Detailed Information on Supercuts’ Initial Franchise Fee, Royalty Fee + 28 Other Fees (Items 5 and 6, 2022 FDD)

1.  Development Fee:  $10,000 to $99,500

• Supercuts’ current practice is to sign a Development Agreement with all franchisees for each new franchise acquisition, even if the franchisee expects to develop only one Store. Supercuts currently grants single-Store development rights (the “Single Store Program”) and 3-Store and 6-Store development rights (the “Fast Start Program”).

• If you are a new franchisee or an existing franchisee that signed a Development Agreement after September 29, 2011, the Development Fee is full payment for your development and franchise rights, whether for one Store, or more than one Store. If you are such a “new” franchisee, Supercuts does not charge you any initial franchise fees for Stores to be developed under the Development Agreement.

• Development Fee Amount for 1 Store:  $39,500
• Development Fee Amount for 3 Stores:  $69,500
• Development Fee Amount for 6 Stores:  $99,500
• Development Fee Amount for 6+ Stores:  $10,000 for each additional Store

2.  Construction Management Services Fee:  $5,500 or $7,500

• If you want Supercuts’ approved vendor, Build Point Solutions Group Inc. (“Build Point Solutions”) to supervise and oversee your Store’s construction or remodel process, you must pay Build Point Solutions a fee of either $5,500 or $7,500 when you sign Build Point Solutions’ services agreement.

• You also must pay for the cost of construction or remodeling and any Store FF&E that Build Point Solutions arranges for you to purchase, plus shipping and handling.

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

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

• If you elect not to use Build Point Solutions to coordinate your Store construction or remodel, then you must use architects and contractors that Supercuts approves and pay Supercuts a fee of $500 to $1,000 to review your construction/remodel and design plan prior to commencing construction (the “Construction and Design Plan Review Fee”) and a fee of $1,500 to $3,000 for Supercuts to review your Store upon completion of the construction or remodel (the “Post Build Review Fee”).

5.  Royalty Fees:  for new Stores, combined service and merchandise royalty fee is 4% of combined net service revenue and net merchandise revenue from opening date until first year anniversary. From first year anniversary until the Franchise Agreement expires or is terminated, royalty fee is 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) with a potential rebate if 75% of Stores in a specific DMA vote in favor of rebate

• 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.  Hairstylists Academy (HSA):  4 training days at $55 per day per attendee plus Mannequin Recovery fee of $67 for the 2 mannequins that stylists use in HSA

• Due Date:  Prior to training.

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

• Due Date:  Prior to training.

11.  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.

12.  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.

13.  Anniversary Fee (essentially a “renewal” fee):  1% of total net monthly revenues for 12 full months immediately preceding first 10-year anniversary. For each 10-year anniversary thereafter, 2% of total net monthly revenues for 12 full months immediately preceding such anniversary date.

• Due Date:  Within 30 days after each 10-year anniversary of opening date.

14.  Transfer Fee:  1 store: $2,500; 2 stores: $4,500; 3 stores: $6,000; 4 stores: $7,000; 5 stores: $7,500. Each store after is $500.

• Due Date:  At least 30 days 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.

15.  Lease Renewal Fee:  $1,500

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

16.  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).

17.  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.

18.  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.

• Due and payable if fees owed to Supercuts or its affiliate are not paid timely or if payment is dishonored.

19.  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.

20.  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.

21.  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.

22.  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.

23.  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.

24.  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.

25.  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.

26.  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).

27.  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.

28.  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.

29.  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.

30.  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.