Salons by JC Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

1.  Initial Franchise Fee:  $50,000

2.  Initial Training:  $0 to $1,000

• Salons by JC will typically provide approximately 3 days of its initial training program at its headquarters, which is currently in San Antonio, Texas, free of charge for up to 3 trainees (including you).

• If more than 3 trainees attend, the additional cost is $1,000 per person.

• The low amount in this range assumes that you and up to 2 persons will attend the initial training program, while the high estimate assumes that 4 total individuals will attend.

3.  Travel and Living Expenses During Training:  $1,500 to $2,500

• This is Salons by JC’s estimated range of costs to cover the travel and living expenses, including airfare, lodging, and meals, which you will incur when you and your employees attend the initial training program.

• The cost you incur will vary depending upon factors such as distance traveled, mode of transportation, travel preferences (such as air travel or ground transportation), nature of accommodations, per diem expenses actually incurred, and the number of persons who attend training.

• This estimate does not include any wages or salary for you or your trainees during training.

4.  Site Selection Assistance and/or Site Evaluation Expenses:  $0 to $1,000

• Currently, you are required to engage one of Salons by JC’s third-party approved suppliers to provide site selection assistance or guidance.

• Salons by JC has the right, but is under no obligation, to: (i) conduct an on-site evaluation of any site you propose; and (ii) require you to reimburse it for the actual costs that it incurs in connection with sending its representative(s) to your Designated Territory to conduct this evaluation.

• The low end of this estimate assumes you engage Salons by JC’s approved supplier for such services that charges its fee directly to the landlord at issue, while the high end assumes that you engage one of Salons by JC’s other approved suppliers that charges you directly for the site selection assistance they provide.

• If Salons by JC requires you to reimburse it for any expenses it incurs in connection with your site selection assistance, it accounts for such reimbursement amounts as part of the Additional Funds estimate set forth below.

5.  Security Deposits – Lease and Utilities:  $10,000 to $35,000

• These are estimated amounts of your security deposit under the lease for the Facility, as well as your initial utility deposits. These amounts will vary by market, and may be refundable (as determined by the payee).

6.  Insurance Premium (3 months):  $900 to $1,500

• This is an estimate of insurance premiums for the initial 3 months of business operation. Your costs will vary depending on your market, the amount of coverage you select, your insurance carrier, and other factors.

7.  Business License and Permits:  $100 to $300

• You must obtain all business licenses, permits, certificates, or approvals before you open for business. Local, municipal, county, and state regulations vary on what licenses and permits are required by you to operate.

8.  Rent (3 months):  $0 to $65,000

• You will need to rent or acquire a building for your Salons by JC Business. Rent varies considerably from market to market, and from location to location in each market.

• This figure estimates your rent for the Facility over the first 3 months of your lease, and this figure assumes that you will be leasing your Facility (rather than purchasing it).

• Some franchisees have received free rent over the first 3 months of operation.

9.  Blueprints, Plans, Permits, Architectural Fees:  $45,000 to $65,000

10.  Leasehold Improvements:  $780,000 to $1,170,000

• You may need to construct improvements or “build out” the Facility at which you will operate your Salons by JC Business.

• You may be able to negotiate various terms with your landlord, including paying for some of the build out costs for your space. Also, you may seek to finance some or all of your build out costs through your landlord or other financing sources.

• A variety of factors may affect the availability of landlord and other financing, the monthly overall costs of the financing, and other terms relevant to your decision whether to pay or finance the build out costs.

• Your landlord may also agree to provide you with a tenant improvement credit whereby the landlord credits some of the costs you incur in building out the Facility towards your monthly rent.

• This estimate is based on Salons by JC’s standard franchise offering that assumes that the Salons by JC Business will be between 6,000 and 9,000 square feet in size.

11.  Signage and Graphics:  $8,000 to $25,000

• The cost of signage and graphics will vary from location to location depending on lease requirements, local ordinances and restrictions, store frontage, and related factors.

• Salons by JC can provide assistance to you if needed.

• The final design must be submitted to Salons by JC for review and approval, which will not be unreasonably withheld so long as you comply with its standards and specifications for these items.

12.  Furniture, Fixtures, and Equipment:  $85,000 to $175,000

• You must purchase furniture, fixtures, and equipment for the Facility that meet Salons by JC’s specifications and are from approved or designated vendors (if Salons by JC chooses to designate vendors for these items).

• You may decide to lease the furniture and/or equipment needed rather than purchasing it with a lump sum payment.

• The amounts listed are an estimate and may vary per your location and market. The estimate assumes that you will be purchasing these items and includes your required Computer System.

13.  Internet (3 months):  $375 to $900

14.  Initial Inventory and Operating Supplies:  $2,000 to $4,000

• This estimate covers your initial stock of various inventory and supply items you are required to use in your initial phase of operations. You are required to obtain these items from Salons by JC or from its designated sources.

15.  Initial Marketing Spend:  $15,000 to $20,000

• You are required to expend between $15,000 and $20,000 on marketing, advertising, and other promotional efforts within your Designated Territory and where Salons by JC otherwise directs regarding the initial launch and grand opening of your Salons by JC Business (the “Initial Marketing Spend”), which must be expended in connection with a written plan that you are responsible for developing, subject to Salons by JC’s directives, requirements, and approval.

• Salons by JC will designate your exact Initial Marketing Spend once you have secured your approved Facility, and you may be required to expend all or some portion of your Initial Marketing Spend on materials and services that are provided by Salons by JC’s approved supplier(s).

16.  Additional Funds (3 months):  $10,000 to $20,000

• You will need additional capital to support on-going expenses during the initial 3 months after you open your Salons by JC Business. The estimate includes items such as payroll, royalty, additional advertising, repairs and maintenance, bank charges, miscellaneous supplies and equipment, state tax, and other miscellaneous items, that may not be covered by sales revenues.

17.  Total Estimated Initial Investment:  $1,007,875 to $1,636,200

• The figures in this table are only estimates.

• In calculating these estimates, Salons by JC relied on (1) the experience of its affiliate that currently operates various Salons by JC Businesses in a similar manner to the Salons by JC Business being offered in the Disclosure Document; (2) for certain estimates, information that was provided by certain of Salons by JC’s franchisees that were open and operating as of the end of the past fiscal year; and (3) estimates Salons by JC has received from certain third-party vendors.