ITEMI
THE FRANCHISOR. AND ANY PARENTS,
PREDECESSORS. AND AFFILIATES
The Franchisor
The Snip-its Franchise Company, LLC ("us",
"our" or "we")
is the
franchisor.
We are a Massachusetts limited
liability company, and we were incorporated on January 29, 2003. We maintain
our principal place of business at 1085 Worcester Road, Natick, Massachusetts 01760. We do not maintain sales offices at any location other than our
principal place of business. We conduct business under the name and mark
"Snip-its", and we do not conduct business under any other name.
We franchise the right to
operate a Snip-its Salon (the "Salon"), which is a hair cutting and
hair care salon and business that focuses on children, and is described below
in greater detail. We began to offer such franchises in the second quarter of
2003. We do not offer any franchises other than as described in this Disclosure
Document, and we do not engage in any business activity other than such
franchising activities and the operation of salons using the
"Snip-its" name and mark.
Our Parent. Predecessors and
Affiliates
We do not have any predecessors.
Our parent company is The
Snip-its Corporation (the "Parent"). The Parent is a Massachusetts corporation, and was incorporated on December 3, 1996. The Parent maintains
its principal place of business at 1085 Worcester Road, Natick, Massachusetts 01760.
The Parent currently owns and
operates one Snip-its Salon (see Item 20 for details). The Parent has owned and
operated Snip-its Salons since its inception, and operated five Snip-its Salons
when we began offering franchises in 2003; however, Snip-its Salons have been
operating since 1995, and the entities that created the concept were formed in
1992. The first Snip-its Salon opened in 1995 (the "Framingham Salon"), and was owned by an affiliate
of the Parent, Snip-its, L.P. ("Snip-its, L.P."). Snip-its, L.P. was formed on
August 30, 1995 for the purpose of operating the Framingham Salon. Snip-its,
L.P.''s general partner and predecessor was Snip-its, Inc. ("Snip-its,
Inc.")> which was formed on August 3, 1992. When the Parent was formed in 1996,
the Framingham Salon was transferred to the Parent, and Snip-its, L.P. and
Snip-its, Inc. were dissolved.
The Parent also may offer and
sell products (such as video games, music, and other entertainment-oriented
products that will be used at, or sold at, the Snip-its Salons) to franchisees
(see Item 8 for details). The Parent does not and has not in the past offered
franchises in our or any other line of business.
The Franchise Offered
Franchise Agreement
We will offer to enter into
franchise agreements ("Franchise Agreements") with qualified entities and
persons ("you")
that wish
to establish and operate a Snip-its Salon. (In this disclosure document,
"you" means the person or legal entity with whom we enter into an
agreement. The term "you" also refers to the direct and indirect
owners of a corporation, partnership, limited liability company, or limited
liability partnership that signs a Franchise Agreement as the
"franchisee".) The form of Franchise Agreement that we intend to
offer to you should you and we mutually agree to enter into a franchise
relationship is attached to this Disclosure Document as Exhibit A.
Under a Franchise Agreement, we
will grant you the right (and you will accept the obligation) to operate a
Salon at an agreed-upon specified location (the "Approved Location").
If, at the
time you enter into the Franchise Agreement, you do not have an Approved
Location, you must lease, sublease, or acquire a site for the location of the
Salon, subject to our approval, in accordance with the site selection addendum
("Site Selection Addendum") which is attached to the Franchise
Agreement as Exhibit B. The procedures for finding, selecting and receiving
authorization for a site under the Site Selection Addendum are described in
Item 11 of this Disclosure Document. As described below in Item 12, the
Franchise Agreement will establish a geographic area within which your Salon
will be located (the "Territory"). Item 12 of this Disclosure
Document, and the Franchise Agreement, will describe the rights that you and we
will have with respect to the Territory.
Area Development Agreement
We also may offer an area
development agreement (the "Development Agreement") to qualified entities and
persons ("you"
or the "Developer"). The Development Agreement
grants the right to establish and operate a specified number of Snip-its Salons
in a specified area (the "Development Area") at specific locations to be
designated in separate Franchise Agreements. The form of Development Agreement
that we intend to offer is attached to this Disclosure Document as Exhibit B.
If you sign a Development
Agreement, you must open each Snip-its Salon in accordance with the schedule
for developing Snip-its Salons described in Exhibit A to the Development
Agreement (the "Development Schedule"). The Developer must exercise
each development right by executing a Franchise Agreement for the establishment
and operation of a Snip-its Salon.
The number of Snip-its Salons
to be established under the Development Schedule will be mutually determined by
you and us. During the term of the Development Schedule you must operate and
maintain at least the number of Snip-its Salons which are required to be
established according to the terms of the Development Schedule.
Snip-its Salons
We own a format and system (the
"System")
relating to
the establishment and operation of branded entertainment hair care salon
businesses ("Snip-its
Salons") focusing on the specific hair care and entertainment (including birthday
party) needs of children, operating in buildings that bear our custom interior
and exterior trade dress, under the "Snip-its" name and marks.
Snip-its Salons focus on the details of creating an exciting and adventurous
store experience and delivering high-quality, consistent haircuts to children.
The distinguishing characteristics of the System include a specially-designed
building or facility for hair care and entertainment (including birthday party)
operations, with specially developed equipment, equipment layouts, and signage;
distinctive interior and exterior design, trade dress and accessories; unique
proprietary animated cartoon characters (the "Characters"); proprietary computer games;
specialized proprietary hair care products, including, without limitation,
shampoos, conditioners and styling aids ("Proprietary Products," further described below), and
non-proprietary products; procedures for operations; quality and uniformity of
products and services offered; procedures for management and inventory control;
a proprietary, point-of-sale, management and marketing computer system;
training and assistance; and advertising and promotional programs. Snip-its
Salons typically will be located in a covered mall, uncovered shopping center,
or strip shopping center, in either urban or suburban areas.
We identify the System by means
of certain trade names, service marks, trademarks, logos, emblems, and indicia
of origin, including but not limited to the mark "Snip-its", and such
other trade names, service marks, and trademarks (the "Proprietary Marks"),
as are now
designated (and may in the future be designated by us in writing) for use in
connection with the System.
You must operate your Salon in
accordance with our standards and procedures, as set out in our Confidential
Operating Manual (the "Manual"). We will lend you a copy of the
Manual for the duration of the Franchise Agreement. In addition, we will grant
you the right to use the Proprietary Marks that we designate in writing for use
with the System. We may periodically change and improve parts of the System.
The Proprietary Products are a
complete line of haircare products designed and formulated just for children.
We created each of the all-natural, tear-free, irritant-free, and alcohol-free
products to be ultra-gentle for children''s sensitive skin and eyes with
soothing botanical extracts and sunscreen. We feature tearless shampoos and
bodywashes in selected flavors, as well as other specialty shampoos,
conditioning products, and styling aids.
Industry-Specific
Regulations
You must comply with all local,
state, and federal laws that apply to your Salon operations, including for
example health, sanitation, no-smoking, EEOC, OSHA, discrimination, employment,
and sexual harassment laws. The Americans with Disability Act of 1990 requires
readily accessible accommodation for disabled persons and therefore may affect
your building construction, site elements, entrance ramps, doors, seating,
bathrooms, etc. You must obtain real estate permits (e.g., zoning), real estate licenses,
and operational licenses. In some states, there are also regulations
promulgated or enforced by a cosmetology board or similar entity that pertain
to hair cutting and other activities in connection with the operation of the Salon.
You and your hair stylists and other employees must comply with all such
cosmetology laws and similar laws and regulations, as well as applicable
federal, state, and local laws and regulations in connection with the operation
of your Salon. Other than cosmetology-, related regulations, we are not aware
of any federal or state laws or regulations that pertain to your operation of
your Salon. You should consult with your attorney concerning those and other
local laws and ordinances that may affect your Salon''s operation.
Competition
The hair care industry is
highly competitive, but also fragmented, and the vast majority of hair care
salons are independently owned and operated. You may compete with hair cutting
businesses that provide service to all age groups, which businesses may be
national, regional, and local chains as well as independently owned and
operating salons. You can also expect to compete in your market with
locally-owned businesses, as well as national and regional chains that focus
exclusively on the children''s market segment of the hair cutting industry.
Children''s hair care salon concepts compete on the basis of many factors, such
as price, service, quality and appeal of products and the retail experience,
location, promotions and marketing programs.
