Supercuts 2003 Annual Report Download - page 17

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Table of Contents
Cost Cutters, First Choice Haircutters and Magicuts
The majority of existing Cost Cutters’ franchise agreements have a 15-year term with a 15-year option to renew, 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 provides limited territorial protection.
Pro Cuts
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 provides limited territorial protection.
St. Algue and Jean Louis David (JLD)
The majority of St. Algue’s franchise contracts have a five-year term with an implied option to renew for a term of three years. All new JLD
contracts have five-year terms, although a substantial number of JLD’s existing contracts provide for an eight-year term. The franchise
agreements for both St. Algue and JLD are site specific and only a small minority of the contracts provide for territorial exclusivity. The
agreements provide for the right of first refusal if the salon is to be sold and the franchisee must obtain the Company’s approval before selling
of the salon. With regards to the store site, neither St. Algue nor JLD acts as lessor for their franchisees.
Franchise Sales
Franchise expansion will continue to be a significant focus of the Company in the future. Existing franchisees and new franchisees that open
multiple salons may receive a reduction in initial franchise fees.
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. In addition, 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 Training Programs” section of this
document.
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