This post was updated on August 27, 2017 to reflect information from Sport Clips’ 2017 FDD (Item 7).
Detailed Estimates of Sport Clips Franchise Costs Based on Item 7 (Estimated Initial Investment) of Sport Clips’ 2017 Franchise Disclosure Document
1. Initial Franchise Fee: $25,000 to $59,500
- When you sign a Multi-Unit Development Addendum (MUDA) Agreement, the initial franchise fee is $25,000 for the first store, $19,500 for the second store, and $15,000 for the third store. A total of $59,500 is due in one lump sum when you sign the MUDA Agreement; therefore, there is no additional franchise fee due for the second and third stores.
- When you sign a 2 store MUDA Agreement, the initial franchise fee due is $25,000 for the first store, and $19,500 for the second store. A total of $44,500 is due in one lump sum when you sign the MUDA Agreement; therefore, there is no additional franchise fee due for the second store.
- When you sign a single store Franchise Agreement, the initial franchise fee is $25,000.
- If you purchase more than 3 franchises under an MUDA, the initial franchise fee is $12,500 for each franchise that is in addition to 3 Sport Clips stores if these licenses are purchased at the time the MUDA is executed.
- If additional franchise licenses are purchased after the commencement of the MUDA, the cost is $15,000 per license.
2. Travel and Living Expenses While Attending Initial Training: $1,000 to $2,000
3. Real Estate: Amount Not Specified
- Lease payments will vary significantly depending upon the geographic location, terms of the lease, the total area of your store, and various other fees for occupancy charged by the lessor.
- The typical space that the Company will approve will range from 1,000 to 1,500 square feet, although smaller or larger spaces may be approved in special situations.
- The rent may range from $10 to $50 per square foot per year, depending on a number of factors. In most areas, rents typically run between $20 and $40 per square foot per year.
4. Opening Inventory: $4,000 to $6,000
- The cost of initial inventory will vary depending on your store size. The estimated amount is based on the company’s previous experience with franchisees. You are required to purchase an initial inventory of approved hair products for retail sale and in-store use.
5. Fixtures and Equipment (Including Computer Equipment): $41,000 to $48,000
- The cost of fixtures and equipment will vary depending on the size, configuration, and location of your store. This amount includes items such as hair cutting furniture and equipment, television sets, merchandise displays, computer equipment, and point-of-sale software.
6. Leasehold Improvements: $35,000 to $100,000
- Leasehold improvements for most stores will range from $60,000 to $90,000 before any allowance (if any) from the landlord. If a landlord allowance is available, it can range from $10 to $40 per square foot, with the average being approximately $20 per square foot range for new construction and approximately $10 per square foot range for existing centers.
7. Supplemental Services Fee: $3,000 to $5,000
- If Sport Clips or an Area Developer in your geographical area offers Supplemental Services, you are required to participate in this service plan. Currently, Sport Clips offers these services in all areas.
- If you sign an MUDA, Sport Clips will charge you a Supplemental Services fee of $5,000 for the first store, $4,000 for the second store, and $3,000 for the third store and any additional stores.
8. Professional Fees: $1,000 to $5,000
- This estimate includes the initial legal, accounting, and architectural services. Some cities and/or landlords may require that you use a professional architect or engineer to complete the plans beyond that which is provided by Sport Clips’ store designer.
9. Permits and Licenses: $1,000 to $3,500
10. Lease Deposit: $0 to $5,000
11. Signage: $4,000 to $8,000
- The estimated amount for signage includes both store front and in-store signs. Pricing will vary depending on your landlord’s sign criteria.
12. Miscellaneous Opening Costs: $3,000 to $5,000
- This amount includes utility deposits, miscellaneous business licenses, and permits. Some states require a tax deposit, which can be covered by a bond or interest bearing deposit with a bank or with the state.
13. Insurance: $1,300 to $2,500
- Insurance costs may not be uniform since premiums differ depending upon location, amounts of insurance acquired, the insurance company’s assessment of risk, the location of the insured business and business premises, insurance requirements of the landlord as set forth in the business premises lease, and applicable law.
14. Grand Opening Advertising: $30,000
- The amount of $30,000 is paid to the Sport Clips Ad Fund and is spent by the Ad Fund to promote your store in its local market area using a mix of public relations, promotions, advertisements, direct mail, coupons, and other marketing strategies determined by the company and in its sole discretion.
- You may spend additional amounts on other promotional activities that are arranged by or approved by Sport Clips.
- Any part of the grand opening advertising deposit that is not spent promoting your store during the first 180 days after you open your store will be returned to you.
15. Additional Funds – 6 Months: $40,000 to $75,000
- This estimates your initial start-up expenses. These expenses include payroll costs. These figures are estimates and Sport Clips cannot guarantee that you will not have additional expenses starting the business.
16. Total: $189,300 to $354,500
- This does not include Real Estate Costs, Royalties, or Marketing Fund Contributions.