In this FDD Talk post based on Item 19 of Merle Norman Cosmetics’ 2014 FDD, you will find the answers to the following questions:

• Does Merle Norman Cosmetics receive from its Studio Owners any statements regarding the dollar amount of a Studio Owner’s total sales, expenses, costs, or profits?

• Does the financial performance representation below provide information other than the dollar amount of purchases of Merle Norman products by Studios and the retail value of those purchases?

• Are Studio Owners permitted to sell other merchandise (in addition to Merle Norman products) and to offer other services (in addition to free makeover lessons using the lesson material provided by Merle Norman Cosmetics)? What percentage of Studios sell merchandise in addition to Merle Norman products and/or offer other services?

• Are the dollar amounts listed below as the “Retail Value of Purchases from Merle Norman Cosmetics” intended to represent the total sales volume of any Studio?

• When did the franchisor complete the development of the New Design Studio? What are the most significant elements of the New Design? As of December 31, 2013, how many U.S. Studios have implemented the New Design?

• How many Studios operated in the United States under the New Design during the one-year period from January 1, 2013 through December 31, 2013?

• What is the gross profit percentage range for individual Merle Norman products? What is the average gross profit percentage for all Merle Norman products?

• Are Studio Owners required to purchase any specified amount of products from Merle Norman Cosmetics, other than the initial order of Merle Norman products?

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