Item
1
THE
FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES
The
Franchisor any Parents, Predecessors and Affiliates
The Franchisor is Knockouts
LLC, a Texas limited liability company and is referred to in this Franchise
Disclosure Document as "Knockouts," "we," "us,"
or "our." We refer to the person �r entity that will be signing
the Franchise Agreement (defined below) as "you," "your,"
or "franchisee." If you are a corporation, limited liability company,
partnership or any type of legal entity, the provisions of the agreements
described in this Franchise Disclosure Document also apply to your owners by
virtue of our requirement that all owners personally guaranty, and be
personally bound by, your obligations under the agreements.
We were initially formed as a Texas limited
partnership on August 22, 2002. On December 31, 2007, as part of a corporate
reorganization, we converted to a Texas limited liability company and changed
our name to Knockouts, LLC. As part of the same reorganization, we merged with
our former general partner, Knockouts Management Company LLC ("Knockouts
Management"), and emerged as1 the surviving entity. We
currently do business only under the name Knockouts LLC. We maintain our
principal business address at 605 N. MacArthur Blvd., Suite 1100, Irving, Texas 75038. Our agents for service of process are identified in Exhibit 3
to this Franchise Disclosure Document. Prior to the merger, Knockouts
Management maintained its principal business offices at 5605 N. MacArthur Blvd.
Suite 1100, Irving, Texas 75038.
We grant franchises for
KNOCKOUTS� hair salons, hair salons that operate under the mark
"Knockouts" and the additional principal service marks, trademarks,
trade names, logos, emblems and indicia or origin identified in Item 13 of this
Franchise Disclosure Document Marks. We have been offering franchises of the
type described in this Franchise Disclosure Document since August 2004, and
have never offered franchises in any other line of business. We have never
operated a business of the type that you will operate, but Knockouts Management
operated a similar business from October 2003 through September 2004. We also
grant Master Franchises for KNOCKOUTS� in the United States under a separate
disclosure document.
Description
of Franchise
We franchise the operation of
salons offering haircuts, hair coloring, waxing, massage therapy, manicures and
pedicures, as well as other related grooming services to both men and women,
and also offer children''s haircuts. The Salons also sell hair care, grooming
and other related products.
Our Salons operate under trade
name and service mark "KNOCKOUTS�" and other service marks,
trademarks, trade names, logos, emblems and indicia of origin that we designate
to identify Salons ("our "Marks"). See Item 13 for more information
about our Marks.
If we award you a franchise,
you will operate a KNOCKOUTS� salon ("Salon") according to our
proprietary business format and system ("System"). Our System
includes distinctive signage, interior and exterior design, decor, color
scheme, furnishings and fixtures; distinctive products and services; employee
selection practices; employee uniforms and dress codes; uniform standards,
specifications and procedures for operations; quality and uniformity of
products and services offered; inventory, management and financial control
procedures (including point of purchase and tracking systems); training and
assistance; and advertising and promotional programs; all of which we may
change, improve and further develop, at our discretion.
You will operate the Salon
according to the terms and conditions of our franchise agreement (See Exhibit
A), and our standards, specifications, policies and procedures, which we will
disclose to you in our confidential operations manual (collectively referred to
as our "Manual"). See Item 11.
If we award you area
development rights, you will sign our area development agreement (see Exhibit
B), which will give you the right to develop multiple Salons in a mutually
agreed on development area, according to an agreed on development schedule. Each
Salon developed under the Area Development Agreement will be governed by a
separate franchise agreement. The Franchise Agreement for the first Salon
developed under the Area Development Agreement will be the form attached as Exhibit
1. Each subsequent Salon will be governed according to our then-current
form of franchise agreement, which may be different from our current form.
Competition
The market for the hair care
services offered by the Salons is highly competitive. You will offer services
to men, women and children, and believe that the men''s segment of the hair care
industry represents a growth industry that is still developing. Your Salons
will compete with other independently-;Qwned and franchised businesses offering
similar services, such as salons, day spas and barber shops. We anticipate that
you will compete in price primarily with mid-market salon segment, and to a
lesser extent the low cost hair cutteries.
Industry
Regulations
The Salon''s stylists and
massage therapists must be licensed in the state in which the Salon is located
by the appropriate licensing authorities. There will be industry-specific
regulations in your municipality, county or state relating to the operation of
a hair care salon. Health and sanitation regulations will require that your
stylists maintain their haircutting equipment according to specified standards,
including following proper sanitizing and hair disposal procedures.
Environmental laws may regulate the way in which certain solutions are used,
stored and disposed of in the process of providing services to your customers.
Building codes may require special ventilation in your Salon.
Among the licenses and permits
you may need include zoning or land use approvals, Sunday sale permits, ^ sales
and use tax permits, special tax stamps, fire department permits, health
permits, alarm permits, county occupational permits, retail sales licenses and
wastewater discharge permits. There may be other laws, rules or regulations
that affect your Salon, including ADA, OSHA and EPA considerations.
You must also comply with
applicable employment laws, including federal and state discrimination laws,
minimum wage, and other laws and regulations that apply to businesses
generally. If your Salon will offer beer, you may be required to obtain a
liquor or beer and wine license, or you may be able to avoid licensing
requirements by offering it on a complimentary basis. Zoning regulations also
may prohibit or restrict your sale or dissemination of alcoholic beverages. We
strongly recommend that you consult with your own counsel concerning federal,
state and local employment and liquor laws before you decide to purchase a
franchise.
You are responsible for
knowing and complying with all laws and licensing requirements related to the
operation of your Salon. We recommend that you consult with your attorney for
an understanding of them.
