FRANCHISING SINCE 2008

Transcription

1 FRANCHISING SINCE 2008

2 THE UPTOWN EXPERIENCE Hi! I m Scott Sloan, co-founder and CEO of Uptown Cheapskate. My sister (and business partner) Chelsea and I would like to thank you for taking the time to look at Uptown Cheapskate as your potential business opportunity. From well before our first location opened in 2009, Chelsea and I have been fanatically working to create the best resale fashion brand in the entire world. Uptown Cheapskate may be a second-hand clothing store, but that doesn t mean that we allow anything to be second-rate. We re a family-run, closely knit franchise company, and our team has passion for the business and for your success. One of the benefits of our smaller size (45+ Uptown stores and growing fast) is that your experience will be personalized. We invite you to take a look through some of the many reasons why we think owning an Uptown Cheapskate franchise is great. If you have questions, please reach out to any of us. We d also love to host you in Salt Lake for a day to meet the team, visit our stores, and talk about Uptown over a delicious lunch. Buying a franchise is a big investment but it s one that has a lot of reward with it, and we promise to do our best to help you meet your goals. Best, Scott Sloan

3 10 REASONS TO OWN AN UPTOWN 1. Unparalleled resale branding 2. Proprietary buying software: IMAP3 3. Proven systems 4. Investment with a great ROI 5. Territory availability 6. Store design assistance 7. Experienced support team 8. Exceptional group of owners 9. Environmentally and economically friendly 10. You d look really good in an Uptown

4 REASON #1 UNPARALLELED RESALE BRANDING

5 1 UNPARALLELED RESALE BRANDING Uptown Cheapskate is a resale brand, so there s an inherent stigma in how people perceive us. When people think resale, normally they think dirty, dingy, and poor style. Our branding is specifically designed to counteract that. We don t use stock photos or generic templates. Our seasonal photo shoots are fashion forward and allow us to create marketing materials that speak to our hip shoppers. We are constantly retooling our materials to stay on top of what our customers expect from their favorite resale store. WE WANT YOUR FALL & WINTER CLOTHES, SHOES & ACCESSORIES We ll pay you cash or 25% more in store credit As a franchisee, you re expected to uphold that branding image and conform with our high standards in every marketing piece you release to your customer base. We help you do that. You re entitled to total access to our full service marketing team, including designers, marketing analysts, and social media experts. We release both an Annual Marketing Guide with case studies and best marketing practices and Monthly Marketing Toolkits, giving you building blocks to run social media campaigns, in-store promotions, and print materials. If you dream up a new promotion, you can post an ad request and our team will work with you to make it happen at no extra cost. Need a car wrap or a billboard? We ve got you covered, too. In fact, our brand is so important that we ll design pretty much anything you want so that when our customers see your ads, they are getting a consistent message from every store. This builds a unified brand. The result of this is that the Uptown Cheapskate brand and its unique store experience create loyal customers who keep coming back for the latest fashion and styles.

6 REASON #2 PROPRIETARY BUYING SOFTWARE

7 2 PROPRIETARY BUYING SOFTWARE One of the biggest challenges of running a second-hand store is being able to correctly price product. Most people know that Forever 21 is cheap and Banana Republic is more expensive, but with more than 4,000 clothing labels in circulation in the US alone, you need a system. IMAP3, our custom inventory appraisal program, takes the guesswork out of brand valuation. Just enter in what the item is, and our system will suggest prices based on store experience and condition. IMAP3 doesn t just price items, it s also the source of nearly 50 custom reports that help you effectively manage inventory, evaluate employee performance, supervise promotions, and most importantly, measure results and make adjustments in your stores. With IMAP3 and its robust reporting, our average owners are able to obtain gross margins of nearly 67% and also effectively manage multiple stores simultaneously. As we ve grown, we ve continued to invest in upgrading and adding features to the software, and as we ve opened more stores, our budget to improve has increased along with the pace of our improvements. We re taking our software from great to greater each and every month. Our team at BaseCamp supports you based on your numbers, so we spend a lot of our time training you on how to use and understand all the features that IMAP3 has to offer.

8 REASON #3 PROVEN SYSTEMS C O M M U N I C A T I O N L O G J A N U A R Y M A R C H

9 3 PROVEN SYSTEMS Like many other companies, Uptown has a vision of growth fueled by opening successful stores across the country and internationally. We need great owners (maybe you?) capable of implementing great systems to make that happen. It s very telling that 85% of resale stores in the US (and there are more than 50,000) are only selling $250,000 or less annually. Our stores do more than double that volume and it s really because of the systems that we use to manage the stores. Over the years, we ve developed dozens of different systems and variables with both Uptown Cheapskate and our sister brand Kid to Kid, and frankly, we know how to run stores efficiently and profitably. In 2014, we released a major upgrade to our operational tools based, in part, on major retailer systems and the best practices from our highest grossing stores. This seven-book system centers around our Annual Priorities Book, which gives a month-by-month and season-by-season guide to what needs to happen in the store. Using our operational tools, you will be able to understand our expectations and communicate YOUR expectations to your team. You ll be able to measure goals, manage inventory correctly, and provide employees with opportunities to succeed. We also provide a full library of training videos, simulations, quizzes, and fashion updates to help all Uptown employees and owners create an exceptional customer experience.

10 n er e eir r REASON #4 INVESTMENT 5. WITH A GREAT ROI y,

11 4 INVESTMENT WITH A GREAT ROI How much do Uptown stores earn? QUARTILE 1 $979,314 AVERAGE SALES 2015 $160,239 NET PROFIT 2015 * QUARTILE 2 $728,548 AVERAGE SALES 2015 $119,998 NET PROFIT 2015 (Item 19, 2016 FDD) A new Uptown store typically costs about $300,000 to open, including the $25,000 franchise fee and working capital of $50,000. Most of our SBA lenders require 30% of that in liquid assets or cash, roughly $75,000, in order to obtain financing. This means that half of our stores are seeing a 187% ROI on cash invested a year! If you re not familiar with the process of obtaining an SBA loan, you re not alone. Part of what we do on the franchisor end is offer pro-forma and business planning assistance to help streamline the loan process. We re also registered with the SBA, so we have access to the SBA express program to see if you re approved much faster than a standard loan. As with any franchise, your success is directly related to your skills and effectiveness as an owner. There are no guarantees that you ll make any money in fact, you may lose your entire investment! However, that type of experience is not common at Uptown.

12 REASON #5 TERRITORIES AVAILABLE States with at least one Uptown TERRITORIES AVAILABLE IN ALL 50 STATES

13 5 TERRITORY AVAILABLE Don t skip over this one it s important. The flexibility to put stores in the best locations in a market is a huge advantage as you consider joining a franchise. If you are looking at owning multiple stores over time to increase your market share or simply make more money, then market availability is hugely important. Since Uptown Cheapskate is relatively new (although we re developing great brand recognition), there are great locations available in most areas for your store. When it s time to select your site, you ll receive demographic analysis, area mapping, and site selection assistance from our headquarters to guide your decision. Our process is very straightforward we identify a local expert broker to create a territory development map that identifies appropriate territories. We look for areas with higher-than average income, younger populations, and trade areas with proximity to malls, regional shopping centers, or universities. When you reach the lease phase, we offer free lease reviews to help you evaluate whether they meet our standards. Although you make the final decision as to where you ll locate your space, many experts will be working with you hand in hand to guide this important decision and get you the most favorable terms for your site.

14 REASON #6 STORE DESIGN ASSISTANCE SUGAR HOUSE LOCATION DURING BUILD OUT SUGAR HOUSE LOCATION OPENING DAY

15 6 STORE DESIGN ASSISTANCE One of the things you ll love about your Uptown store is that it is uniquely yours. Just as no space is identical, no Uptown store is exactly the same. Our in-house design team works with you to design a store that does some very important things. OUR DESIGNS: 1. Maximize your space to display lots of product (which equals higher sales). 2. Incorporate unique elements into your space to create a wow factor. 3. Create an upscale atmosphere at the lowest possible cost. As you look at our franchise cost breakdown, you ll find that our fixtures are relatively more expensive than other franchises. It s the reason an Uptown is slightly more expensive than, say, a Plato s Closet. We encourage you to also look at what you re purchasing. Uptown s custom fixtures are incredibly sturdy, transformable, and built to impress. We want our franchisees to buy them once, and then never have to worry about replacing or breaking them. Our wall merchandising system allows owners to switch from hanging to shelves, to multiple shelves, and back again. That makes it easy to change out displays and product to create a fresh new look without investing in new fixtures. When the store looks fresh, our customers shop more.

16 REASON #7 EXPERIENCED SUPPORT TEAM

17 7 EXPERIENCED SUPPORT TEAM At Uptown, you ll enjoy an unparalleled support consultant to store ratio, which translates into personalized support that meets your needs and wants. Our operational support department takes you all the way through startup into maturity and through the high growth stages that will tax your ability to manage and anticipate needs. Your support begins the day you sign the franchise agreement, when we give you access to our online Training Portal with over 100 hours of interactive training. Our training specialist will assign you portions of the online training, so when you come to Salt Lake for your required 2 week training, you ll already have a good understanding of the systems and how to operate an Uptown store. Next, you ll meet the entire team during New Owner Training in Salt Lake. Lyndie Bullock, the Uptown Support Lead, will train you on how to use your reports and customer service. Tina Zaharias, our New Store Specialist, will work with you on New Product and marketing. Holly Simmonds and Korinne Faulkner will help you master the computer systems, including IMAP3. Our Grand Opening Support Rep will teach you how to sell fashion clothing and give you tools to merchandise and manage a store. The list goes on. By the end of the two weeks, you ll have strong ties to all the people you ll be working with on a day-to-day basis.

18 7 EXPERIENCED SUPPORT TEAM But first, you have to open! Rachel Woodland and Tina Zaharias, your New Store team, have more than 20 years of combined retail experience and 10 years of experience opening Kid to Kid and Uptown Cheapskate stores. This team will walk you through your store build-out, help you talk to your contractors, provide resources for ordering supplies, and will put together your store order. They ll coordinate your internship in another successful Uptown store so you can practice what you learned at training. When you open to buy, they will schedule your computer installation, help you spend your marketing dollars, and will closely monitor how quickly you re filling with inventory. We fly out a support rep before your opening, and then again during your Grand Opening to assist you and make sure everything goes smoothly. Within six months, we ll fly back and do a check. After several months of weekly and daily contact, you ll transition out of New Store status, and will be assigned a new operational support rep. This rep will serve as your liaison with the office, will help you get the tools you need, and will assist you in implementing our proven systems in your own location.

19 REASON #8 EXCEPTIONAL GROUP OF OWNERS

20 8 EXCEPTIONAL GROUP OF OWNERS At Uptown, we attribute much of our success to our store owners, who pioneer new ideas and freely share what s going right in their stores. We prioritize innovation, and our motto is that we re better together. As a result of that, our owners build and maintain strong friendships and mentorships (and also plenty of friendly competition!) that helps propel the system forward. Those relationships are built in person during our annual Owners Conference and regional Performance Group meetings. They re also established through our monthly group calls, where the Uptown corporate team provides training on best practices and then moderates group idea sharing. In addition, Uptown s Advisory Board is comprised of elected representatives for our stores, and gives the company feedback on our direction. One more note at Uptown, we share sales numbers and other store performance indicators in live time. It s an incredible advantage to our franchise. With a clear picture of performance of each store, our owners are able to push each other to the next level and learn from each other s successes and failures. Through Performance Groups, the Owner Advisory Panel, and Advertising Cooperatives, we have a team atmosphere where owners are willing to help each other succeed. - Patrick Davis, Uptown Cheapskate Belair

21 REASON #9 ENVIRONMENTALLY & ECONOMICALLY FRIENDLY

22 9 ENVIRONMENTALLY & ECONOMICALLY FRIENDLY Last year, our system paid more than $10 million back to our local communities, while recycling 2,515,803 clothing items in our stores. Although buying a business that is green shouldn t be the main driver in a business decision, one of the reasons that Chelsea and I are passionate about Uptown is that there s no moral conflict in running an Uptown store. Uptown stores create jobs, keep money local, and find a use for the hundreds of thousands of items that are discarded each year. That s not all. Uptown Cheapskate partners with Global Citizen, an international non-profit that aims to end extreme poverty by the year Our customers are able to participate in raising money for that cause through events and through our plastic bag program. Individual stores also partner with various charities to find use for the clothing items we aren t able to purchase in order to make sure they find good homes. Finally, we benefit our customers, who are able to find fashionable clothing for a fraction of the retail cost. This helps our customers stretch their budgets while looking great.

23 REASON #10 YOU D LOOK REALLY GOOD IN AN UPTOWN

24 10 YOU D LOOK REALLY GOOD IN AN UPTOWN You don t need to be a fashionista or fashion expert to own an Uptown. Our owners come from a variety of backgrounds from corporate finance, to restaurant management, to sport retail, to bartending. If the fashion thing is a concern for you, don t worry. If you follow the franchise systems, we can train you or your team to buy the correct product at the correct price.

25 *Figures reflect averages as per the 2016 FDD Item 19. These averages are based on results from November 2014-October The financial performance representation contained in Item 19 also includes averages for the other quartiles based on 39 Uptown Cheapskate stores that operated during that period. Results differ widely from the represented performance. You should review the full Item 19 Financial Performance along with your professional advisors and legal counsel. There is no assurance that you will do as well and you must accept that risk. This offering is made by prospectus only.