Regis Profile
Regis Corporation owns, operates, and franchises hairstyling and hair care salons.
The company franchises hairstyling and hair care salons throughout the United States (the U.S.), Canada, Puerto Rico and the United Kingdom (the U.K.).
As of June 30, 2022, the company franchised, owned or held ownership interests in 5,576 locations worldwide. Its locations consist of 5,395 franchised salons, 105 company-owned salons, and 76 locations in which it maintains a non-controlling ownership interest. Each of the company's salon concepts offer similar salon products and services.
The company earns royalty revenue based on service and product sales at its franchise locations and earns revenue for services and products sold at the company-owned salons. Salons operate primarily under the trade names of Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters (Roosters MGC International LLC) and they serve the value category within the industry. Salons are primarily located in strip center locations and Walmart Supercenters.
The company has substantially completed its multi-year transformation to an asset-light fully-franchised business. As of June 30, 2022, 98.1% of its salons were owned by franchisees. The remaining 105 company-owned salons will be sold or closed when the leases expire.
Segments
The company operates through two segments, Franchise Salons and Company-owned Salons.
Franchise Salons
This segment includes 5,395 franchised salons located mainly in strip center locations and Walmart. Franchise salons offer hair care and beauty services and retail products. This segment operates primarily in the U.S., Puerto Rico and Canada and primarily includes the Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters and Magicuts (Magicuts, Ltd) concepts.
The company-owned salons reportable operating segment includes 105 company-owned salons located mainly in strip center locations and Walmart. Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products. SmartStyle, Supercuts, Cost Cutters and other regional trade names operating in the United States and Canada are generally within the Company-owned salons segment.
Company-owned Salons
This segment includes 105 company-owned salons located mainly in strip center locations and Walmart. This segment offers hair care and beauty services and retail products. SmartStyle, Supercuts, Cost Cutters and other regional trade names operating in the United States and Canada are generally within the Company-owned salons segment.
Salon Franchising Program
The company has various franchise support functions its 5,395 franchised salons as of June 30, 2022, included mainly of Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters salons. The company provides its franchisees with a comprehensive system of business training, stylist education, site approval, professional marketing, promotion, and advertising programs, and other forms of ongoing support designed to help franchisees build businesses. Historically, the company has signed the salon lease and then subleased the space to its franchisees. However, moving forward, for all new locations and some lease renewals, franchisees will seek to sign the salon leases directly with the landlords; however, there may be cases where it decides to stay on the lease. The company has the right to approve salon leases.
Salon Concepts
Supercuts: Supercuts franchise agreements have a perpetual term, subject to the termination of the underlying lease agreement or termination of the franchise agreement by either the company or the franchisee. Supercuts salons provide hair care services and professional hair care products to its guests at convenient times and locations at value prices. This concept appeals to men, women, and children. The company has 2,264 franchised and 18 company-owned Supercuts locations throughout North America.
SmartStyle and Cost Cutters in Walmart Supercenters: The majority of existing SmartStyle and Cost Cutters franchise agreements for salons located in Walmart Supercenters have a five-year term with a five-year option to renew. The franchise agreements are site specific.
SmartStyle and Cost Cutters salons offer a full range of custom styling, cutting, and hair coloring, as well as professional hair care products and are located exclusively in Walmart Supercenters. This concept has primarily a ‘walk-in’ guest base with value pricing. The company has 1,646 franchised and 49 company-owned SmartStyle and Cost Cutters salons located in Walmart Supercenter locations throughout North American.
Cost Cutters (not located in Walmart Supercenters), First Choice Haircutters and Magicuts: The majority of existing Cost Cutters franchise agreements have a 15-year term with a 15-year option to renew (at the option of the franchisee), while the majority of First Choice Haircutters franchise agreements have a 10-year term with a five-year option to renew. The majority of Magicuts franchise agreements have a term equal to the greater of five years or the current initial term of the lease agreement with an option to renew for two additional five-year periods. The current franchise agreement is site specific.
Roosters Men’s Grooming Center: Roosters franchise agreements have a 10-year term with a 10-year option to renew (at the option of the franchisee). New franchisees enter into a franchise agreement concurrent with the opening of their first store, along with a development agreement with the right to open two additional locations.
Portfolio Brands: Portfolio Brands salons are made up of acquired regional salon groups operating under the primary concepts of Cost Cutters, First Choice Haircutters, Roosters, Hair Masters, Cool Cuts for Kids, Style America, Famous Hair, Magicuts, Holiday Hair, and TGF, as well as other concept names. Most concepts offer a full range of custom hairstyling, cutting and coloring services, as well as professional hair care products. The company has 1,344 franchised and 38 company-owned Portfolio Brands locations throughout North America.
International Salons: International salons are locations operating in the United Kingdom, primarily under the Supercuts and Regis concept. These salons offer similar levels of service as the company’s North American salons. Salons are usually located in prominent high-traffic locations and offer a full range of custom hairstyling, cutting and coloring services, as well as professional hair care products. The company has 141 franchised International locations.
Affiliated Ownership Interest
The company maintains a non-controlling 55.1% ownership interest in Empire Education Group, Inc. (EEG), which is accounted for as an equity method investment. EEG operates accredited cosmetology schools. The company entered into an agreement to sell its stake in EEG to the controlling owner in 2020, the closing of which is pending state approvals.
Trademarks
The company holds numerous trademarks, both in the United States and in many foreign countries. The most recognized trademarks are SmartStyle, Supercuts, Regis Salons, Cost Cutters, First Choice Haircutters, Roosters and Magicuts.
Governmental Regulation
In the United States, the company's franchise operations are subject to the Federal Trade Commission's Trade Regulation Rule on Franchising (the FTC Rule) and by state laws and administrative regulations that regulate various aspects of franchise operations and sales. The company's franchises are offered to franchisees by means of a disclosure document containing specified disclosures in accordance with the FTC Rule and the laws and regulations of certain states. The company has registered its offering of franchises with the regulatory authorities of those states in which it offers franchises and in where registration is required. The company is subject to the informational requirements of the Securities and Exchange Act of 1934, as amended (Exchange Act). The company therefore files periodic reports, proxy statements and other information with the Securities and Exchange Commission (SEC).
History
Regis Corporation was founded in 1922.
