ITEM 1
THE FRANCHISOR, AND ANY
PARENTS, PREDECESSORS, AND AFFILIATES
This Disclosure Document
describes Shoebox franchises. To simplify the language in this Disclosure
Document, "we,"
"us," "our," or "SBF" means Shoe Box Franchising, LLC, the franchisor. "You,"
"your," or "Franchisee"
means the
purchaser of a franchise. If the purchaser of a franchise is a partnership,
corporation, limited liability company, or any other type of entity
(collectively, an "Entity"), "you" means both the purchaser and
its partners, shareholders, members, or other equity owners.
SBF is a Delaware limited
liability company that was formed on August 16, 2007. SBF does not do business
under any name other than Shoebox or Shoebox New York. SBF''s principal place of
business address is 1346 Oakbrook Drive, Suite 170, Norcross, Georgia 30093. To the extent that we have designated agents for service of process in other states,
they are listed in Exhibit I. We do not operate businesses similar to the franchises
being offered in this Disclosure Document. We began offering Shoebox franchises
in February 2008, and have never offered any other franchises in any other line
of business.
For your convenience, a
corporate structure chart containing a graphic depiction of the relationships
among SBF and our parent and affiliates is attached as Exhibit F to this Disclosure Document.
The following narrative describes the relationships on the chart.
SBF is a wholly-owned
subsidiary of Shoe Box Franchise Brands, LLC ("SB Brands"), a Delaware limited liability company.
SB Brands owns the intellectual property rights to the Shoebox concept, and has
licensed us the right to use and sublicense the Shoebox concept under a Master
License Agreement dated January 15, 2008. SB Brands is a wholly-owned
subsidiary of Shoe Box Holdings, LLC ("SB Holdings"), a Delaware limited liability
company. The principal place of business of SB Brands and SB Holdings is 1330
Avenue of the Americas, 34th Floor, New York, NY 10019.
Shoebox Brand and Marketing
Fund, LLC ("SB
Fund"), a
Delaware limited liability company, is our sole subsidiary and shares our
principal place of business. SB Fund''s sole purpose is to hold the
contributions to our Marketing Fund (described in Item 11). SB Fund does not conduct any
active business.
SB Holdings is a majority-owned indirect subsidiary of
NexCen Brands, Inc. ("NexCen Brands"), a Delaware corporation. NexCen
Brands has a principal place of business at 1330 . Avenue of The Americas, 40th Floor, New York, New York 10019.
SB Holdings is a joint venture
(and jointly owned) between NexCen Brands, VCS Group, LLC, a Delaware limited
liability company ("Camuto"), and TSBI Holdings, LLC, a New York limited liability
company ("TSBI").
However,
NexCen Brands controls the majority of voting rights in the joint venture. SB
Holdings acquired the intellectual property rights to the Shoebox concept from
TSBI on January 15, 2008, and contributed the acquired assets to SB Brands.
Our predecessor, TSBI, and its
subsidiaries have operated stores similar to the Shoebox franchises under the
mark "THE SHOE BOX" and "SHOE BOX" since 1954. TSBI''s
principal place of business is 419 South Oyster Bay Road, Plainview, New York 11803. On January 15, 2008, we entered into a License Agreement with TSBI granting
TSBI the right to continue to operate THE SHOE BOX stores it was then operating
and to continue to develop new stores. TSBI and its subsidiaries currently own
and operate nine stores under THE SHOE BOX mark. We refer to these stores as "Predecessor-Owned
Stores."
NexCen Brands, SB Fund, SB
Brands, SB Holdings, and TSBI (i) do not own or operate any franchises like the
franchise that we are offering to you, (ii) have never offered franchises in any line of business,
and (iii) have never provided franchise
support services to franchisees.
Athlete''s Foot Brands, LLC ("AFB"), a Delaware limited liability
company and a wholly-owned subsidiary of NexCen Brands, franchises the right to
operate specialty athletic footwear and footwear accessory products stores
under the trademark and service mark THE ATHLETE''S FOOT� (the "Athlete''s Foot
Stores"). The principal business address of AFB is 1346 Oakbrook Drive, Suite 170,
Norcross, Georgia 30093. As of December 31, 2007, there were 221 franchised
Athlete''s Foot Stores in operation in the United States. Athlete''s Foot Store
franchises have been offered by AFB''s predecessors since 1972. AFB does not own
or operate any other types of franchises, including franchises similar to the
Shoebox concept.
GAC Franchising, LLC ("GAC"), a Delaware limited liability
company and an indirect, wholly-owned subsidiary of NexCen Brands, franchises
the right to operate specialty ice cream stores under the trademark and service
marks GREAT AMERICAN COOKIES� (the "Great American Cookies Stores"). The principal business address
of GAC is 1346 Oakbrook Drive, Suite 170, Norcross, Georgia 30093. As of
January 5, 2008, there were 286 franchised Great American Cookies Stores in
operation in the United States. Great American Cookies Store franchises have
been offered since 1977 and by GAC since February 2008. GAC does not own or
operate any other types of franchises, including franchises similar to the
Shoebox concept.
MaggieMoo''s Franchising, LLC ("MMF"), a Delaware limited liability
company and an indirect, wholly-owned subsidiary of NexCen Brands, franchises
the right to operate specialty ice cream stores under the trademark and service
marks MAGGIEMOO''S� and MAGGIEMOO''S ICE CREAM TREATERY� (the "MaggieMoo''s
Stores"). The principal business address of MMF is 1346 Oakbrook Drive, Suite 170,
Norcross, Georgia 30093. As of December 31, 2007, there were 183 franchised
MaggieMoo''s Stores in operation in the United States. MaggieMoo''s Stores
franchises have been offered since 1989 and by MMF since March 2007. MMF does
not own or operate any other types of franchises, including franchises similar
to the Shoebox concept.
Marble Slab Franchising, LLC,
a Delaware limited liability company and an indirect, wholly-owned subsidiary of
NexCen Brands ("MSF"), franchises the right to operate specialty ice cream
stores under the trademark and service mark MARBLE SLAB CREAMERY� (the "Marble Slab
Stores"). The principal business address of MSF is 1346 Oakbrook Drive, Suite 170,
Norcross, Georgia 30093. As of December 31, 2007, there were 341 franchised
Marble Slab Stores in operation in the United States. Franchised Marble Slab
Stores have been offered since 1986 and by MSF since March 2007. MSF does not
own or operate any other types of franchises, including franchises similar to
the Shoebox concept.
PM Franchising, LLC, a Delaware limited liability company and an indirect, wholly-owned subsidiary of NexCen
Brands ("PMF"),
franchises
the right to operate specialty pretzel stores under the trademark and service
mark PRETZELMAKER� ("PretzelMaker Stores"). The principal business address
of PMF is 1346 Oakbrook Drive, Suite 170, Norcross, Georgia 30093. As of
December 31, 2007, there were 128 franchised PretzelMaker Stores in operation
in the United States. PretzelMaker Stores franchises have been offered since
1992 and by PMF since August 2007. PMF does not own or operate any other types
of franchises, including franchises similar to the Shoebox concept.
PT Franchising, LLC, a Delaware limited liability company and an indirect, wholly-owned subsidiary of NexCen
Brands ("PTF"),
franchises
the right to operate specialty pretzel stores under the trademark and service
mark PRETZEL TIME� ("Pretzel Time Stores"). The principal business address
of PTF is 1346 Oakbrook Drive, Suite 170, Norcross, Georgia 30093. As of
December 31, 2007, there were 167 franchised Pretzel Time Stores in operation.
Pretzel Time Stores franchises have been offered since 1992 and by PTF since
August 2007. PTF does not own or operate any other types of franchises,
including franchises similar to the Shoebox concept.
Bill Blass International LLC,
a Delaware limited liability company and an indirect, wholly-owned subsidiary
of NexCen Brands ("BBI"), manufactures and licenses apparel, footwear, and
accessories under the trademark and service mark BILL BLASS� and other related
marks. The principal business address of BBI is 1330 Avenue of the Americas, 34th Floor, New York, NY 10019. It is anticipated that BBI will license its marks to
approved suppliers who may provide products to Shoebox franchisees under the
BILL BLASS mark. BBI (i) does not own or operate any franchises like the
franchise that we are offering to you, (ii) has never offered franchises in any
line of business, and (iii) except as provided above, has never provided any other
franchise support services to franchisees.
NexCen Franchise Management,
Inc. ("NexCen
Management"), a Delaware corporation and a wholly-owned subsidiary
of NexCen Brands, manages our franchise operations pursuant to a Management
Agreement dated January 15, 2008 (the "Management Agreement"). The principal business address
of NexCen Management is 1346 Oakbrook Drive, Suite 170, Norcross, Georgia 30093. NexCen Management participates with us, AFB, GAC, MMF, MSF, PMF, and PTF in
establishing franchise stores for each concept by providing the sales,
marketing, administration, training and support services to be provided under
the franchise agreements that each franchisor enters into with its franchisees.
NexCen Management''s role with each entity is limited to acting as the franchise
manager and providing the services described above. All licensing of the
trademarks, service marks, trade dress and other intellectual property rights
and all other aspects of the franchise relationship are the responsibility of
us, AFB, GAC, MMF, MSF, PMF, and PTF for each of the respective concepts.
NexCen Management does not own or operate any franchises like the Shoebox
franchise and has never offered franchises in any line of business.
The Shoebox Franchise
We are offering, under the
terms of this Disclosure Document, the opportunity to become a franchisee to
develop and operate Stores. Stores specialize in selling better footwear, handbags,
and accessories. Stores operate under the marks SHOEBOX, SHOEBOX NEW YORK, and
certain other trademarks, service marks, trade names, signs, associated
designs, artwork, and logos (collectively, the "Marks"). We may designate other trade
names, service marks, and trademarks as Marks. Stores will range in size from
1,000 to 3,000 square feet and may be located in storefronts, strip shopping
centers, or regional malls.
Stores operate under a
prescribed system of specifications and operating procedures that we, our
affiliates, and our predecessor have developed and will continue to develop
(the "System").
The
distinguishing characteristics of the System include, but are not limited to,
our store designs, layouts, and identification schemes (collectively, the "Trade Dress"); our proprietary operations
manuals (the "Manuals");
our
specifications for equipment, inventory, and accessories; our merchandising and
fashion expertise; our relationships with vendors; our software and computer
programs; and the accumulated experience reflected in our training program,
operating procedures, customer service standards methods, and marketing
techniques. We change, improve, add to, and further develop the elements of the
System from time to time. We describe our mandatory and suggested
specifications and procedures in our Manuals.
Single Store Program
Under the single store
program, you may purchase a Shoebox franchise ("Franchise") to develop and operate one
Store at a mutually agreed upon site (the "Site") within a general area ("Site Selection
Area") that
we will specify in the Franchise Agreement that we and you will execute (the "Franchise
Agreement"). Our current form of Franchise Agreement is included as Exhibit A to this Disclosure Document.
Unless you sign an Area Development Agreement, you have no obligation, nor any
right, to open any additional Stores. Under the Franchise Agreement, you will
have no right to use the Marks or the System at any location other than the
Site or to use the Marks or the System in any wholesale, e-commerce, or other
channel of distribution other than the retail operation of the Store at the
Site. SBF has the right to use, or license the use of, the Mark, or any other
trademark or service mark in the designated area of responsibility. See Item
12.
We require you to purchase a
minimum value of inventory at the opening of your Store, and to maintain a
certain minimum value of inventory in your Store throughout the term of your
Franchise Agreement. We will establish your minimum inventory requirements once
you have selected and secured a Site that we have accepted. We may increase the
minimum inventory requirements upon 30 days prior written notice to you no more
than once per 12-month period. However, unless the Net Sales in your Store increased
by 50% or more over the previous year''s total, we may not increase your minimum
inventory requirements by more than 20% of the previous year''s requirements.
Area Development Program
In addition, for qualified
franchisees who desire the right to develop multiple Stores within a designated
territory ("Territory")
that meets
certain conditions, we also offer the opportunity to enter into an Area
Development Agreement with us (the "Area Development Agreement") to develop a mutually agreed
upon number of Stores in accordance with a development schedule specified in
the Area Development Agreement (the "Development Schedule"). We may, in our sole
discretion, agree to allow you to satisfy your development obligations by
referring to us prospective franchisees. The number of Stores to be opened in
your Territory will be dependent upon a number of factors such as population
density, demographic data, the number of potential locations for stores, and
the presence of competition (the "Development Criteria"). If the Area Development
Agreement provides you with exclusive rights to your Territory, we may not
open, nor permit others to open, Stores operating under the Marks in the
Territory for as long as the Area Development Agreement is in effect. Our
current form of Area Development Agreement is included as Exhibit B to this Disclosure Document.
As each Store
is opened, you will sign our then-current form of Franchise Agreement for each
Store. If you fail to open the required number of Stores on the mutually agreed
Development Schedule, we will have the right to terminate the Area Development
Agreement. If the Area Development Agreement is terminated, you will lose all
of your rights to develop the Territory and the initial fees paid for any
stores for which Franchise Agreements have not been signed. However, the
Franchise Agreement for each Store which has been opened will not be terminated
solely by reason of the termination of the Area Development Agreement.
Management Agreement
We have entered into a
Management Agreement which provides that NexCen Management will perform all of
the franchise sales, marketing, administration, training, and support services
required under our Franchise Agreements and Area Development Agreements with
our franchisees. We remain responsible for all licensing of the trademarks,
service marks, trade names and other intellectual property rights and all other
aspects of the franchise relationship. Except as set forth in the previous
sentence, NexCen Management may perform any and all of our obligations and may
exercise any or all of our rights on our behalf, but we remain ultimately
responsible for all of our duties and obligations under any of our agreements
with you. The Management Agreement was negotiated at arms-length and requires
us to compensate NexCen Management for its services. If the Management
Agreement expires or is terminated, we will perform our obligations under our
agreements or appoint a new manager to do so.
Market and Competition
The market for footwear,
handbags, and related accessories is mature and is competitive. Your
competitors include other specialty retail footwear and/or handbag stores,
department stores, boutiques, e-tailers and other national and regional chains
that sell footwear, handbags, and accessories. You may have to compete in close
proximity with other footwear and/or handbag retailers.
Industry-Specific
Regulations
There are no laws or
regulations that are specific to the operation of specialty retail footwear
stores. However, you will have to comply with laws and regulations that are
applicable to business generally (such as workers'' compensation, OSHA, and Americans with
Disabilities Act requirements). Federal, state and local governmental laws,
ordinances and regulations periodically change. It will be your responsibility
to ascertain and comply with all federal, state and local governmental
requirements. We do not assume any responsibility for advising you on these
regulatory matters. You should consult with your attorney about laws and
regulations that may affect your Store.
