Great Clips
Great Clips offers haircare services in franchised salons using licensed trademarks and methods. Known for affordable pricing and quick service, it operates in the retail hair salon industry.
About Great Clips
Great Clips, Inc. is an American hair salon chain with over 4,530 locations across the United States and Canada. Its headquarters are located in Bloomington, Minnesota, a suburb of Minneapolis. In 2013, it had system-wide sales of $1.03 billion.
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Great Clips franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Great Clips franchise ranges from $187,800 to $419,900. This includes the Initial Franchise Fee and other required payments as detailed in the FDD [p.2].
What is the initial franchise fee?
The initial franchise fee varies based on whether it is a first-time agreement or a subsequent one. For a first Franchise Agreement with Great Clips, the Initial Franchise Fee is $20,000 paid upon signing [p.17]. For any subsequent agreements, a Partial Initial Franchise Fee of $10,000 is due at signing, with the remaining $10,000 payable when placing the equipment order for the salon [p.387].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 6% of sales, which is remitted as royalties to the company [p.175]. Regarding advertising fees, Great Clips has sole discretion over expenditures from the Market Development Advertising Fund (MDAF) and may use these funds for various marketing activities without obligation to spend them locally or account for their use [p.207, p.39].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement typically has an indefinite term [p.4]. However, if you wish to renew the agreement after its initial term expires, you must promptly apply to renew it during a closed-pending-relocation period or if you desire to relocate the salon beyond its initial term [p.188].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, a franchisor can refuse to permit the transfer of ownership of a franchise except for good cause. Good cause includes but is not limited to unspecified factors [p.6(g)]. This means you would need approval from the franchisor to sell or transfer your franchise, and they have the right to deny such requests based on their discretion regarding what constitutes good cause.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on any grounds available by law [p.387]. Additionally, Great Clips, Inc. can terminate a franchisee's right to participate in the Salon X Program or terminate the franchise agreement if the franchisee fails to pay Foundation Fees on a timely basis [p.338].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
You do not receive an exclusive territory. However, you are granted a protected territory defined by a radius of three-quarters of a mile from the primary customer entrance of the Salon (the 'Protected Area'), except in Non-Traditional Locations where the Protected Area is determined by Great Clips. [p.47]
What training and ongoing support does the franchisor provide?
According to [p.355], Great Clips provides satisfactory training and ongoing support to existing franchisees who are currently not in default of their Franchise Agreement. This indicates that training and support are provided, but specific details about the nature or extent of this support are not detailed in the given excerpts.
How many franchised outlets are there, and how many have closed or been terminated?
This isn't specified in the excerpts.
Does the franchisor share any financial performance or earnings information?
The franchisor shares financial performance information based on actual records of existing outlets if provided to a prospective franchisee. However, this information is not guaranteed for all new franchises and may vary depending on market conditions [p.58, p.354]. The average sales, expenses, profits, cash flows, and earnings data are derived from financial statements submitted by certain franchisees but have not been independently audited or verified [p.59].
What am I restricted to selling, and where must I buy supplies?
You are restricted to offering services and inventory items designated by Great Clips, and you must offer the full range of required services and required inventory as authorized by them. Additionally, approximately 90% to 95% of your initial purchases and around 80% to 85% of ongoing purchases will need to be from Great Clips or suppliers designated by them, including certain printed materials and paper goods [p.27, p.4].