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Supercuts Franchise Cost & Fees

Date of Incorporation: 1976

Franchising Since: 1979

Headquarters: Minneapolis, Minnesota

 

Business Description: Supercuts licenses the operation of retail hair care establishments known as Supercuts. Supercuts grants the limited right and license to operate a Supercuts Store offering the services and products approved by Supercuts and using its formats, designs, methods, specifications, standards, operating procedures and certain proprietary trademarks, service marks and other commercial symbols.

 

Franchise Offer: The franchisee will have the right to own and operate a retail hair care establishment providing haircutting and related services under the Supercuts mark and other distinctive marks.

 

Financial Assistance: Except as described, Supercuts does not offer direct or indirect financing or guarantee the franchisee’s note, lease, or obligation. In virtually all cases, franchisees must sublease the Store's premises directly from Supercuts, which will sign the “master lease” with the landlord. Supercuts has a written arrangement with Rogers Software Development, Inc. (Rogers) by which Rogers, an unaffiliated company, leases franchisees the Store's point-of-sale system (hardware and software). Supercuts does not sell, assign, or discount to a third party all or part of any financing arrangement. Neither Supercuts nor any of its affiliates receives any consideration from Rogers due to the arrangement.

 

Training and Assistance: Supercuts' offers its customary initial training course concerning the operation of a Supercuts location. The franchisee is entitled to have one additional person attend this training course at no additional charge at the same time. All new Supercuts stylists must attend a hairstylists academy training course/certification. All Store managers must attend Managers Training. This training generally requires between two and five days to complete. Supercuts will offer to all of the franchisee’s employee’s refresher courses regarding the uniform haircutting techniques used by all Supercuts hair care establishments. Supercuts will also make available to franchisees the Managers' Training courses, and provide advisory personnel at no cost to franchisees who shall occasionally visit the location to inspect the quality of the services being offered by employees, instruct and advise employees on proper procedures and advise employees on new techniques and methods.

 

Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that they control.

 

Term of Agreement and Renewal: Provided the lease or sublease has not expired and the franchisee is in good standing and not in default of any of the relevant agreements, the term extends indefinitely. The term of the franchisee agreement expires only upon termination or expiration of right to lease or sublease franchise location (including renewal periods, if any) unless the franchisee relocates within 180 days of such termination expiration.

 

Obligations and Restrictions: Although Supercuts strongly encourages franchisees’ direct involvement, Supercuts does not require that they participate personally in the day-to-day operation of the Supercuts Store. It is Supercuts’ policy, however, that the Supercuts Store must at all times be under the direct, on-premises supervision of a manager (who may be the franchisee) who has completed the training program and devotes his/her entire time during business hours to the management of the Supercuts Store. The franchisee is prohibited from offering or selling any products or services not authorized by Supercuts and from using the premises for any purpose other than the operation of Supercuts establishment.

 

Estimated Number of Units: 2,325

 

Investment Tables:

Initial Investment:

Name of Fee Low High
Initial Franchise Fee $10,000 $29,500
Leasehold Improvements $35,000 $47,000
Furniture, Equipment & Supplies $25,000 $38,000
Computer Terminal/ Software (Point of Sale System) $0 $5,500
Opening Inventory $5,000 $10,000
Travel and Living Training $2,050 $4,500
One Month's Rent and Security Deposit $4,000 $12,000
Grand Opening Plan Assistance $2,500 $2,500
Grand Opening Advertising Expenses $5,000 $15,000
Signs $4,000 $8,000
Additional Funds (3 months) $15,000 $30,000
Total Estimated Initial Investment (including initial lease costs) $108,750 $203,600

 

Other Fees

Type of Fee Amount
Royalty Fees For new stores the combined service and merchandise royalty fee is 4% of combined net service revenue and net merchandise revenue from the open date until the first-year anniversary. From first-year anniversary until the Franchise Agreement expires or is terminated, the royalty fee is 6% of combined net service revenue and net merchandise revenue.
Advertising Fees 5% of net monthly service revenues (i.e. except merchandise sales) with a potential rebate if 75% of Stores in specific SSA vote in favor of rebate.
Product and Service Purchases Varies.
Hairstylists Academy (HSA) Additional Training $220 (for 5 days) per each new stylist at Supercuts’ discretion (fee will be $225 beginning January 1, 2014); training fee will increase every 5 years, commencing January 1, 2007, by the Consumer Price Index (“CPI”) increase for the 5- year period plus 1%.
Managers' Training Course A portion of the cost of facilities, materials and audio visual equipment for training related to duties. In SUPERCUTS' most recent fiscal year, the cost ranged from $54 to $290 per attendee.
Anniversary Fee (essentially a "renewal" fee) 1% of total net monthly revenues for 12 full months immediately preceding first 10 year anniversary. For second 10 year anniversary and every 10 years thereafter, 2% of total net monthly revenues for 12 full months immediately preceding such anniversary date.
Transfer Fee 1 store: $2,500
2 stores: $4,500
3 stores: $6,000
4 stores: $7,000
5 stores: $7,500
Each store thereafter is $500
Sublease Payments $2,000 - $6,000 per month.
Audits All unpaid fees, cost of audit plus interest at highest allowable rate not to exceed 18% per annum from date due.
Late Payments 18% per annum minimum, not to exceed highest applicable commercial contract rate under applicable state and/or federal law.
Modernization $35,000 adjusted for inflation (not to exceed 2% per year), spent on capital improvements to modernize and update store location [Note: $35,000 may not represent the entire costs of a complete remodeling; only updating.]
Gift Card Transactions $45 per download software download fee and $15 per terminal annual software maintenance fee (both if the franchisee supplies their own terminal device); per transaction fees range from $.0225 to $.07; nonsufficient funds recovery fee of $.05 per card.
Indemnification Varies under circumstances and depends on nature of claim.
Maintenance Cost Reimbursement Out-of-pocket cost reimbursement.
Costs and Attorney's Fees Varies under circumstances and depends on nature of the franchisee’s non-compliance.

The above information has been taken from the FDD of Supercuts. Date of FDD: 2013

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