FDD Talk 2.0: Estimated Initial Investment for a Great Clips Salon (2012 FDD)

(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of Great Clips’ 2012 Franchise Disclosure Document – Part 1

Estimated Initial Investment for a Great Clips Salon

1.  Initial Franchise Fee:  $20,000

• The Initial Franchise Fee is $20,000 if you are applying for a single Franchise Agreement with no participation in an incentive program.

• If you have signed a Master Development Agreement, you will pay a $4,000 Development Fee and a $6,000 Initial Franchise Fee for each Franchise Agreement you sign in the Exclusive DMA. The Development Fee is non-refundable.

• If you are participating in the Three Star Program, you will not pay the Initial Franchise Fee of $20,000, but rather you will pay a non-refundable total fee of $35,000 for three franchises plus a $5,000 Initial Advertising Contribution to the Market Development Ad Fund, payable when you sign the Three Star Program Agreement.

2.  Initial Advertising Contribution to the Market Development Ad Fund:  $5,000

3.  Travel and Living Expenses While Training:  $1,500 to $2,500 per participant

4.  Architecture Fees:  $600 to $3,500

• You will pay architecture fees for plans and drawings for your Salon and for the costs of copying and delivering the drawings. This amount may be higher if revisions to completed plans are required, or if your local code requires engineered mechanical, electrical, and plumbing drawings. This amount may also be higher if your Salon will be located in a building requiring LEED Certification (Leadership in Energy and Environmental Design Green Building Rating System).

5.  Leasehold Improvements, including Labor:  $20,000 to $50,000

• Leasehold improvements, fixtures, signage, furnishings, and labor may be financed through lessors or third parties at your discretion. If you finance these items, you will incur financing costs.

• Your Salon will likely be in a shopping center rather than a newly built, free-standing building.

• The cost of leasehold improvements will vary depending on the condition of the location when it is handed over to you from the landlord. These estimated costs are based upon receiving the location in a standard “vanilla shell” condition.

• A typical Great Clips salon is approximately 900 to 1,200 square feet.

• In some circumstances, with Great Clips’ consent, it may be possible to convert an existing free-standing building or a pre-existing facility, as long as it conforms to all Great Clips system standards.  The cost of these kinds of conversions is too individually variable to be realistically predicted and may cost more than a newly-built facility.

• You are responsible for obtaining all necessary permits or licenses necessary for the siting, construction, renovation, or operation of the franchised business.