(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of Great Clips’ 2012 Franchise Disclosure Document – Part 3

Other Fees Under the Franchise Agreement

• Royalty:  6% of Gross Sales. Gross Sales includes all revenue from the sale of all products, goods, and services sold from or in connection with the franchise location, less sales taxes.

• Continuing Advertising Contribution to the North American Advertising Fund:  5% of Gross Sales. You must also engage in certain local advertising and sales promotion activities at an additional cost. In order to operate on a competitive business, you will need to spend a minimum of 1-3% of your Gross Sales on incremental advertising in addition to the 5% Continuing Advertising Contribution to the North American Advertising Fund.

• Great Clips University:  $200 per salon per year. This is the current fee and is subject to change at Great Clips’ discretion. Stylists must start training within 30 days of employment. You must pay your trainees’ travel and living expenses in connection with attending training.

Average Sales Based on Sales Range

Sales Range ($000):  <$150

• Number of Salons:  6
• % of Salons:  0.5%
• Average Sales in Range:  $122,714
• Labor:  61.5%
• Occupancy:  20.9%
• All Other:  27.4%
• Total:  109.8%
• Cash Flow (%):  (9.8%)
• Cash Flow ($):  ($12,040)

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