PIGTAILS AND CREWCUTS - FDD UFOC ITEM 1 Detail

ITEM 1

1-¹⁵³THE "^RANCHIS''OR''^rHFS PREDECESSOR¹⁵⁶ AND ANY PARENTS. PREDECESSORS¹⁵⁷ AND AFFILIATES¹⁵⁸

The franchisor is Pigtails & Crewcuts Franchise, LLC. This Offering Circularⁱ⁵⁹To simplify the language in this disclosure document, the franchisor will be referred to in this disclosure document will refer to Pigtails & Crewouts Franchise, LLC as "we", "us", "our" or "Company". This Offering Circular will refer to the person or entity that buys the franchise from us^{1 2}The person (or persons! who signs a franchise agreement with us will be referred tQ in this disclosure document¹⁶³ as "you" or "your", and this term lnefades¹⁶⁴also applies_ta¹⁶⁵ your partners if you are a partnership, your members if you are a limited liability company, or your shareholders if you are a corporation and to certain other partners involved in vour business like guarantors, managers and operators

The Franchisor¹⁶⁷

Pigtails & Crewcuts Franchise, LLC is a Georgia limited liability company that was organized on December 18, 2002, although it did not transact any business until after the Acquisition (sec bolow1.ⁱ⁶⁸2 0 02.¹⁶⁹ Our corporate address is 1100 Old Ellis Road, Suite 1200, Roswell, Georgia 30076 and our telephone number is (770) 752-6800. Our agents for service of process are disclosed on Exhibit A to this Offering Circular. ^I70,^m

Our History¹⁷²

The first Pigtails & Crewcuts salon was opened in August 2002 in Atlanta, Georgia by Adair Johnston Enterprises, LLC f/k/a Pigtails & Crewcuts, LLC, a Georgia limited liability company ("Adair Johnston") with a principal business address of 3208 Paces Ferry Place,

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Atlanta, Georgia 30305. The Pigtails & Crewcuts salon was designed as a children''s specialty hair salon ¹⁷⁴that offers children''s haircuts, up dos, nail and toe polishes, and which also sells novelties, gifts, and cosmetic and private label hair care products for children. ¹⁷⁵In December 2002, one of the owners of Adair Johnston decided to franchise the Pigtails & Crewcuts salon concept. To do so, we-wefe''⁷⁶Pigtails & Crewcuts Franchise. LLC¹⁷⁷_T was¹⁷⁸ formed, and Adair Johnston assigned to us all right, title and interest in and to the trademarks, service marks, logotypes and commercial symbols associated with Pigtails & Crewcuts salons (see Item 13 of this Offering Circular). Subsequently, however, our owners postponed plans to franchise the Pigtails & Crewcuts salon (the "Salon") and we were dormant until the acquisition described be4ew¹⁷⁹Disclosure Document)¹⁸⁰. Our only predecessor is Adair Johnston. Adair Johnston never operated any other type of business (franchise or otherwise). We have never operated a Salon nor have we operated any other type of business (franchise or otherwise).¹⁸¹

In November 2003, our owners abandoned their plans to own and operate the franchise 3y3tem the Pigtails & Crewcuts concent . Instead, our owners wanted to concentrate on growing the number of Salons they operated. To facilitate that decision, on November 6, 2003, all of our membership interests were sold to BCC Holdings, LLC, a Georgia limited liability company, which was organized on September 18, 2003 solely to acquire the¹⁸⁵all of our'' ⁶ membership interests (the "Acquisition"). The purpose of the Acquisition was to allow new parties to concentrate on franchising the Pigtails & Crewcuts salon concept. As part of the Acquisition, we entered into a development agreement with Bewildered, LLC, a limited liability company controlled by one of our former owners, for the development of 20 Salons and in December 2005, BCC Holdings transferred all ownership interests in us to its members_s¹⁸⁷ who are now our owners. As a result of the Acquisition, the Pigtails & Crewcuts Salon operated by ¹⁸⁸Adair Johnston^sjdoji¹⁸⁹ was converted to a franchised location and in December 2005, Adair Johnston transferred its Pigtails & Crewcuts Salon to a now Pigtails & Crewouts franchisee.

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The Franchise¹⁹²

W� grant franchises for the operation of a distinctive¹⁹³ children''s specialty hair salon ¹⁹⁴rthe "Pigtails & Crewcuts SalonlsV or the "SalonfsV''L Neither we nor any of OUT Owners or officers own and operate a Salon. We have not operated anv other type of business (franchise or otherwise). We have not offered franchises in any other line of business. ^t95We have no affiliates that have offered franchises for- in this business or any other line of business or that provide¹⁹⁹. No affiliate provides²⁰⁰ any services or products to the franchise system²⁰''pur franchisees²⁰ .

You will he required to operate vour Salon in accordance with the Franchise Agreement (Exhibit G) and OUT standards and specifications. Our franchise includes the right to perform all services and offer all products offered by or through Pigtails & Crewcuts Salons, including haircutting, nail and toe polishes, up-dos, novelties, gifts, customized birthday ²⁰⁴parties, and the sale of cosmetic and private label hair care products for children. In connection with our Salon concept, we have developed and designed various customized hair care products which we sell not only under the Pigtails & Crewcuts brand but also under other brands we may create and develop.

A typical Pigtails & Crewcuts Salon occupies approximately 1,200 to 1,800 square feet of space that may be either owned by you or leased from a third party. All Pigtails & Crewcuts Salons are constructed to our specifications as to size, layout, decor, and the like. A typical Salon has 4 styling chairs for children and 2 regular barber chairs, however, each Salon must have at least 3 children''s chairs and 2 regular barber chairs. A Pigtails & Crewcuts Salon may be either a freestanding building or an in-line retail plaza space, but, in any event, ample parking, good visibility and availability of prominent signage is a necessity.

Wo have created the Pigtails & Crowcuts²⁰⁵By operating a Salon, vou have access to the elements of our²⁰⁶ franchise system that includos²⁰⁷like²⁰⁸ the common use and promotion of the "PIGTAILS & CREWCUTS" trade name and other trademarks, trade names, service marks, logotypes, and other commercial symbols we designate (collectively, the "Marks"), procedures for inventory and management control, training, advertising, promotional programs and ongoing assistance. At any time, we may add or delete products and/or services, and you must follow suit. The Pigtails & Crewcuts Salons use the method of operation, products, concept, format, style and trade secrets developed, adopted, and approved by us. You will operate a Pigtails & Crewcuts Salon as an independent business utilizing the Marks, business concepts, support, guidance and materials developed by us. You will offer and provide products and services to the general public under the terms and conditions contained within the Pigtails &

Crowouts ²⁰⁹Franchise Agreement (the "Franohisc Agreement") (Exhibit G to this Offering Circular)²¹⁰ and our confidential operations manual (the "Operations Manual") that will be loaned to you at the time of training. You may not ²¹¹offer ne-²¹²other services or products without our prior written approval. A franchisee should²¹³

We expect prospective franchisees to²¹⁴ have a minimum net worth of $150,000.

Pigtails & Crowouts franchisees compete primarily with single-owner salons and salons and haircutting chains that perform traditional harboring and hair styling and related services. The target market for the services and products offered at Pigtails & Crowouts Salons is individuals of both sexes from age 1 through age 12. The hair salon business is very competitive whioh i3 often driven by fierce price competition, however, we believe that we have created a niche market²¹⁶ with the Pigtails & Crowouts system²¹⁷ by creating a specialty salon with a unique trade dress and appearanec which is designed to cater to the needs of young children and their parents that will be ²¹⁸casily ^distinguishable from other hair salons.²²⁰ An individual may own a franchise for investment purposes provided he or she successfully completes training and has a full-time manager who also successfully completes training. Prior business management experience is vital for new franchisees, and prior salon management experience is highly desirable. Prior business ownership experience also is highly desirable.

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Competition

YpJl Will²²² compete primarily with single-owner salons and salons and haircutting chains that perform traditional barbering and hair styling and related services. The target market for the services and products offered at Pigtails & Crewcuts Salons is individuals of both sexes from age 1 through age 12. The hair salon business is very competitive which is often driven bv fierce price competition, however, we believe that we have created a niche market ² bv creating a specialty salon with a unique trade dress and appearance which is designed to cater to the needs of voung children and their parents that will be�� distinguishable from other hair salons.²²⁵

Industry-Specific Regulations²²⁶

In addition to laws and regulations²²⁷You must comply a number of federal, state and local laws²²⁸ that apply to establishing and operating businesses generally, the Pigtails & Crewout3 franchises arc subject to various . Additionally, you must comnly with industry-specific²³¹ federal, state and local government rcgulatiefts²³²lawj&,²³³ including those relating to licensing of hair stylists and site location as well as public health and safety codes and ordinances. You must acknowledge in the Franchise Agreement that you will keep apprised of, and comply with, all applicable laws, including the Americans with Disabilities Act, as amended. Many laws vary from jurisdiction to jurisdiction. We encourage you to inquire about the laws, regulations and ordinances which affect the operation of your Salon.