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Snip-its Franchise Cost & Fees

Date of Incorporation: 1995

Franchising Since: 2003

Headquarters: Eden Prarie, Minnesota

 

Business Description: The Snip-its Franchise Company, LLC is the franchisor. The company franchises the right to operate a Snip-its Salon, which is a hair cutting and hair care salon and business that focuses on children.

 

Franchise Offer: The franchisee will operate a branded entertainment hair care salon business focusing on the specific hair care, spa services, and entertainment (including birthday party) needs of children, operating in buildings that bear Snip-its custom interior and exterior trade dress.

 

Financial Assistance: The franchisor does not offer direct or indirect financing. It will not guarantee a franchisee’s note, lease, or other obligations.

 

Training and Assistance: Before the Salon opens, franchisees (or, if they are a corporation, partnership, limited liability company, or limited liability partnership, one of their Principals who they designate as the Operating Partner), and/or one Salon Manager, must attend and successfully complete, to the franchisor’s satisfaction, the initial training program. The initial training program will take place over a one or two week period, at such location(s) that the franchisor may specify. The franchisor will also provide an initial training program, to be provided at one time, for franchisees’ initial complement of hair stylists and receptionists (not to total more than ten individuals). If franchisees ask that the franchisor provides additional on-site training, and it is able to do so, then franchisees will pay the then-current per diem charges and out-of-pocket expenses. The franchisor will make available additional training programs, as it deems appropriate.

 

Territory: During the term of the Franchise Agreement, and except as otherwise provided in that agreement, the franchisor will not establish or license anyone else to establish, another Snip-its Salon at any location within the “Territory” that is designated in the Franchise Agreement. The Territory will be based on a particular area surrounding the Salon. The size of the Territory granted will vary from franchise to franchise, but will typically be a ½ mile radius for an urban location for the Salon, and a 5 mile radius for a suburban location for the Salon. Franchisees may sell and provide only products and services (including the Proprietary Products) that conform to the franchisor’s standards and specifications.

 

Term of Agreement and Renewal: The length of the initial franchise term is 10 years. Two additional 5-year renewal terms are available, if requirements are met.

 

Obligations and Restrictions: The Franchise Agreement does not require franchisees to participate personally in the direct operation of the Salon, although the franchisor encourages and recommends active participation by franchisees. The franchisor does, however, require that the Salon be under the active full-time management of either the franchisee, the Operating Partner, or the Salon Manager.

 

Estimated Number of Units: 70

 

Investment Tables:

Initial Investment

Name of Fee Low High
Initial Franchise Fee $15,000 $25,000
Security Deposit and Rent $4,000 $14,000
Staff Recruiting $150 $500
Travel and Living Expenses While Training $100 $1,500
Architecture Fees $3,000 $5,500
Base Construction and Leasehold Improvements $33,600 $65,000
Millwork $13,100 $18,300
“Snipification” of Salon $9,700 $13,500
POS System $2,700 $2,700
Exterior Signage $4,000 $6,000
Furniture $1,800 $3,800
Audio Visual Equipment $8,700 $9,500
Initial Inventory Salon Supplies $5,000 $9,000
Shipping $1,500 $3,500
Insurance $500 $2,500
Professional Services $500 $2,500
Grand Opening Advertising $7,500 $10,000
Additional Funds - 3 months $5,000 $15,000
Estimated Total $115,850 $206,800

 

Other Fees

Type of Fee Amount
Royalty 5% of Gross Sales for the first year, and 6% of Gross Sales for the balance of the term.
Marketing Contribution and Marketing Fund 1.5% of Gross Sales for the first year, and 2% of Gross Sales for the balance of the term.
Additional Stylist and Receptionist Training The franchisor’s per-diem charges, which will not exceed $40 per stylist or receptionist per day, plus out-of-pocket costs.
Additional Highly Trained Personnel Training The franchisor’s per-diem charges, which will not exceed $115 per Highly Trained Personnel per day, plus out-of-pocket costs.
Audit Costs All costs and expenses associated with the audit, reasonable accounting and legal costs.
Computer Licensing Fee Currently none; but may not exceed $2,000
Transfer Fee 50% of then-current initial franchise fee.
Renewal Fee 25% of the then-current initial franchise fee.
Indemnification Will vary with circumstances.
Canceled Check $50
Supplier Testing Will vary.
Interest on Overdue Amounts 1.5% per month on the underpayment.
Franchisee Advisory Council Dues Dues that will compensate the Franchisee Advisory Council for the reasonable expenses of its activities.
Indemnity Will vary under circumstances.
Technology Fee The franchisor reserves the right to charge this fee, which it currently expects, when charged, to range from $25 to $150 per month; but it reserves the right to increase this fee in the future in such reasonable amounts as necessary to compensate for new technological initiatives.
Costs and Attorneys’ Fees Will vary under circumstances.

The above information has been taken from the FDD of Snip-its. Year of FDD: 2015

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