Cost Cutters

What are the specific details of the 11 litigation cases initiated against Cost Cutters over the past 3 years, and what are the allegations or claims involved?

Can you provide information on the 1 pending litigation case, including the nature of the claim and expected timeline for resolution?

Why has the franchise system contracted from 521 units 3 years ago to 405 units currently? What are the primary reasons for closures?

The closure rate of 29% in the past year is unusually high—can you explain the circumstances behind the 134 closures in 2025?

What distinguishes the 41 franchisor-initiated terminations in 2025 from previous years, and what were the primary causes?

Gross sales averages ($279,898) are approximately 38% below the typical range for beauty franchises—are these figures representative of unit performance across the system, or are there significant variations by location?

Given the low transfer rate of 3.9%, why are franchisees not transferring their units rather than closing them, and does this indicate difficulty in finding buyers?

Can you clarify the minimum weekly fee requirement of $100 and how this obligation operates during periods of low sales or seasonal downturns?

The advertising fund rate of 4.0% exceeds typical rates—how is this fund allocated, and can you provide documentation of expenditures and return on investment for franchisees?

Why is the transfer fee set at $2,500, which is significantly lower than typical industry ranges, and does this affect the resale value of franchised units?

What specific support and training were provided to the franchisees who closed or were terminated, and how has the support program changed in response to recent closures?

The non-compete clause specifies 2 years and 6 miles—are former franchisees challenging these restrictions, and are any of the litigation cases related to non-compete enforcement?

With a 15-year initial term and 15-year renewal option, how many franchisees have successfully renewed, and what percentage choose not to renew?

Since territory is non-exclusive with no encroachment protection, are franchisees competing with other Cost Cutters units or company-owned locations in their markets, and has this been a factor in closures?

Can you provide an Item 19 financial performance statement breakdown by location type, age of unit, and geographic region to help assess which franchises are profitable?

What percentage of the 134 closures in 2025 were due to voluntary decisions by franchisees versus franchisor initiation or default?

Are there any systemic issues or changes to the business model, pricing strategy, or competition that have contributed to the higher-than-typical turnover rate?

How has the technology fee of $170 per month been used, and has it provided measurable benefits to franchisees in terms of customer acquisition or operational efficiency?

Of the 1 pending litigation case, what is the potential financial exposure or impact to the franchisor and existing franchisees?

Can you explain the reasoning behind the franchisor-favorable financial obligation clause requiring a $100 minimum weekly fee regardless of sales performance, and how have franchisees responded to this requirement during economic downturns?