Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Cost Cutters Franchise Costs (2015 FDD)

by Franchise Chatter on December 24, 2015

in Franchise Costs, Salon Franchise

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Cost Cutters Photo by d.xin

Detailed Estimates of Cost Cutters Franchise Costs Based on Item 7 (Estimated Initial Investment) of Cost Cutters’ 2015 Franchise Disclosure Document

1.  Initial Fee:  $12,500 to $29,500

  • The Initial Fee if you sign a Franchise Agreement for a single Cost Cutters Business will be $29,500, unless you are an existing franchisee prior to September 30, 2011, then the Initial Fee will be $12,500.

2.  Leasehold Improvements:  $60,000 to $120,000

  • The estimated amounts payable for leasehold improvements are based on Cost Cutters’ experience with corporate-owned locations and will vary based on the size of your salon; its geographic location; if there are costs assumed by your landlord in the form of either cash or free rent; whether you elect to incur the Engineering Drawings Fee; the cost of construction materials such as steel, drywall, flooring, and other construction materials; and other economic factors.

3.  Furniture, Equipment, and Supplies:  $25,000 to $50,000

  • Your costs for furniture, fixtures, signs, and equipment will vary depending on the size of your salon, its geographic location, shipping costs, whether you elect to utilize the services of Cost Cutters associated with the Equipment Coordination Fee, and other economic factors.

4.  Construction Management Services Fee:  $0 to $5,000

  • If you want the franchisor to supervise and oversee your Store’s construction process, you must pay it a $5,000 fee when you sign its Construction Management Services Agreement.

5.  Computer Hardware and Software (Point-of-Sale System):  $5,500

  • Cost Cutters requires that you purchase a computerized point-of-sale cash register and back office system with non-proprietary salon management software for your business.
  • Your costs for the computer hardware and software will vary depending on the specific type of hardware acquired, geographic location, and other economic factors.
  • Your costs will also include installation of hardware and software, and training by the vendor’s technical installers, if you are a new franchisee to the Cost Cutters franchise system. These installation and training costs are included in the $5,500 amount.

6.  Opening Inventory:  $5,000 to $10,000

  • You may purchase all or some of the initial inventory for your salon from Cost Cutters. Your costs for initial inventory will vary depending on the size of your salon, its geographic location, shipping costs, and other economic factors.

7.  Travel and Living Expenses During Orientation and Training:  $2,050 to $4,500

8.  Rent and Security Deposit:  $2,500 to $9,600

  • You will need to lease approximately 800 to 1,200 square feet for your salon. Cost Cutters estimates that your monthly rent will range from $2,500 to $9,600, although your actual rent will vary based on the size of your salon, its geographic location, and other economic factors.
  • Before opening your salon, you may need to pay both a security deposit equal to one month’s rent plus your first month’s rent.

9.  Grand Opening Advertising:  $8,000 to $15,000

  • You are required to spend a minimum of $8,000 on your grand opening advertising. The $8,000 is only a minimum amount. You may need to spend more than $8,000 to produce an effective grand opening depending on your market conditions.

10.  Signs:  $4,000 to $8,000

11.  Additional Funds (3 to 6 months):  $15,000 to $30,000

  • Additional Funds includes supplies, training fees, security deposit, utility deposits, prepaid insurance, legal and accounting fees, license fees, uniforms, rent, taxes, etc.
  • These amounts are an estimate of the expenditures you will make during the first three to six months of the operation of your Cost Cutters Business for salaries, supplies, inventory, utilities, Continuing Fees, Advertising Fees, and other miscellaneous operating costs and expenses.
  • These estimates are based on Cost Cutters’ 29 years of experience in franchising and operating Cost Cutters Businesses, and are derived primarily from information which franchisees provide to Cost Cutters.

12.  Total:  $139,550 to $287,100

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