What changed in this filing

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Item 1. Business

2022-08-23 compared with 2021-08-26 · 118 added, 129 removed, 211 unchanged (54% of the section changed)

Regis Corporation franchises technology-enabled hairstyling and hair care salons.

Regis Corporation franchises and owns hairstyling and hair care salons.

The Company is listed on the NYSE under the ticker symbol "RGS." Unless the context otherwise provides, when we refer to the "Company," "we," "our," or "us," we are referring to Regis Corporation, the Registrant, together with its subsidiaries.

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Salons also sell a variety of hair care and other beauty products.

We earn royalty revenue based on service and product sales at our franchise locations, earn revenue on product sold to franchisees, and earn revenue for services and products sold at our company-owned salons.

Salons operate primarily under the trade names of SmartStyle, Supercuts, Cost Cutters, First Choice Haircutters and Roosters and they generally serve the value category within the industry.

We earn royalty revenue based on service and product sales at our franchise locations and earn revenue for services and products sold at our company-owned salons.

Salons operate primarily under the trade names of Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters and they generally serve the value category within the industry.

Salons are primarily located in strip center locations and Walmart Supercenters.

Financial information about our segments and geographic areas for fiscal years 2022 and 2021 are included in Note 15 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

In fiscal year 2021, we nearly completed our multi-year transformation to a technology-enabled, asset-light fully-franchised business.

Since the transformation began, we have sold 4,671 salons to franchisees.

We have substantially completed our multi-year transformation to an asset-light fully-franchised business.

As of June 30, 2022, 98.1% of our salons are owned by franchisees.

Of the remaining 276 company-owned salons, approximately 130-150 will be sold in fiscal year 2022 with the remaining salons closed when the leases expire.

Additionally, in fiscal year 2021, the Company closed 252 non-performing company-owned SmartStyle salons and 361 other underperforming company-owned salons.

In fiscal years 2020 and 2019, the Company closed 250 and 133, respectively, underperforming salons at or near their lease end.

The remaining 105 company-owned salons will be sold or closed when the leases expire.

Industry Overview:

The hair salon market is highly fragmented, with the vast majority of locations independently-owned and operated.

However, the influence of salon chains, both franchised and company-owned, continues to grow within this market.

Management believes salon chains will continue to have significant influence on this market and will continue to increase their presence.

In practically every area in which the Company has a salon, there are competitors offering similar hair care services and products at similar prices.

However, the influence of salon chains, both franchised and corporate-owned, continues to grow within this market.

Management believes salon chains will continue to have significant influence on this market and will continue to increase their presence due to name recognition and benefits that come with scale.

In nearly every area in which the Company has a salon, there are competitors offering similar hair care services and products at similar prices.

The Company faces competition from chains, such as Great Clips, Fantastic Sams, Sport Clips and Ulta Beauty, independently-owned salons, department store salons located within malls, in-home hair services, booth rentals and blow dry bars.

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however, barriers exist for chains to expand nationally due to the need to establish systems and infrastructure, the ability to recruit franchisees, experienced field and salon management and stylists, and to lease quality sites.

The principal factors of competition in the hair care category are quality and consistency of the guest experience, convenience, location and price.

The principal factors of competition in the hair care category are quality and consistency of the guest experience, the ability to attract, retain, and train stylists, technology, convenience, location and price.

The Company continually strives to improve its performance in each of these areas and to create additional points of brand differentiation versus the competition.

Salon Franchising Program:

We have various franchising programs supporting our 5,563 franchised salons as of June 30, 2021, consisting mainly of Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters salons.

We provide our franchisees with a comprehensive system of business training, stylist education, site approval, professional marketing, promotion, and advertising programs, and other forms of on-going support designed to help franchisees build successful businesses.

We have various franchise support functions our 5,395 franchised salons as of June 30, 2022, consisting mainly of Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters salons.

We provide our 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 successful businesses.

Historically, we have signed the salon lease and then subleased the space to our franchisees.

However, moving forward, for all new locations and most lease renewals, franchisees will sign the salon leases directly with the landlords.

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 we decide to stay on the lease.

We have the right to approve salon leases.

Standards of Operations.

The Company does not control the day-to-day operations of its franchisees, including employment, benefits and wage determination, establishing prices to charge for products and services, business hours, personnel management, and capital expenditure decisions.

The Company does not control the day-to-day operations of its franchisees, including employment, benefits and wage determination, prices charged for products and services, business hours, personnel management, and capital expenditure decisions.

However, the franchise agreements afford certain rights to the Company, such as the right to approve locations, suppliers and the sale of a franchise.

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Pursuant to a franchise agreement with the Company, each franchisee pays an initial fee for each store and ongoing royalties to the Company.

In addition, for most franchise concepts, the Company collects advertising funds from franchisees and administers the funds on behalf of the concepts.

In addition, for most brands, the Company collects advertising funds from franchisees and administers the funds on behalf of the brands.

Franchisees are responsible for the costs of leasehold improvements, furniture, fixtures, equipment, supplies, inventory, payroll costs and certain other items, including initial working capital.

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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 ten-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.

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Roosters Men’s Grooming Center

Roosters franchise agreements have a ten-year term with a ten-year option to renew (at the option of the franchisee).

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.

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Existing franchisees receive training, counseling and information from the Company on a regular basis.

The Company provides salon managers and stylists with technical training for franchisees.

Among other factors, consistent delivery of an exceptional guest experience, haircut quality, convenience, competitive pricing, salon location, inviting salon appearance and atmosphere, differentiating benefits and guest experience elements and comprehensive retail assortments, all drive guest traffic and improve guest retention.

The Company provides franchisee salon managers and stylists with access to technical training resources.

Among other factors, consistent delivery of an exceptional guest experience, haircut quality, convenience, competitive pricing, salon location, inviting salon appearance and atmosphere, comprehensive retail assortments, and engagement through technology all drive guest traffic and improve guest retention.

Guest Experience.

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We believe the ability to serve walk-in appointments and minimize guest wait times are essential elements in delivering an efficient guest experience.

Our mobile applications and online check-in capabilities, including check-ins directly from Facebook Messenger ® and Google ® , allow us to capitalize on our guests' desire for convenience.

We continue to focus on stylist staffing and retention, optimizing schedules, balancing variable labor hours with guest traffic and managing guest wait times.

Our salons are located in high-traffic strip centers and Walmart Supercenters, with guest parking and easy access, and are generally open seven days per week to offer guests a variety of convenient ways to fulfill their beauty needs.

Our mobile applications and online check-in capabilities, including check-ins directly from Google ® , allow us to capitalize on our guests' desire for convenience.

Our franchisees continue to focus on stylist staffing and retention, optimizing schedules, balancing variable labor hours with guest traffic and managing guest wait times.

Our franchise salons are located in high-traffic strip centers and Walmart Supercenters, with guest parking and easy access, and are generally open seven days per week to offer guests a variety of convenient ways to fulfill their beauty needs.

Affordability.

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Salon Safety, Appearance and Atmosphere.

Guest and stylist safety is our first priority and became even more important by the COVID-19 global pandemic.

We have invested heavily in safety and personal protective equipment, ensuring social distancing in our salons and training employees on safety measures.

Guest and stylist safety is our first priority and became even more important by the novel strain of coronavirus and all related variants (COVID-19).

We have invested heavily in safety and personal protective equipment and training employees on safety measures.

Our salon repairs and maintenance program is designed to ensure we invest in salon cleanliness and safety, as well as in maintaining the normal operation of our company-owned salons.

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Retail Assortments.

Salons sell nationally recognized hair care and beauty products, as well as a complete assortment of corporate-owned brand products.

Salons sell nationally recognized hair care and beauty products, as well as an assortment of corporate-owned brand products.

Stylists are compensated and regularly trained to sell hair care and beauty products to their guests.

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The top selling brands within the Company's retail assortment include:

L'Oreal Professional Brands, Regis Private Label Brands such as Designline ® , Prototype ® and Blossom ® , and Paul Mitchell.

We also distribute our Regis Blossom, Prototype and Designline brands through distribution channels, including amazon.com and walmart.com, to supplement our existing in-salon sales and raise brand awareness.

In fiscal year 2021, our proprietary back-office salon management system, Opensalon ® Pro, became available to franchisees.

Opensalon Pro gives us critical business information at the transaction level.

We are building a robust business analytics platform and team that will use the data to transform the Company into a data-driven organization.

This data will enable us to drive traffic into our salon, implement relevant promotions, and enhance our loyalty programs and product sales initiatives.

Our mobile applications allow guests to view wait times and interact in other ways with salons.

L'Oreal Professional Brands, Regis Private Label Brand, Designline ® , and Paul Mitchell.

We also distribute our Designline brand through distribution channels, including Amazon.com and Walmart.com.

In fiscal year 2022, we sold our proprietary back-office salon management system, Opensalon ® Pro to a third party, Zenoti.

See Note 3 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

We expect all of our salons will transition to the Zenoti salon management system in fiscal year 2023.

We also use mobile applications to allow guests to view wait times and interact in other ways with salons.

Our marketing is brand specific and funded primarily from contractual contributions, based on sales, to the brand's cooperative advertising funds.

These funds are used largely in support of advertising and other efforts to increase guest traffic to our salons, grow online booking usage, and improve overall awareness of and affinity for our brands.

A portion of our marketing funds are used in support of stylist recruitment to grow the number of active stylists in our system.

Our Company depends on its stylists to help deliver great guest experiences.

We believe in the importance of the ongoing development of our stylists' craft.

We aim to be an industry leader in stylist training, including the utilization of digital training that we enhanced significantly during fiscal years 2019 and 2020.

We aim to be an industry leader in stylist training, including the utilization of both live and digital training.

Our stylists deliver a superior experience for our guests when they are well-trained technically and through years of experience.

We employ trainers who provide new hire training for stylists joining the Company.

We employ trainers who provide new hire training for stylists joining the Company and train franchisee trainers.

We supplement internal training with targeted vendor training and external trainers that bring specialized expertise to our stylists.

We utilize training materials to help all levels of field employees navigate the operation of a salon and essential elements of guest service training within the context of brand positions.

In response to the global COVID-19 pandemic, we have provided stylist training virtually with the benefits of maintaining social distancing, sanitization, personal protective equipment and other safety protocols.

Salon Support

Our corporate headquarters is referred to as Salon Support.

This acknowledges that loving our franchisees, guests and stylists mandates a service-oriented mentality in supporting our franchisees' goals as well as our company-owned operations.

We take a service-oriented mentality to best support our franchisees and stylists in an effort to ensure guest satisfaction by helping our franchisees drive their business, as well as overseeing our company-owned operations.

Organization.

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Our ongoing simplification efforts focus on aligning our cost structure with our transition to an asset-light franchise model and improving the way we plan and execute across our portfolio of brands.

In fiscal year 2021, we completed a corporate reorganization based on a zero-based budgeting philosophy to ensure each employee was performing the "right work," each team was the "right size" based on resources and priorities and overall, have the "right structure" to succeed as a company.

This exercise reduced salon support headcount in fiscal year 2021.

In April 2020, we relocated Salon Support to a new location in Minneapolis, Minnesota.

The new headquarters facilitates collaboration amongst our internal teams, supports our employee recruiting efforts, and enhances shareholder value.

Due to the COVID-19 pandemic, the majority of our salon support employees worked from home in fiscal year 2021 and have recently returned to the office in a modified schedule.

In fiscal year 2022 and 2021, we completed a corporate reorganization based on a zero-based budgeting philosophy to ensure each employee was performing the "right work," each team was the "right size" based on resources and priorities and overall, we have the "right structure" to succeed as a company.

This exercise reduced Salon Support headcount in fiscal year 2022 and 2021.

Salon Support is primarily located in Minneapolis, Minnesota while allowing for hybrid and remote work.

Salon Concepts:

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A description of the Company's salon concepts is listed below:

SmartStyle salons offer a full range of custom styling, cutting, and hair coloring, as well as professional hair care products and are currently located exclusively in Walmart Supercenters.

SmartStyle has primarily a "walk-in" guest base with value pricing.

The Company has 1,666 franchised and 91 company-owned SmartStyle and Cost Cutters salons located in Walmart Supercenters.

Supercuts salons provide consistent, high-quality hair care services and professional hair care products to its guests at convenient times and locations at value prices.

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The Company has 2,264 franchised and 18 company-owned Supercuts locations throughout North America.

SmartStyle/Cost Cutters in Walmart stores.

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 currently 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.

Portfolio Brands.

Portfolio Brands (formerly known as Signature Style) 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, Fiesta Salons, and TGF, as well as other concept names.

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.

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International Salons.

International salons are franchised locations operating in the United Kingdom, primarily under the Supercuts concept.

International salons are locations operating in the United Kingdom, primarily under the Supercuts and Regis concept.

These salons offer similar levels of service as our 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.

The tables on the following pages set forth the number of system-wide locations (franchised and company-owned) and activity within the various salon concepts.

System-wide location counts

2021 2020 2019

FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart stores 1,666 1,317 615

Supercuts 2,264 2,386

SmartStyle/Cost Cutters in Walmart stores 1,646 1,666

Portfolio Brands 1,344 1,357

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COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart stores 91 751 1,550

Supercuts 18 35

SmartStyle/Cost Cutters in Walmart stores 49 91

Portfolio Brands 38 150

Mall-based (2) 43 166 —

Total Company-owned salons 105 276

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Constructed locations (net relocations)

2021 2020 2019

FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart stores — 4 3

Supercuts 15 21

SmartStyle/Cost Cutters in Walmart stores 1 —

Portfolio Brands 5 10

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COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart stores — — —

Supercuts — 4

SmartStyle/Cost Cutters in Walmart stores — —

Portfolio Brands — —

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Closed locations

2021 2020 2019

FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart stores (56) (29) (18)

Supercuts (156) (273)

SmartStyle/Cost Cutters in Walmart stores (49) (56)

Portfolio Brands (81) (82)

Mall based (2) — — (807)

Total North American salons (286) (411)

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COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart stores (252) (72) (39)

Supercuts (6) (54)

SmartStyle/Cost Cutters in Walmart stores (15) (252)

Portfolio Brands (40) (307)

Mall based (2) (117) (41) —

Total Company-owned salons (61) (613)

Conversions (including net franchisee transactions) (2)

2021 2020 2019

FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart stores 405 727 69

Supercuts 19 130

SmartStyle/Cost Cutters in Walmart stores 28 405

Portfolio Brands 63 212

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COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart stores (408) (727) (71)

Supercuts (11) (125)

SmartStyle/Cost Cutters in Walmart stores (27) (408)

Portfolio Brands (72) (214)

Mall based (2) (6) 207 —

Total Company-owned salons (110) (747)

_______________________________________________________________________________

(1) Portfolio Brands was previously referred to as Signature Style.

(2) In October 2017, the Company sold substantially all of its mall-based salon business in North America, representing 858 salons, and substantially all of its previous International segment, representing approximately 250 salons in the UK, to TBG.

These salons were included in discontinued operations in fiscal years 2020 and 2019.

On December 31, 2019, 207 mall-based salons were acquired from TBG and are included in continuing operations under the Company-owned segment from January 1, 2020.

See Note 3 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K for further discussion.

(1) Canadian and Puerto Rican salons are included in the North American salon totals.

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EEG operates accredited cosmetology schools.

We entered into an agreement to sell our stake in EEG to the controlling owner in fiscal year 2020 while enhancing our relationship in order to recruit stylists directly from the beauty school.

The transaction is expected to close in fiscal year 2022 upon receipt of state approvals, at which time the Company expects to record an immaterial non-operating gain.

We entered into an agreement to sell our stake in EEG to the controlling owner in fiscal year 2020, the closing of which is pending state approvals.

The sale is not expected to have a significant impact on the Company's operations or financial position.

Corporate Trademarks:

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Human Capital Management:

The Company believes that being a brand citizen starts with putting your social values in the foreground, defining your purpose in the context of your core business, fostering trust among consumers, and acting with a sense of collective responsibility.

In fiscal year 2021, the Company set out to develop a new vision that would allow it to become a model brand citizen.

It started with stakeholder interviews with members of the Company's Board of Directors, its executive leadership team, corporate employees, franchisees, and stylists.

Next, the Company facilitated a comprehensive review of brand citizen strategies in addition to primary and secondary research.

As an outcome of this work, the Company defined its purpose as:

Unleash the beauty of potential .

To build values reflective of this newly defined purpose, the Company assembled a cross-functional group of key leaders that represented its Board of Directors, departments throughout the Company, its franchisees, and its stylists, and all together, conducted a values workshop.

As a result of this collaborative effort, the Company unveiled its values as:

We are committed to our purpose of Unleashing the Beauty of Potential , which is supported by our four core values:

Foster Trust.

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Take responsibility and own your role and your results.

These values support a collaborative and inclusive culture that is critical to the success and growth of our Company.

To help reinforce our values and incorporate them into everything we do, we have a values committee comprised of cultural ambassadors who serve as the voice of employees and help ensure a best-in-class employee experience.

As of June 30, 2022, the Company employed approximately 630 employees;

203 of whom served at its corporate headquarters in Minnesota, 28 of whom served at its product engineering headquarters in California, 183 of whom served at its distribution centers, 55 of whom provided artistic education to its hair care salons, and the remainder of whom served as field employees or at its company-owned salons.

122 of whom were corporate employees serving the Company's headquarters in Minnesota, 10 of whom served at its product engineering headquarters in California, 52 of whom provided artistic education to its hair care salons, and the remainder of whom served as field employees or at its company-owned salons.

The Company offers flexible work arrangements such as hybrid and remote work.

Diversity and Inclusion

The Company believes diversity of thoughts, backgrounds, experiences, and ideas help it deliver a world-class system of technology-enabled hair salons.

As of June 30, 2021, racial minorities consist of over 46% of the Company's U.S.

The Company promotes diversity of thoughts, backgrounds, experiences, and ideas.

As of June 30, 2022, racial minorities comprise over 32% of the Company's U.S.

workforce, which is summarized below.

• 13% Black or African American

• 12% Hispanic or Latinx

• 6% Black or African American

• 1% American Indian or Alaska Native

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• 3% Two or more races

Also, 86% of the Company's entire workforce are women and 61% of the Company's leadership positions are held by women.

Also, 85% of the Company's entire workforce are women and 15% are men.

Additionally, 67% of the Company's leadership positions are held by women.

Families First

Nearly 100 years ago, the Company began as a family business and its support of families continues today.

It offers up to 16 weeks of parental leave so that parents have time to focus on their newest family members.

It also offers flexible work options, ranging from occasional work at home to full-time telecommuting.

One hundred years ago, the Company began as a family business and its support of families continues today.

It offers up to 16 weeks of parental leave, including adoption, up to 12 of which are paid, so that parents have time to focus on their newest family members.

It also offers flexible work arrangements, including full-time telecommuting.

Additionally, the Company offers flexible paid time off, which allows employees to control their time away from work based on individual needs, not years of service.

The Company also observes 13 U.S.

holidays, including Martin Luther King Jr.

Day (MLK Day of Service) and Good Friday, which were added in fiscal year 2021.

Other Compensation and Benefits

The Company also takes care of its people by offering competitive compensation and benefits packages that meet the needs of its employees and their families, including short- and long-term incentive packages, an employee stock purchase plan, retirement plans, health, dental, and vision benefits, basic life insurance, long-term disability coverage, and wellness and employee assistance programs.

The Company also takes care of its people by offering competitive compensation and benefits packages that are designed to support the total well-being and promote the full potential of our employees and their families.

These include short- and long-term incentive packages, an employee stock purchase plan, retirement plans, health, dental, and vision benefits, basic life insurance, long-term disability coverage, and wellness and employee assistance programs.

The Company analyzes market trends and monitors its own compensation practices to attract, retain, and promote employees and reduce turnover and associated costs.

In addition, its short- and long-term incentive plans are aligned with its core values and key business objectives, which are intended to motivate strong performance.

Development and Engagement

Continuous employee development and engagement are essential to creating a high-performance culture.

In fiscal year 2022, we increased our investment in learning and development.

In addition to the resources available on our internal Learning Hub, we launched our Beauty of Series, which consists of interactive sessions designed to help our employees unleash their potential.

This series included the following topics.

The Beauty of Being Remarkable, where employees learned the importance of self-promotion in both their personal and professional lives.

The Beauty of Wellness, which was designed to help employees manage stress more effectively and create healthy habits and coping skills.

And The Beauty of Being Tech-Enabled, where panelists discussed how technology fueled and disrupted their industries.

We survey our employees to provide them with an opportunity to share anonymous feedback with management in a variety of areas, including support from leadership, communication and collaboration, growth and career opportunities, available resources, and recognition.

Leaders reviewed the results to determine opportunities and develop action plans for their teams to improve engagement and the overall employee experience.

We introduced Regis Listens, which highlights offerings that we've implemented as a result of employee feedback to show employees that we are listening.

Corporate Responsibility

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The Company also specifically condemns human trafficking and abuse of child labor.

Information About Our Executive Officers:

Executive Officers of the Registrant:

Information relating to the Executive Officers of the Company follows:

Name Age Position

Felipe Athayde 42 President and Chief Executive Officer

Matthew Doctor 34 Executive Vice President and Chief Strategy Officer

Chad Kapadia 52 Executive Vice President and Chief Technology Officer

Jim Lain 57 President, SmartStyle and Portfolio Brands

Amanda Rusin 39 Executive Vice President, General Counsel

Shawn Thompson 38 President, Supercuts

Kersten Zupfer 46 Executive Vice President and Chief Financial Officer

Felipe Athayde was appointed President and Chief Executive Officer in October 2020.

Prior to joining the Company, he served as President, Americas of Popeyes Louisiana Kitchen, owned by Restaurant Brands International, a multinational quick-service restaurant holding company, between March 2019 and September 2020.

Athayde has held various positions with Restaurant Brands International between 2011 and 2020, including President, Latin America and Caribbean for Burger King, and President, U.S.

for Tim Hortons.

Matthew Doctor was appointed Executive Vice President and Chief Strategy Officer in February 2021.

John Davi 44 Executive Vice President, Chief Digital Officer

Matthew Doctor 35 President and Chief Executive Officer

Michael Ferranti 39 Executive Vice President, Chief People Officer

Jim Lain 58 Executive Vice President, Chief Operating Officer

James Suarez 47 Senior Vice President, Merchandising and Education

Andra Terrell 51 Senior Vice President, General Counsel and Corporate Secretary

Kersten Zupfer 47 Executive Vice President, Chief Financial Officer

John Davi was appointed to Executive Vice President and Chief Technology Officer in October 2021, and Executive Vice President and Chief Digital Officer in July 2022.

Prior to joining the Company, he served as Chief Product Officer for BriteCore, Senior Vice President of Product at MINDBODY, Inc, founding Vice President of Product for Diffbot, and Head of Engineering for Cisco Systems' Media Solutions Group.

Matthew Doctor was appointed to President and Chief Executive Officer in May 2022, after holding such position on an interim basis since December 2021.

Previously, he served as Executive Vice President and Chief Strategy Officer since February 2021.

Prior to joining the Company, he was Chief Financial Officer of Kava Restaurants LLC, a Tim Horton's franchisee.

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Doctor worked in business development at Restaurant Brands International and was in investment banking with J.P.

Chad Kapadia was appointed to Executive Vice President and Chief Technology Officer in June 2018.

Before joining the Company, he served as Head of Engineering at Target Corporation's New Ventures and Accelerators.

Prior to Target Corporation, Mr.

Kapadia served in technology positions of increasing responsibility, including Chief Technology Officer and Product Head at Swissclear Global, Inc.

and as an Engineering Leader and founding member of Netflix, Inc.'s Content Platform Engineering and Media Pipeline.

Jim Lain was appointed as President of Portfolio Brands in December 2020 and President of SmartStyle in June 2021.

Previously, he served as Executive Vice President and Chief Operating Officer since November 2013.

Michael Ferranti was appointed to Executive Vice President and Chief People Officer in December 2021.

Previously, he served as Senior Vice President, People and Culture since March 2021.

Before joining the Company, Mr.

Ferranti served as Head of M&A and Franchising for Subway Restaurants U.S.

and Canada on their Development team.

Prior to Subway Restaurants, Mr.

Ferranti held a variety of senior leadership roles with Le Pain Quotidien, KraftHeinz and Restaurant Brands International.

Jim Lain was appointed to Executive Vice President and Chief Operating Officer in December 2021.

Previously, he served as President of Portfolio Brands since December 2020, President of SmartStyle since June 2021, and Executive Vice President and Chief Operating Officer since November 2013.

Before joining the Company, Mr.

Lain served as Vice President at Gap, Inc.

from August 2006 to November 2013.

Amanda Rusin was appointed as Executive Vice President, General Counsel and Corporate Secretary in November 2020 and previously served as Senior Vice President, General Counsel and Corporate Secretary since January 2018.

Before joining the Company, Ms.

Rusin served as Assistant General Counsel at Polaris Industries, Inc.

from September 2015 to December 2017 and Senior Attorney at Polaris Industries, Inc.

from June 2014 to September 2015.

Before joining Polaris Industries, Inc she served as Commercial Director at Cargill, Incorporated from August 2013 to May 2014 and Attorney at Cargill, Incorporated from June 2008 to August 2013.

Shawn Thompson was appointed as President of Supercuts in December 2020.

Before joining the Company, Mr.

Thompson served as President, U.S.

for Tim Hortons and Head of Global operations for Restaurant Brands International.

James Suarez was appointed to Senior Vice President, Merchandising and Education in February 2022.

Prior to his promotion to Senior Vice President, Merchandising and Education, Mr.

Suarez had 25 years of combined salon operations and education experience at the Company.

Andra Terrell was appointed to Senior Vice President, General Counsel and Corporate Secretary in February 2022.

Prior to joining the Company, she served as Deputy General Counsel and Assistant Secretary of Cajun Operating Company for the Church's Chicken and Texas Chicken brands.

Terrell also served as Assistant General Counsel - Franchise for Luxottica Retail, Assistant General Counsel for General Nutrition Centers Inc., Franchise Counsel for Precision Tune Auto Care, Inc.

and General Counsel of Decorating Den Systems, Inc.

Kersten Zupfer was appointed to Executive Vice President and Chief Financial Officer in November 2019.

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The Company is subject to various federal, state, local and provincial laws affecting its business, as well as a variety of regulatory provisions relating to the conduct of its beauty-related business, including health and safety.

During the third and fourth fiscal quarters of fiscal years 2020 and 2021, state and local governments temporarily mandated the closure of some of our franchise and company-owned salons in the response to the COVID-19 global pandemic.

These government-mandated closures have and may continue throughout the pandemic.

We monitor state and local regulations carefully to ensure the safety or our stylists and guests.

At the end of fiscal year 2020, the majority of state and local governments where we operate temporarily mandated the closure of our salons in response to the COVID-19 global pandemic.

These pandemic related government-mandated closures continued into fiscal year 2021 and even into fiscal year 2022 in parts of Canada.

We monitor state and local regulations carefully to ensure the safety of our stylists and guests.

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 has registered its offering of franchises with the regulatory authorities of those states in which it offers franchises and where registration is required.

State laws that regulate the franchisee/franchisor relationship presently exist in a substantial number of states and, in certain cases, apply substantive standards to this relationship.

Such laws may, for example, require that the franchisor deal with the franchisee in good faith, may prohibit interference with the right of free association among franchisees, and may limit termination of franchisees without payment of reasonable compensation.

Such laws may, for example, require that the franchisor deal with the franchisee in good faith, prohibit interference with the right of free association among franchisees, and limit termination of franchisees without payment of reasonable compensation.

The Company believes that the current trend is for government regulation of franchising to increase over time.

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The Company believes it is operating in substantial compliance with applicable laws and regulations governing all of its operations.

The Company maintains an ownership interest in Empire Education Group.

The Company maintains an ownership interest in Empire Education Group, Inc.

Beauty schools derive a significant portion of their revenue from student financial assistance originating from the U.S.

3 unchanged sentences

In 2020, the Company signed an agreement to sell our ownership interest in EEG to the other owner.

The transaction is expected to close in fiscal year 2022 after receipt of state ownership transfer approvals.

The transaction is expected to close after receipt of state ownership transfer approvals.

Financial Information about Foreign and North American Operations

Financial information about foreign and North American markets is incorporated herein by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 and segment information in Note 15 to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Financial information about foreign and North American operations is incorporated herein by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 and segment information in Note 15 to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Available Information

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business