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Considering a Sport Clips Franchise? Don’t Overlook These 26 Important Franchise Fees

by Franchise Chatter on December 17, 2016

in Franchise Fees, Salon Franchise



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Don't Invest in a Franchise Until You Check Out This List

Sport Clips Guys-Watching-Sports

If you are considering a Sport Clips franchise, don’t get blindsided by these 26 important franchise fees (from the initial franchise fee, to the royalty fee, to 24 other fees found in Items 5 and 6 of Sport Clips’ 2016 FDD).

  • All fees are imposed by and are payable to Sport Clips. All fees are non-refundable unless it is otherwise stated below.
  • All fees are uniformly imposed; however, older existing Franchise Agreements may allow franchisees to currently pay a lower advertising fund contribution and training fee until the time of the franchisee’s renewal.

1.  Franchise Fee:  $12,500 to $59,500

  • Except as described here, all new franchisees pay a $59,500 lump sum franchise fee when they sign a Multi-Unit Development Agreement (MUDA) ($25,000 for the first Franchise Agreement, $19,500 for the second Franchise Agreement, and $15,000 for the third Franchise Agreement), and have the right to open 3 Sport Clips stores within a specified area and during a specified time over a period of 3 years.
  • If Sport Clips awards a single store Franchise Agreement or a 2-store MUDA, the franchisee will pay a $25,000 lump sum franchise fee when the franchisee signs a Franchise Agreement for a single store, or a $44,500 lump sum franchise fee when the franchisee signs a Franchise Agreement with a 2-store MUDA ($25,000 for the first Franchise Agreement and $19,500 for the second Franchise Agreement).
  • Sport Clips will grant a 2-store MUDA if your store is in a city of less than 100,000 people and is at least 75 miles from any city that has more than 100,000 people.
  • If Sport Clips grants you a single store Franchise Agreement or a 2-store MUDA, you have no rights to buy additional franchises at a reduced price. There are no refunds under any circumstances.
  • Examples of situations where Sport Clips would award a single store Franchise Agreement or a 2-store MUDA would be for a Sport Clips store Manager who qualifies to become a franchisee or for a Veteran of the U.S. Armed Forces who does not financially qualify for additional licenses.
  • Sport Clips participates in the International Franchise Association’s VetFran program. Under this program, a new franchisee who is a veteran of the U.S. Armed Services, who has been honorably discharged, who has had at least one year of active service, and who signs a MUDA for 3 or more stores is eligible to receive a 20% reduction on the initial franchise fee.
  • If you sign a MUDA for 3 or more stores, and you want to purchase additional stores after the commencement of your original Franchise Agreement and MUDA, it is Sport Clips’ current policy to charge an initial franchise fee of $15,000 per additional store.
  • If you have 5 or more Sport Clips stores open and operating, it is Sport Clips’ current policy to charge an initial franchise fee of $12,500 per additional store license.

2.  Supplemental Services Fee:  $5,000 for your first store, $4,000 for your second store, and $3,000 for your third store and any additional stores

  • If Sport Clips offers Supplemental Services in your area, you will sign the Supplemental Services Agreement that is Attachment E to the Franchise Agreement and pay a Supplemental Services Fee of $5,000 for your first store, $4,000 for your second store, and $3,000 for your third store and any additional stores in one lump sum.
  • If you have 5 or more stores open and operating, you may be eligible to elect a limited services agreement with a reduced fee of $2,000.
  • The Supplemental Services Fee is not refundable under any circumstances. At the present time, Sport Clips offers Supplemental Services in all areas and these services and fees are mandatory.

3.  Point-of-Sales Software License:  $2,500 for the first license, $2,250 for the second license, and $2,000 for each additional license



  • Before you open your Sport Clips store, you must purchase from the Company a point-of-sale software license to use in your store. The cost for the software license is $2,500 for the first license, $2,250 for the second license, and $2,000 for each additional license.
  • This fee is not refundable.

4.  Grand Opening Advertising Deposit:  $25,000 to $30,000

  • Before you open your Sport Clips store, you pay a Grand Opening advertising deposit of $30,000 in one lump sum to promote your store in its local market area. 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 refunded to you.

5.  Royalty:  6% of Net Sales

  • Due Date:  Payable on Monday of each week by ACH transfer.
  • Net Sales include all revenue from the franchise location. Net Sales do not include sales tax.

6.  Advertising:  $300 per week, or 5% of Net Sales, whichever is more

  • Due Date:  Same as royalty fee.
  • Sport Clips has established and administers an Advertising Fund. Under the Franchise Agreement, you are required to pay the greater of $300 each week, or 5% of your Net Sales for the previous week, as an Advertising Fund contribution.
  • However, it is Sport Clips’ current policy to charge you no more than $450 per week as an Advertising Fund contribution. For example, if 5% of your Net Sales for the previous week exceeds $450, Sport Clips will only charge you a maximum of $450 for that week.
  • Sport Clips can change this policy at any time, and it plans to review the maximum amount payable in December of each year. Sport Clips currently expects that the cap on the maximum amounts payable each week will be increased in 2017 and 2018 and 2019, however, under the current Franchise Agreement, it cannot charge you more than 5% of your Net Sales as an Advertising Fund Fee, with a minimum of $300 each week.
  • There may be additional advertising requirements contained in your premises lease. The extent of such advertising requirements in your lease may or may not be subject to negotiation; consequently, the extent of any such advertising obligation, if any, may be unknown to Sport Clips.

7.  Training Fee:  Base Training Fee of $25 per week, plus a Percentage Training Fee of $55 per week or 1% of Net Sales, whichever is more

  • Due Date:  Same as royalty fee.
  • Under the Franchise Agreement, you are required to pay a weekly Base Training Fee of $25 per week, plus a Percentage Training Fee of $55 or 1% of Net Sales, whichever is more.
  • However, it is Sport Clips’ current policy to charge you no more than $85 per week as the Percentage Training Fee. For example, if 1% of your Net Sales for the previous week exceeds $85, Sport Clips only charges you a maximum Percentage Training Fee of $85 plus the Base Training Fee of $25 for that week.
  • Sport Clips can change this policy at any time, and it plans to review the maximum amount payable in December of each year; however, under the current Franchise Agreement, it cannot charge you more than the Base Training Fee of $25 each week, plus the greater of $55 or 1% of your Net Sales each week as the Percentage Training Fee.
  • Other than the weekly training fee, there is no additional charge for this training although you or your employees may incur expenses to travel to the training.

8.  Stylist Recruitment Fee:  1% of Net Sales



  • Due Date:  Same as royalty fee.
  • Under the Franchise Agreement, you are required to pay a Stylist Recruitment Fee of 1% of your Net Sales for the previous week.
  • However, it is Sport Clips’ current policy to charge you no more than $20 per week as the Stylist Recruitment Fee. For example, if 1% of your Net Sales for the previous week exceeds $20, Sport Clips will only charge you a maximum of $20 for that week.
  • Sport Clips can change this policy at any time, and it plans to review the maximum amount payable in December of each year.

9.  Technology Fee:  1% of Net Sales

  • Due Date:  Same as royalty fee.
  • Under the Franchise Agreement, you are required to pay a Technology Fee of 1% of your Net Sales for the previous week.
  • However, it is Sport Clips’ current policy to charge you no more than $10 per week as the Technology Fee. For example, if 1% of your Net Sales for the previous week exceeds $10, Sport Clips will only charge you a maximum of $10 for that week.
  • Sport Clips can change this policy at any time, and it plans to review the maximum amount payable in December of each year.

10.  Local Advertising Coop Fee:  up to $300 per week

  • Due Date:  Same as royalty fee.
  • Payable only if you are in an area that votes to establish a local advertising cooperative.
  • If franchisees owning 75% or more of the stores in your market area vote to establish a local advertising cooperative, you are required to participate in the local advertising cooperative membership.
  • The local advertising cooperative can assess each member store a fee of up to $300 per week. The amount of the fee is decided by a vote of the cooperative’s members.
  • Currently, there are no active advertising cooperatives.

11.  Local Stylist Recruiting Coop Fee:  $100 per week, or 1% of net sales, whichever is greater

  • Due Date:  Same as royalty fee.
  • Payable only if you are in an area that has an established local Stylist Recruiting Coop.
  • If franchisees owning 75% or more of the stores in your market area vote to establish a local Stylist Recruitment Cooperative, you are required to participate in the local Stylist Recruitment Cooperative membership.
  • The local Stylist Recruitment Cooperative can assess each member store a fee not to exceed 1% of Net Sales, and can establish a minimum fee not to exceed $100 per week.
  • Decisions on how the funds are to be allocated are also made by a vote of the cooperative’s members.
  • Currently, there are no active Stylist Recruitment Cooperatives.

12.  Sport Clips Wayne McGlone Memorial Relief Fund Contribution:  $5 per week

  • Due Date:  Same as royalty fee.
  • The Sport Clips Wayne McGlone Memorial Relief Fund (“SCWMMRF”) is an emergency assistance fund supported by and available only to Sport Clips franchisees, their employees, and Sport Clips employees. SCWMMRF was started with a donation from Sport Clips in the amount of $25,000.
  • Stores owned by Sport Clips contribute to the SCWMMRF at the same rate as franchised stores.
  • Contributions to the fund may be tax deductible to you.
  • All contributions to the SCWMMRF go into a general fund (not specified or designated for any particular emergency or hardship), and any distributions undergo the review process as designated by an Independent Selection Committee which is comprised of the then-current Sport Clips Manager of the Year, a franchisee selected by the Team Leader Advisory Council, and a representative of the Chisholm Trail Community Foundation.

13.  Computer Software Monthly Maintenance Fee:  $45 per month currently

  • Due Date:  On the first Monday of each month.
  • The fee includes support and updates to your required POS computer software.
  • These fees are paid to a third party vendor.

14.  Accounting Software Maintenance Fee:  not to exceed $75 per month

  • Due Date:  On the first day of each month.
  • Fees are paid by you to the franchisor or directly to third party supplier if such a program is established.

15.  Meeting Registration Fees:  currently $645 per person for the Annual Meeting. Subject to change, but will not exceed $1,000 during the term of the Franchise Agreement.

  • Due Date:  Upon registration for national and area meetings.

16.  Renewal Fee:  $5,000 if you own fewer than 3 open franchised Sport Clips; $3,500 if you own 3 or more open franchised Sport Clips

  • Due Date:  Upon renewal.

17.  Audit:  cost of audit plus 10% interest on underpayment

  • Due Date:  30 days after billing.
  • Payable only if audit shows an understatement of at least 2% of gross sales for any month.

18.  Transfer Fee:  $5,000 for the first store transferred, and $1,000 for each additional store or license transferred if the transfers are in one transaction

  • Due Date:  Prior to consummation of transfer.
  • Payable when you sell your franchise. No charge if franchise is transferred to a corporation that you control.
  • If you sell your business to an existing Sport Clips franchisee, you pay a reduced fee of $2,500 for the first store or license that is transferred to the existing franchisee, and $1,000 for each additional store or license that is transferred.

19.  Fee for Failure to Maintain POS Computer System Communication:  $100 per week for each week, or portion of a week, that your POS Computer System is not maintained with the current approved software or required Internet connection so that Sport Clips can access your sales data with its standard access software

  • Due Date:  Within 10 days of the end of the week that Sport Clips cannot access your Computer System.

20.  Indemnification:  all losses and expenses incurred

  • Due Date:  Upon being incurred by Sport Clips.
  • Payable only if Sport Clips incurs liability because of your actions.

21.  Interest:  maximum permitted by law, on late royalties and advertising fees

  • Due Date:  Upon payment of late royalties and advertising fees.

22.  Confidential Operating Manual Replacement Fee:  $250 per volume, or $1,000 per set of volumes

  • Due Date:  Upon reissue of Confidential Operating Manual.
  • Payable only if your Confidential Operating Manual is lost or destroyed.

23.  Extension Fee:  $5,000 per Franchise Agreement to extend the time by 1 year to open your stores as stated in the Development Schedule attached to your Franchise Agreement

  • Due Date:  Within 30 days of the date that your store should be open, but is not.
  • You are required to open your stores as stated on a Development Schedule that is Schedule A of your Franchise Agreement. If you do not open a store by the due date, you may request, and Sport Clips may grant you at its option, a one-time, one-year extension to open the store if you pay a fee of $5,000 for each store that does not open according to the date stated on Schedule A.
  • This extension is at Sport Clips’ option.

24.  Store Resale Assistance Fee:  5% of sales price, with a minimum fee of $5,000 and a maximum fee of $10,000

  • Due Date:  Upon the closing of the sale of your store.
  • Payable only if you execute a Resale Assistance Agreement requesting Sport Clips to assist you in identifying a buyer for your store.

25.  Store Resale Broker Fee:  currently $15,000

  • Due Date:  Upon the closing of the sale of your store.
  • Payable only if you sell your store to a party that was referred to you by a business broker with whom Sport Clips has an on-going relationship. The fee is paid by you directly to the Broker.

26.  Product Review Fee:  Sport Clips’ out-of-pocket cost

  • Due Date:  Upon your request that Sport Clips approve product.

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