Great Clips
Date of Incorporation: 1982
Franchising Since: 1983
Address: Minneapolis, Minnesota
Country: U.S.
Description: Great Clips salons are specialized and distinctive retailers of hair care and personal grooming services. The salons offer consistent, high quality, affordable, limited hair care services and a limited selection of products designated by Great Clips to men, women and children in a distinctive retail environment.
Franchise Offer: The franchise offered through the disclosure document is a license to develop and operate a single Great Clips salon offering a required line of hair care services and products from a designated location, customarily in a shopping center, identified by trademarks licensed by the franchisor and using distinctive trade dress and business methods prescribed by Great Clips. A development agreement can be offered to qualified individuals, where the franchisee commits to open a minimum number of Great Clips salons in a specified area within a given period of time.
Financial Assistance: Neither Great Clips, its agents, nor its affiliates offer financing arrangements for the purchase of the Great Clips salon. Great Clips, at its sole and absolute discretion, may guaranty a lease for a franchisee. In consideration for such a guaranty, the franchisee will be charged a $3,000 non-refundable lease liability fee which will be included in the equipment order placed with Great Clips for the salon. Great Clips reserves the right to pledge franchisee obligations to third parties to secure their obligations to such persons. Great Clips may occasionally offer, at its sole and absolute discretion, various incentive programs in connection with its franchise development activities, some of which may involve financing support to franchisees and free rent. These programs, if offered, are subject to change or withdrawal without notice.
Training and Assistance: Great Clips provides training to the franchisee, stylists and management staff of the Great Clips salon. There are currently no refresher courses required, but the franchisee may re-attend all or portions of the Great Clips training programs at no additional charge other than travel and living expenses. The franchisee may be required to re-attend all or portions of a Great Clips training program, at Great Clips’ determination, as a condition for the renewal of the Franchise Agreement. There are three components of training:
- Franchisee Orientation & Training which the franchisee must attend and successfully complete all requirements of as set forth in the Operations Manual. Great Clips strongly recommends that your general manager also complete this training. There is 21 hours of classroom training included in the orientation.
- Great Clips Academy for Hair which the franchisee, management staff and stylists must attend and complete all training requirements of. This includes 24 hours of classroom training at the nearest available training facility. There is no fee to train the franchisee or first 15 stylists (including three initial management staff).
- The LEADS for Management Staff training modules are compulsory for both franchisee and management staff, and include 42 hours of classroom training.
Territory: The franchisee will receive a protected area consisting of a circular area defined by a radius of three-quarters of a mile from the primary customer entrance of the salon.
Term of Agreement and Renewal: The term of the Franchise Agreement is 10 years from date of opening of the salon, and provides for consecutive additional renewal terms of 10 years each.
Obligations and Restrictions: The franchisee must devote their best efforts to the management and operation of the Great Clips business, but are not required to personally manage the salon.
Total Number of Units: 2,852 units.
Investment Tables:
Initial Investment:
| Expenditures | Low | High |
|---|---|---|
| Initial Franchise Fee | $20,000 | $20,000 |
| Initial Advertising -Contribution | $5,000 | $5,000 |
| Travel and Living Expenses While Training | $1,500 per participant | $2,500 per participant |
| Architecture Fees | $500 | $3,000 |
| Leasehold Improvements, including Labor | $20,000 | $50,000 |
| Rent and Security Deposits | $1,000 | $8,000 |
| Fixtures, Signage and Furnishings, including Computer | $30,000 | $40,000 |
| Freight | $1,200 | $2,200 |
| Sales Tax on Fixtures, Signage and Furnishings | $0 | $1,500 |
| Opening Inventory and Supplies | $4,700 | $6,400 |
| Grand Opening Advertising | $10,000 | $12,000 |
| Insurance | $1,500 | $2,400 |
| Lease Liability Fee | $0 | $3,000 |
| Lease Review Fee | $850 | $2,000 |
| Additional Funds (6-12 Months) | $12,000 | $45,000 |
| Total | $108,250 | $203,000 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Continuing Franchise Fee | 6% of the franchisee's Gross Sales. |
| Sales or other taxes due on Continuing Franchise Fee | As imposed by state or local government. |
| Continuing Advertising Contribution to the North American Advertising Fund | 5% of the franchisee's Gross Sales. |
| Additional Training: 1) The Great Clips Academy for Hair 2) LEADS for Management Staff: Module 1 3) LEADS for Management Staff: Module 2 |
Combined fee of $200 per salon per year. |
| Renewal Fee | $1,750 |
| Assignment Fee | $1,500 per salon |
| Local Co-op Dues | Average of $100 per month |
| Insurance Coverage | $1,500-$2,400 per year |
| Software License and Support Fee | $89.50 per month |
| Gift Card Processing Fee | $0.12 per transaction |
| Lease Liability Fee | $0 - $3,000 |
| Out-of-Pocket Expenses Related to Lease or Sublease Assignment | As incurred |
| Real Estate Commission | As incurred |
| Late Charges | Accrued interest of 8% per annum or the highest interest allowed by law in the state where the salon is located. |
| Audit or Inspection Cost | Cost of audit |
| Taxes, Business Debts or Liens | As applicable |
| Resale Program Service Fee | The Resale Program Service Fee is the greater of $5,000 or 5% of the selling price of the Great Clips business, not to exceed $20,000. |
|
Salon Upgrades and Ongoing Maintenance Costs
|
Approximately $40,000 and $2,500 respectively. |
Date of FDD: 2010
The above information has been compiled from the FDD of Great Clips along with online sources.
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