Company on a continuous basis. The Company provides store managers and stylists with extensive technical training
for Supercuts franchises. For further description of the Company's education and training programs, see the "Salon Education and Training
Programs" section of this document.
Salon Markets and Marketing:
The Company maintains various advertising, sales and promotion programs for its salons, budgeting a predetermined percent of revenues
for such programs. The Company has developed promotional tactics and institutional sales messages for each of its concepts targeting certain
guest types and positioning each concept in the marketplace. Print, radio, television, online and billboard advertising are developed and
supervised at the Company's headquarters, but most advertising is done in the immediate market of the particular salon.
Most franchise concepts maintain separate advertising funds (the Funds) that provide comprehensive advertising and sales promotion
support for each system. The Supercuts advertising fund is the Company's largest advertising fund and is administered by a council consisting
of primarily franchisee representatives. The council has overall control of all of the fund's expenditures and operates in accordance with terms
of the franchise operating and other agreements. All stores,
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