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Sport Clips Franchise Cost & Fees

Date of Incorporation: 1993
Franchising Since: 1995
Headquarters: Georgetown, Texas

Business Description: Sport Clips franchisees sell, primarily to men and boys, hair cutting services, hair care products, sport memorabilia, and sports accessories, in an environment with a sports theme and multiple televisions featuring sports programming.

Franchise Offer: Sport Clips franchisees operate the franchise pursuant to the franchisor’s System, which includes their standards, specifications, approved products, methods and procedures. The System also includes the use of the trademark and trade name “Sport Clips.” The services and products of Sport Clips stores are offered to all segments of the public, and the businesses are generally located in strip center locations.

Financial Assistance: In some cases Sport Clips will guarantee the franchisee’s lease with a third party if the franchisee has acceptable credit and that is the only way to obtain an exceptional location. In some cases, Sport Clips may guarantee the franchisee’s loan with a third party lender for a second or other additional stores if the franchisee has acceptable credit and the franchisee has identified a location that Sport Clips believes is an exceptional location. This program is not available for a first Sport Clips location owned by the franchisee. In some cases, the Sport Clips may pay a portion of the fees charged for the franchisee’s Small Business Administration (SBA) loan if the franchisee obtains a SBA-guaranteed loan from a bank preapproved under that program. Except as described, the franchisor does not arrange financing from other sources.

Training and Assistance: The training program is mandatory for all new franchisees, and is conducted at the Sport Clips’ office in Georgetown, Texas. There is no charge for the initial training program, but the franchisee must pay the travel and living expenses for him or her and one other person. Sport Clips may require the franchisee, his or her manager, and his or her employees, including Stylists, to attend other training programs during the term of the Franchise Agreement. Within 12 months of signing the Franchise Agreement, and during the week before the franchisee first store opens and for three to five days after the store opens, provide on-site assistance to the franchisee at the franchisee’s store location. Sport Clips also holds an annual national meeting and area meetings to discuss sales techniques, merchandising, and advertising programs.

Territory: The franchisee will receive an exclusive territory during the initial five year term of the Franchise Agreement. The territory is the lesser of a one-mile radius around the franchisee’s location or a radius around the franchisee’s location that encompasses a population of 25,000 people. After the initial five-year term, the franchisee does not have an exclusive territory, but Sport Clips will give the franchisee the first right of refusal to open a location with the territory as long as the franchisee is not in default of the Franchise Agreement.

Term of Agreement and Renewal: The length of the franchise term is five years. If the franchisee is in good standing and meets the franchisor’s terms and conditions, he or she can renew for additional five-year terms.

Obligations and Restrictions: Sport Clips does not require that the franchisee personally supervise the franchised business, but it is recommended. The business must be directly supervised “on-premises” by a manager who has successfully completed the Company's training program. The franchisee may offer and sell only those goods and services that the Company has approved. The franchisee must offer products and services that the Company designates as required for all franchisees. The required products and services are haircuts, hair care services, hair care products, and specified hair care accessories.

Estimated Number of Units: 1,625

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $25,000 $59,500
Travel and Living Expenses while Attending Initial Training $1,000 $2,000
Real Estate Varies
Opening Inventory $4,000 $6,000
Fixtures and Equipment (Including Computer Equipment) $35,000 $45,000
Leasehold Improvements $35,000 $100,000
Supplemental Services Fee $3,000 $5,000
Professional Fees $1,000 $5,000
Permits and Licenses $1,000 $3,500
Lease Deposit $0 $5,000
Signage $4,000 $8,000
Miscellaneous Opening Costs $3,000 $5,000
Insurance $1,300 $2,500
Grand Opening Advertising $30,000 $30,000
Additional Funds-6 Months $40,000 $75,000
Estimated Total (does not include real estate costs) $183,300 $351,500
Other Fees
Type of Fee Amount
Royalty 6% of Net Sales.
Advertising $300 per week, or 5% of Net Sales, whichever is more.
Stylist Recruitment Fee 1% of Net Sales.
Technology Fee 1% of Net Sales.
Local Advertising Co-op Fee Up to $300 per week.
Local Stylists Recruiting Co-op Fee Up to $100 per week, or 1% of net sales, whichever is greater.
Sport Clips Wayne McGlone Memorial Relief Fund Contribution $5 per week.
Training Fee Base Training Fee of $25 per week, plus a Percentage Training Fee of $55 per week or 1 % of Net Sales, whichever is more.
Computer Software Monthly Maintenance Fee $40 per month currently.
Accounting Software Maintenance Fee Not to exceed $75 per month.
Renewal Fee $5,000 if franchisee owns fewer than 3 open franchised Sport Clips; $3,500 if franchisee owns 3 or more open franchised Sport Clips.
Interest Maximum permitted by law, on late royalties and advertising fees.
Fee for Failure to Maintain POS Computer System Communication $100 per week for each week, or portion of a week, that the POS Computer System is not maintained with the current approved software so that Sport Clips can access the sales data with their standard access software.
Supplemental Services Fee $5,000 for the first store, $4,000 for the second store, and $3,000 for the third store and any additional stores.
Transfer Fee $5,000 for the first store transferred, and $1,000 for each additional store or license transferred if the transfers are in one transaction.
Audit Cost of audit plus 10% interest on underpayment.
Meeting Registration Fees Currently $645 per person for the Annual Meeting. Subject to change, but will not exceed $1,000 during the term of the Franchise Agreement.
Renewal Fee $5,000 if the franchisee owns fewer than 3 open franchised Sport Clips; $3,500 if the franchisee owns 3 or more open franchised Sport Clips.
Indemnification All losses and expenses incurred.
Product Review Fee SCI's out-of-pocket cost.
Confidential Operating Manual Replacement Fee $250 per volume, or $1,000 per set of volumes.
Extension Fee $5,000 per Franchise Agreement to extend the time by 1 year to open the stores as stated in the Development Schedule attached to the Franchise Agreement.
Store Resale Assistance Fee 5% of sales price, with a minimum fee of $5,000 and a maximum fee of $10,000
Store Resale Broker Fee Currently $15,000

The above information has been taken from the FDD of Sport Clips. Year of FDD: 2016

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