Great Clips, Inc
Total Page:16
File Type:pdf, Size:1020Kb
FRANCHISE DISCLOSURE DOCUMENT BLACKLINED GREAT CLIPS, INC. A Minnesota Corporation 4400 West 78th Street, Suite 425 Minneapolis, Minnesota 55435 (952) 893-9088 greatclipsfi-anchise.com Great Clips A franchised GREAT CLIPS® Salon offers a required line of haircare services and products from a designated location, customarily in a shopping center, identified by trademarks licensed by the franchisor ("Great Clips") and using distinctive trade dress and business methods prescribed by Great Clips. The total investment necessary to begin operation of a Great Clips franchise is from $•139114,150 to $208.300216.000. This includes $25,000 to $40,000 that must be paid to Great Clips or an affiliate. This disclosure document summarizes certain provisions of your franchise agreement and other information in plain English. Read this disclosure document and all accompanying agreements carefully. You must receive this disclosure document at least 14 calendar days before you sign a binding agreement with, or make any payment to, Great Clips or an affiliate in connection with the proposed franchise sale. Note, however, that no governmental agency has verified the information contained in this document. You may wish to receive your disclosure document in another format that is more convenient for you. To discuss the availability of disclosures in different formats, contact the Franchise Administration Department at 4400 West 78th Street, Suite 700, Minneapolis, Minnesota 55435, (952) 893-9088. The terms of your contract will govem your franchise relationship. Don't rely on the disclosure document alone to understand your contract. Read all of your contract carefully. Show your contract and this disclosure document to an advisor, like a lawyer or an accountant. Buying a franchise is a complex investment. The information in this disclosure document can help you make up your mind. More information on franchising, such as "A Consumer's Guide to Buying a Franchise " which can help you understand how to use this disclosure document, is available from the Federal Trade Commission ("FTC"). You can contact the FTC at 1-877-FTC- HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also visit the FTC's home page at www.ftc.gov for additional information. Call your state agency or visit your public library for other sources of information on franchising. There may also be laws on franchising in your state. Ask your state agencies about them. Issuance Date: April 1, 2013, as amended Soptember 16, 20132014. STATE COVER PAGE Your state may have a franchise law that requires a franchisor to register or file with a state franchise administrator before offering or selling in your state. REGISTRATION OF A FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE ' DOCUMENT. Call the state franchise administrator listed on Exhibit O for information about the franchisor, about other franchisors, or about franchising in your state. MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO RENEW. Please consider the following RISK FACTORS before you buy this franchise. RISK FACTORS: 1 EXCEPT IN MARYLAND, AND SUBJECT TO STATE STATUTE, THE FRANCHISE AGREEMENT REQUIRES THAT ALL ARBITRATION AND LEGAL PROCEEDINGS CONCERNING THE FRANCHISE AGREEMENT OR THE RELATIONSHIP BETWEEN YOU AND GREAT CLIPS BE HELD IN THE STATE OF MINNESOTA. OUT OF STATE ARBITRATION OR LEGAL PROCEEDINGS MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE OR SUE IN MINNESOTA THAN IN YOUR HOME STATE. 2 LOCAL LAW MAY SUPERSEDE CERTAIN PROVISIONS OF THE FRANCHISE AGREEMENT. CERTAIN STATES MAY ALSO REQUIRE FRANCHISORS TO MAKE ADDITIONAL DISCLOSURES RELATED TO THE INFORMATION CONTAINED IN THIS DISCLOSURE DOCUMENT. IF APPLICABLE, THESE ADDITIONAL DISCLOSURES APPEAR IN AN ADDENDUM TO THIS DISCLOSURE DOCUMENT. PLEASE REFER TO THE STATE SPECIFIC ADDENDA FOR FURTHER INFORMATION. 3 AS OF DECEMBER 31, 2W32013. OUR TOTAL LIABILITIES EXCEEDED OUR TOTAL ASSETS BY •S35.897.09235.411.655. YOU MAY WANT TO CONSIDER THIS WHEN MAKING A DECISION TO PURCHASE A FRANCHISE. 4. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE. We use the services of one or more FRANCHISE BROKERS or referral sources to assist us in selling our franchise. A franchise broker or referral source is our agent and represents us, not you. We pay this person a fee for selling our franchise or referring you to us. You should be sure to do your own investigation of the franchise. Effective Date: See the next page for state effective dates. STATE EFFECTIVE DATES EE^se-gSS^oE Washington and Wisconsin. This Franchise Disclosure Document is registered, on file or exempt from registration in the following states having franchise registration and disclosure laws, with the following ettective dates: State Effective Date California Hawaii Illinois Indiana Maryland Michigan Minnesota New York North Dakota Rhode Island South Dakota Virginia Washington Wisconsin In all other states, the effective date ofthis disclosure document is the issuance date of April 1, 2013, as amended September 16, 20132014. TABLE OF CONTENTS Ite^ 1 The Erancbisor and any Parent Predecessors and Affixes 1 2 Business Experience ^3 3 Litigation 6 4 Bankmptcy 6 5 initiaiEee ^ 67 6 OtberEees 9 7 Estimated Initiai investment ^ Restrictions on Sources ofProducts and Services 9 Prancbisee^ Obligations 19 10 Pinancing 21 11 Prancbisor^sAssistance, Advertising, Computer Systems andTraining 22 12 Territory 13 Trademarks 14 Patents, Copyrights and Proprietary Infbrmation ^38 15 Obligation to Participate in tbe Actual Operation oftbe Prancbise Business 4^38 16 Restrictions on Wbattbe Franchisee May Sell 4339 17 Rene^val,Termination, Transfer and Dispute Resolution 4440 1^ Public Figures 4544 19 Financial Perfbrmance Representations 4544 20 Outlets andFranchisee Information 5^5^ 21 Financial Statements ^59 22 Contracts ^59 23 Receipts 626^ E^hih^ts A ListofOutlets B List ofFormer Franchisees C Franchisee Organisations Creat Clips has Created, Sponsored or Endorsed 0 Independent Franchisee Associations E Financial Statements F PrancbiseAgreement C Three Star Program Agreement H Master Development Agreement 1 Stylev^are^Sof^vare Suite Agreement innovative Computer Software ^ ParticipationAgreement^StoredValue Systems, inc. ^ Lease Documents L Automated Clearing House Authorisation M Franchise Application questionnaire N StateAddenda O State Agencies and Agents ibr Service ofProcess I^ml THEFRANC^SO^ANDAN^ Franeh^or Tosimphfy^^guagem^di^o^edoeum Franchisor "Yon" means the person or entity that ^ Ciips and eaeh individuai whohas any ownership interest inthat entity. Great Giips isa Minnesota corporation that was incorporated on ^niyi^i982. Great Giips^ principal hnsiness oftiee is 4400West7^ Street, Snite700, Minneapolis, MN 55435 Great Glips has no predecessors or affiliates. Great Glips does hnsiness nnder its corporate name and the trade name and service mark GREATGLiFS® GreatGlips^ agents torservieeofproeess are disclosed in ExhihitG. Franchised Business Great Glips licenses the operation of GRFAF GLiFS^ salons, which are specialized and distinctiveretailersofhaircareandpersonal grooming products andserviees. Thefranchise descrihed inthis diselosuredocumentis alieense to developandoperateasingleGRFAT GLiFS^ husiness (the "Salon") at a designated location (the "Authorized Tocation"). The Franehise Agreement authorizes you to use the GREAT GTiFS® trade name and service mark in connection with the operation ofthe Salon and permits you to use the distinctive identity, t^^ dress, methods and system (the "System"), developedhy Great Glips for operating the Salon. Gi^ATGEiFS® salons offer consistent, Ingh^^ limited selectionof products designatedhyGreatGlips for men,womenandehildren ina distinctive retail environment. You must pay eertain fees and make certain investments, descrihed initems 5 through^ ofthis diselosuredoeument. Gther material aspectsofthe franehise are described in this disclosure document and in the Franehise Agreement included as ExhihitF,whieh will govem the relationship hetween you and Great Glips. Gertain parts of the Franchise Agreement are highlighted in iteml7. Great Glips may choose, in its sole and ahsolute discretion, to offeradevelopment agreement (the ^Master Development Agreement") to qualified individuals. lender the Master DevelopmentAgreement,youeommitto openaminimum numher of GREAT GEiFS® salons in a specified area definedhy the television Designated Market Area(the^ExelusiveDMA") within a given period of time. The numher of salons to he opened under the Master Development Agreement is determinedby Great Glips usingaformula hased upon one unit for eachlOunits in the initial Market l^nitFotential("iMl^") rounded to the nearest whol^ forthe entire Exclusive DMA. The Master Development Agreement is included as Exhibits GreatGlipsopeneditsfirstGREATGEfFS^salonin^ December 31, ^3^2^, the GREAT GEiFS® franehise System had approximately 3,^^^ ^^^^ salons opened primarily by franchisees Great dips has not o^ered in the past and dees net enrrently offer franchises in anyotherlines of hnsiness^hntmaydosointhefrttnre. Asof Deeemher31,^31^201^