Notes & Disclosures

All Notes are taken from the 2018 Waxing The City Franchise Disclosure Document

Type of Expenditure  Low Amount  High Amount  Method of Payment  When Due  To Whom Payment is to be Made
Initial Franchise Fee (Note 2)  $6,750  $32,500  Lump Sum

Upon signing the franchise agreement

Us
Travel and Living Expenses While Training (Note 3) $1,785 $5,950 As Incurred As incurred during training Airline, hotels, restaurants
Real Estate and Leasehold Improvements (Note 4) $47,584 $243,835  Varied Times Before Opening Landlord and building contractor
Architect/Design Fees (Note 5)  $855 $8,325 As specified in contract At time of design  Architect
Furniture, Fixtures, and Equipment (Note 6)  $14,861 $49,538 As Agreed  Varied times Us or vendors
Office Supplies (Note 7)  $3,000 $3,800 As agreed Varied times  Us or vendors
Technology Expenses and Licenses (Note 8) $5,219 $21,695 Lump Sum Before Opening Us or vendors 
Signage (Note 9) $4,521 $24,246 Lump Sum Before Opening Us or vendors 
Initial Inventory (Note 10)  $3,810 $12,699 As Agreed  At Delivery Us or vendors
Grand Opening Advertising (Note 11) $7,500 $25,000 Lump Sum Before Opening  Us or vendors
Insurance $795 $2,650 As incurred Varied times Third parties
Miscellaneous Expenses (note 12)  $4,200  $8,525 As agreed  Varied times  Vendors
Additional Funds and Working Capital for First 3 Months (note 13) $15,466 $80,962 As Incurred Varied times Vendors or third parties
Total (note 15)  $116,356 $519,725      

Notes:

(1) The high and low ranges in the table are based on an average Waxing Studio. All figures for the low range assume you obtain SBA financing and are required to contribute 30% down as an equity investment prior to the funding of your SBA loan. This is consistent with the experience of most of the Waxing Studios opened in 2015, 2016 and 2017. The high end of the range assumes you do not obtain any financing for your initial investment. We recommend that studios have 4-6 waxing treatment rooms after 1 year of operation. Our estimates assume you will build out your studio space for 6 rooms but that you initially order equipment, furniture and supplies for 4 treatment rooms. These fees are non-refundable unless otherwise noted.

(2) The Initial Franchise Fee is generally $32,500. However, we discount the fee in certain specific circumstances. Some of these discounts are tied to your status as a Veteran or your status as an existing franchisee of us, or our affiliate, in good standing. All of these discounts are described in Item 5.

(3) The person you designate as the “Principal Operator” of your studio must attend mandatory training at one of our corporate regional training centers as designated by us (currently located in Woodbury, Minnesota and Denver, Colorado), or at such place as we designate. If your Principal Operator is not a Principal Owner, then they must sign a confidentiality and non-disclosure agreement that meets our requirements and you must provide a copy to us before they attend training. In addition, if your Principal Operator is not a Principal Owner, then a Principal Owner must also attend and complete this training to our satisfaction before you open your Waxing Studio. While we do not charge for this training, you must pay all travel and living expenses for your attendees. The estimates are the estimated costs for 1 person to attend the Initial Training Program for 5 days. As of the date of this Disclosure Document, we only require you to attend the Initial Training Program for 5 days. We may increase this requirement to 10 days.

We will also conduct Initial Cerologist Training for each of your aestheticians at our offices or, at our discretion, another location that we designate, before you open for business. There is no fee for this training, however, you must pay all travel and living expenses for your attendees. During the first 12 months after your Waxing Studio opens, we will also train additional people at no additional cost. After that time, you must pay $250 per person, or $500 per day, plus travel and lodging for four days, per corporate trainer if Cerologist Training is offered at your Studio. Our estimate assumes 3 people attend Initial Cerologist Training at our corporate office within the first 12 months of operation.

(4) Our estimate for initial expenses for real estate and improvements assumes you will lease space for your Waxing Studio. Waxing Studios are generally located in commercial retail areas. The typical size of a Waxing Studio ranges between 1,500 and 1,800 square feet. Our estimates are based on these assumptions. Rent for these locations will typically vary from $25to $30per square foot per year, not including CAM or tax expenses. Our low estimate assumes your Waxing Studio is 1,500 square feet and that you pay $100 per square foot for the buildout of your Waxing Studio. As stated in Note 1, it also assumes you obtain SBA financing and pay 30% down. Our high estimate provides a “vanilla shell” or “as is” space for an 1,800 square foot studio costing $125 per square foot for the buildout, which, at a minimum, includes rooms that will work as waxing treatment rooms, concrete floors, demised exterior walls, HVAC, roof, and utilities stubbed to the premises sufficient for a Waxing Studio. Our estimate assumes you must only pay first month rent and an additional month as a security deposit.

As described in Item 8, we offer a “Construction Management Services” program through our approved vendor to oversee the construction of your Waxing Studio. We do not currently require you to participate in the Construction Management Services program, however we may transition this to a mandatory program. If this occurs, you will be required to purchase Construction Management Services if you have not already signed a Franchise Agreement with us or have not commenced the construction of your Waxing Studio. As of the issuance date of this Disclosure Document, we anticipate that the cost of the Construction Management Services will be $6,500 to $8,500.

The amount of your leasehold improvements will likely vary substantially based on existing conditions, size, design, including the availability and prices of labor and materials. The amounts do not include the costs of any necessary site development or site engineering work, nor do they include capitalized costs of rent or other occupancy costs, over either the life of the lease or the life of your investment. In addition, these amounts do not reflect costs for the purchase of unimproved land and construction of a free-standing Waxing Studio, which also would result in a significantly greater initial investment. You should carefully investigate all of these costs in the area where you wish to establish your Waxing Studio. In addition, we assumed the general contractor will include permitting fees in the construction costs.

If you are receiving a tenant improvement allowance from your landlord, the landlord may require you to show them that you paid for the leasehold improvements before giving you the money. We have a program that will provide a short term loan to qualified franchisees for tenant improvements, so that you can pay for those improvements, pending receipt of money from your landlord. The maximum amount we will finance for any franchisee is $150,000. We require you to pay us a 6% origination fee, but we do not charge interest on the loan, unless it is in default. The loan must be repaid at the earlier of (i) when the landlord pays the tenant improvement money, (ii) 90 days after the last cash distribution is made to you under the loan documents, or (iii) 30 days after you open your Waxing Studio. See Item 10 for additional details.

(5) You will be required to retain an architectural vendor to create a complete set of detailed Construction Documents. See Item 5. We do not construct, remodel or decorate your premises. The low estimate assumes standard tenant improvements within a structure, designed for commercial use, and excludes items such as structural modifications, site work, energy studies, surveys and/or exterior improvements. The high estimate takes into account additional code studies, energy calculations and minor exterior building improvements.

(6) We estimate the total cost to purchase furniture, fixtures and equipment for the reception area, common areas, 4 waxing treatment rooms and the employee break room to approximately $50,000. The low range assumes you obtain SBA financing and contribute 30% down towards your required equity investment.

(7) Before beginning operations, you must purchase an assortment of office equipment and supplies as described in the Operations Manual, including intake forms, postcards, BlackBook™ or membership service package brochures, posters, and shopping bags. This estimate also includes additional marketing materials, like branded promotional products, printed materials, large format indoor or outdoor signage for tradeshows, and similar items, which you may purchase through our marketing portal.

(8) This estimate assumes you purchase all technology equipment. The low range assumes you obtain SBA financing and pay 30% down. The technology equipment includes 3 computers, 2 tablet or mobile devices, a sound system, a security and surveillance system, a printer and Point of Sale (“POS”) equipment. POS equipment must be purchased from our mandated transaction processing and studio management and scheduling software provider. The total cost of equipment will likely be between $12,000 and $15,000, plus an additional 30% for installation, taxes and shipping. This range also includes 3 months of Technology Fees and 3 months of license fees for optional automated marketing support software that is used by most of our franchisees.

(9) This estimate assumes you purchase all of your signage and the low range assumes you paid 30% down under SBA financing. The total cost for the signage varies depending on the size of the signs, quantity, whether the signs are illuminated, and the requirements of the landlord and governing authority. We estimate the total cost to be between $12,000 and $25,000.

(10) Your initial inventory of body waxing supplies and retail products will include branded products for retail sale, wax, applicators, gloves, linens and other supplies and products as described in the Operations Manual. We have the right to change the inventory requirements at any time.

(11) The estimate also includes amounts we require you spend to advertise your Waxing Studio for the Grand Opening and Ramp Up Plan described in Item 11. The low end assumes you pay 30% down for SBA financing. Factors that may affect the actual amount you spend include the type of media used, the location of your Waxing Studio, the size of the area you are advertising to, local media cost, and the time of year.

(12) This amount includes utility costs, licensing fees, criminal background checks on all your initial employees, and professional expenses such as legal and accounting.

(13) This amount includes estimated operating expenses you should expect to incur during the first 3 months of operations, not including any revenue generated by your Waxing Studio. These figures do not include any taxes or other permitting or licensing fees that you may pay. The estimate assumes you pay no rent the first month. The low end assumes you pay rent in the second and third month for a studio with 1,500 square feet and the high range assumes you pay rent in the second and third month for a studio with 1,800 square feet. The low range assumes you obtain SBA financing and pay 30% down.

(14) These figures are estimates only. We have relied on our experience in opening 2 company-owned Waxing Studios in the Minneapolis-St. Paul metropolitan area, and the experience of the franchised locations in various states during 2016 and 2017 to compile these estimates. This is only an estimate of your initial investment and is based on our estimate of nationwide costs and market conditions prevailing as of the date of this Disclosure Document. It is possible to significantly exceed costs in any of the areas above. You must bear any deviation or escalation in costs from the estimates that we have given. You should review these figures carefully with a business and a legal advisor before making any decision to purchase a franchise. Many factors that are unique to your location can make a dramatic difference in the estimates provided. Except as specifically stated, we do not offer financing for any part of the initial investment. The availability and terms of financing will depend on factors like the availability of financing generally, your credit worthiness, your relationship with local banks, your experience in the waxing industry, and any additional collateral you may offer to a lender to secure the loan. Our estimates do not include any finance charges or fees, interest or debt service obligations.