Supercuts’ Initial Franchise Fee, Royalty Fee + 34 Other Fees

Detailed Information on Supercuts’ Initial Franchise Fee, Royalty Fee + 34 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee (Single-Store Program):  $20,000

• If you acquire the right to develop just one Supercuts Store, you will sign a Franchise Agreement for that Store and pay the initial franchise fee, which is currently $20,000. The initial franchise fee is not refundable under any circumstances.

2.  Development Fee:  $20,000 initial franchise fee for the first Store, plus $20,000 for each additional Store you commit to develop

• If Supercuts agrees to grant you rights to develop more than one Store, you will concurrently sign the Development Rights Rider (“DRR”) and the Franchise Agreement for the first Store to be developed. You sign Supercuts’ then-current standard Franchise Agreement for each subsequent Supercuts Store you open according to the DRR.

• If you sign Supercuts’ DRR because you commit to develop multiple Supercuts Stores in a territory, Supercuts currently charges a development fee that you must pay in full when you sign the DRR.

• The development fee is the full $20,000 initial franchise fee for the first Store covered by the Franchise Agreement to which the DRR is attached, plus $20,000 for each additional Store you commit to develop under the DRR. The development fee is full payment for your development/franchise rights under the DRR and first Franchise Agreement.

• Supercuts does not charge you any initial franchise fees for the additional Stores to be developed under the DRR.

• The development fee is not refundable under any circumstances.

3.  Hairstylists Academy:  $1,440 to $1,920

• All new Supercuts stylists must attend a hairstylists academy training course/certification. The basic fee for each stylist is presently $240 for the 5-day course ($48 per stylist per day).

• You must pay all related costs, including travel, lodging, meals, and wages associated with your and your employees’ attendance at the training course.

• Because you are expected to open each Store with 6 to 8 stylists, your total training fee will run from $1,440 to $1,920. This training fee is not refundable.

4.  Lease:  $2,000 to $6,000 per month

• You must lease your Store’s location directly from the landlord unless you purchase an existing company-owned Store from Supercuts and it requires you to sublease.

• Monthly rent is estimated to range from $2,000 to $6,000 depending on premises size, condition, and location. You might be required to pay the first month’s rent when the lease is signed as “pre-paid rent” (as opposed to after the premises is delivered); a security deposit of approximately one month’s rent also might be required. Except for the security deposit, these payments are not refundable.

5.  Royalty Fees:  6% of combined net service revenue and net merchandise revenue

• Due Date:  Payable monthly on or before the 10th day of each month for revenue during the preceding calendar month.

• You must pay all amounts due by electronic transfer.

6.  Advertising Fees:  5% of net monthly service revenue (i.e., excluding merchandise sales)

• Due Date:  Same as Royalty fee.

7.  Product and Service Purchases:  varies

• Due Date:  As incurred.

• You will buy products and services necessary to operate your Store from Supercuts’ designated and approved vendors (which may include Supercuts and its affiliates) whose items and services meet Supercuts’ standards and specifications.

• Prices depend on supplier and item/service involved.

8.  Testing and Evaluation Costs:  projected testing/evaluation costs to be incurred (amount depends on circumstances, including supplier’s location, testing required, and item involved)

• Due Date:  As incurred.

• Covers costs of testing new products/services or inspecting new suppliers you propose.

9.  HSA Recertification:  the cost of all training supplies and materials, including, without limitation, mannequins

• Due Date:  Prior to training.

10.  Opensalon Pro Point-of-Sale Fees:  $170 per month SaaS subscription fees

• Due Date:  Payable monthly starting when you enter into the SaaS subscription agreement.

11.  Technology Fee:  up to 2% of gross revenues

• Due Date:  Monthly.

• Supercuts does not currently charge this fee but may begin collecting it on 30 days’ prior written notice to you.

12.  Managers’ Training Course/Ongoing and Supplemental Training:  the cost of training supplies and materials and a proportionate share of the training facilities (if any) and any audio visual equipment needed for such training courses. Supercuts may charge its then-current fee, which will not exceed $1,000 per day. If you request any training courses and programs to be provided locally, then subject to Supercuts’ training personnel’s availability, you must pay Supercuts’ then-current training fee and its training personnel’s TRE.

• Due Date:  Prior to training.

• Supercuts may increase this charge as the costs increase.

13.  Convention Fee:  will vary under circumstances (not to exceed $1,000 per person; does not include your actual out-of-pocket attendance costs paid to third parties)

• Due Date:  Prior to convention.

• You (or your designated representative Supercuts approves) must, at Supercuts’ request, attend an annual franchisee meeting and pay an attendance fee. Supercuts will charge this fee even if you do not attend.

14.  Successor Franchise Fee:  $10,000

• Due Date:  When you sign a successor Franchise Agreement (if you have that right).

15.  Transfer Fee:  $1,500

• Due Date:  Before transfer’s effective date.

• In addition to the transfer fee, if the prospective franchisee is a new franchisee, they must attend Supercuts’ mandatory training course for initial franchisees.

16.  Lease Renewal Fee:  $1,500

• Due Date:  Immediately upon execution of the lease renewal.

17.  Lease Guaranty Fee:  the amount by which 12% of your monthly gross sales exceeds your monthly lease payments for as long as such guaranty is in effect

• Due Date:  Monthly.

• Supercuts reserves the right to charge this fee if you request and Supercuts agrees to guarantee your lease obligations in any way (e.g., as tenant or guarantor).

18.  Inspections:  actual costs of follow up inspection, including Supercuts’ personnel’s daily charges (including wages) and travel-related expenses, including airfare, local transportation, accommodations, meals, and a daily allowance

• Due Date:  As incurred.

• Compensates Supercuts’ costs and expenses for each follow-up inspection to confirm your compliance with the Franchise Agreement and Brand Standards.

19.  Audits:  cost of inspection or audit, including legal fees and independent accountants’ fees, plus travel expenses, room and board, and compensation of Supercuts’ employees (amount depends on nature and extent of your non-compliance)

• Due Date:  Immediately after receipt of audit report.

• Due if you fail to report or understate Gross Sales by 2% or more.

20.  Non-compliance Fees:  $250 to $1,000 per violation

• Due Date:  When billed.

• Due if you deviate from contractual requirements, including Brand Standards.

• This compensates Supercuts for administrative and management costs, not for its damages due to your default. The fee is $250 for the first violation, $500 for the first repeat violation, and $1,000 for second and each subsequent repeat violation.

21.  Late Payments/Interest/Administrative Fee:  1.5% per month or the highest commercial contract interest rate the law allows, whichever is less. In addition, you must pay Supercuts a $100 administrative fee.

• Due Date:  Upon demand.

• For each payment not made to Supercuts or its affiliate when due (or for each dishonored payment).

22.  Construction Management Services Fee:  $5,500 to $7,500

• Due Date:  Upon signing Construction Management Services Agreement.

• Payable to independent supplier.

23.  Construction and Design Plan Review Fee:  $500 to $1,000

• Due Date:  Prior to commencing construction.

• Payable to Supercuts or its affiliate.

24.  Post Build Review Fee:  $1,500 to $3,000

• Due Date:  Upon completion of construction.

• Payable to Supercuts or its affiliate.

25.  Gift Card Transactions:  $45 per download software download fee and $15 per terminal annual software maintenance fee (both if you supply your own terminal device); per transaction fees range from $.0225 to $.07; non-sufficient funds recovery fee of $.05 per card

• Due Date:  As incurred and/or per transaction.

26.  Indemnification: varies under circumstances and depends on nature of claim

• Due Date:  As incurred.

• You must reimburse Supercuts for all claims and losses arising out of (i) Store’s construction, design, or operation, (ii) the business you conduct under Franchise Agreement, (iii) your non-compliance or alleged non-compliance with any law, (iv) a data security incident, or (v) your breach of Franchise Agreement.

27.  Maintenance Cost Reimbursement:  out-of-pocket cost reimbursement

• Due Date:  As incurred.

• You must reimburse Supercuts’ costs for correcting your Store’s failure to comply with Brand Standards.

28.  Costs and Attorneys’ Fees:  varies under circumstances and depends on nature of your non-compliance

• Due Date:  As incurred.

• Due when Supercuts incurs costs and expenses to enforce the Franchise Agreement against you in a legal proceeding and is the prevailing party.

29.  Management Fee:  up to 10% of Gross Sales, plus any out-of-pocket expenses incurred in connection with the Store’s management

• Due Date:  As incurred.

• Due if Supercuts assumes the Store’s management in certain situations, including your default.

30.  Reimbursement for Third-Party Service Providers:  out-of-pocket cost reimbursement

• Due Date:  As incurred.

• Supercuts may require you to reimburse it for costs of third-party quality assurance, audit, guest satisfaction, and “mystery shop” programs it institutes for Supercuts Stores.

31.  Reimbursement for Customer Complaints:  cost reimbursement

• Due Date:  As incurred.

• Supercuts may require you to reimburse its costs if it resolves a customer complaint because you fail to do so.

32.  Tax Reimbursement:  out-of-pocket cost reimbursement

• Due Date:  As incurred.

• You must reimburse Supercuts for taxes it must pay any state taxing authority on account of either your operation or your payments to Supercuts (except for Supercuts’ income taxes).

33.  Insurance Reimbursement:  out-of-pocket cost reimbursement

• Due Date:  As incurred.

• You must reimburse Supercuts’ costs if it obtains insurance coverage for your Store because you fail to do so.

34.  Deficiency Correction Fee:  out-of-pocket cost reimbursement

• Due Date:  As incurred.

• You must reimburse Supercuts’ costs if it corrects a Store deficiency because you fail to do so when required.

35.  De-Identification Fee:  cost reimbursement

• Due Date:  As incurred.

• You must reimburse Supercuts’ costs of de-identifying your Store if you fail to do so.

36.  Lost Future Royalties:  depends how much time remains in franchise term when Supercuts terminates with cause or you terminate without cause

• Due Date:  Within timeframe Supercuts specifies.

• These are contract damages if the Franchise Agreement is terminated before its expiration date.