Supercuts 2011 Annual Report Download - page 18

Table of Contents
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.
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
customer 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, company-owned and franchised, contribute to the Funds, the majority of which are
allocated to the contributing market for media placement and local marketing activities. The remainder is allocated for the creation of national
advertising campaigns and system wide activities. This intensive advertising program creates significant consumer awareness, a strong concept
image and high loyalty.
Salon Education and Training Programs:
The Company has an extensive hands-on training program for their stylists which emphasizes technical training in hairstyling and cutting,
hair coloring, texturizing services and hair treatment regimes, as well as customer service skills and product sales. The objective of the training
programs is to ensure that customers receive professional and quality services, which the Company believes will result in additional repeat
customers, referrals and product sales.
The Company has over 130 full and part-time artistic directors who train stylists the techniques to provide salon services and instruct
stylists in current styling trends. Stylist training is achieved through seminars, workshops and DVD-based programs. The Company was the first
in its industry to develop a DVD-based training system in its salons and currently has over 200 DVD titles designed to enhance the technical
skills of stylists.
The Company has customer service training programs designed to improve the interaction between employees and customers. Employees
are trained in the proper techniques in greeting the customer, telephone courtesy and professional behavior through a series of professionally
designed DVDs, along with instructional seminars.
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