In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Cost Cutters franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Cost Cutters franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Cost Cutters franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Cost Cutters’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- average total sales (fiscal year ended June 30, 2016) for the 364 franchised Cost Cutters Businesses that have been open and operating for at least 2 years as of July 1, 2015, and that provided Cost Cutters with weekly statements of Gross Revenues for all 52 weeks
- average total sales (fiscal year ended June 30, 2016) for the 260 company-owned Cost Cutters Businesses that have been open and operating for at least 2 years as of July 1, 2015
- average total sales (fiscal year ended June 30, 2016) for both franchised and company-owned Cost Cutters Businesses that have been open and operating for at least 2 years as of July 1, 2015
- average total sales (fiscal year ended June 30, 2016) for the 364 franchised Cost Cutters Businesses that have been open and operating for at least 2 years as of July 1, 2015, by region (gold, navy, orange, purple, red, and teal)
- average total sales (fiscal year ended June 30, 2016) for the 364 franchised Cost Cutters Businesses that have been open and operating for at least 2 years as of July 1, 2015, based on sales ranges
- average annual sales, weekly sales, labor costs, supplies, continuing fees, total cost of sales, gross profit, advertising, insurance, rent, maintenance, other expenses, total operating expenses, and net cash flow from operations (fiscal year ended June 30, 2016) for the 175 franchised Cost Cutters Businesses that have been open for more than 12 consecutive months and whose methods of recording sales and expenses were in accordance with the policies and procedures recommended by Cost Cutters
Section I – Background Information
12 Things You Need to Know About the Cost Cutters Franchise
Parent Company Appoints New Executives
1. The Regis Corporation, which is the parent company of Cost Cutters, has appointed a few new executives so far in 2017. Some of the company’s most recent appointments include Jamie Suarez as Vice President, Creative and Rachel Endrizzi as Chief Marketing Officer.
2. Suarez has been with the Regis Corporation since 1997 and previously served as the company’s Creative Director. In his new role, Suarez will be responsible for developing the technical educational direction for the Regis family of brands, including Cost Cutters, as well as new trends and service offerings for the company; he will also oversee the Regis Artistic Team.
3. Endrizzi most recently served as the Regis Corporation’s Vice President of Branding and Marketing Communications and has been the interim Chief Marketing Officer since February. Since joining the company in 2004, Endrizzi has overseen brand marketing for all Regis brands in North America, including SmartStyle, Supercuts, First Choice Haircutters, Regis Salons, and Cost Cutters, as well as the company’s media relations. In her new position, Endrizzi will oversee the integrated marketing, brand management, and communications strategy, including efforts to improve the guest experience and revenue growth, across all Regis brands.
4. Although Cost Cutters already offers affordable hair care services, the brand typically uses coupons and deals to drive additional traffic. Participating Cost Cutters salons are offering a few deals that are good until the end of November, including $2 off a service purchase of $10 or more; $3.50 off a product purchase of $15 or more; a $60 haircut and full color; a $7 wax with any service; and $5 off any tanning package.
5. In addition to deals on services, Cost Cutters has several deals on name brand salon products, including BOGO (buy one, get one) 50% off all styling products such as Redken, Nioxin, and Paul Mitchell. These limited-time offers are only available at participating Cost Cutters locations.
Offers Full Range of Services
6. One of the defining features of Cost Cutters is that it offers a full range of services for the entire family. In addition to high quality haircuts for adults and children, Cost Cutters offers coloring services, including permanent, semi-permanent, and demi-permanent all over color, as well as mini, partial, and full highlights. Cost Cutters also offers special hair services, such as blow outs, perms, and formal styling/special occasion styling, as well as brow and facial waxing services.
7. The brand’s men’s services include modern haircuts, beard and mustache trims, grey blending, and other men’s color techniques.
8. After customers visit Cost Cutters for any service, the brand encourages customers to share their selfies on Instagram with the hashtag #CCSTYLED. Customers’ photos are shared in a selfie gallery on Cost Cutters’ website.
9. Cost Cutters Family Hair Care was founded in 1982 by Joe Francis, who opened the first The Barbers Hairstyling for Men salon in Minnesota in 1963. By the end of the 1960s, Francis’ salons started styling women’s hair and by the 1980s, Francis diversified his services to cater to everyone in a family.
10. Francis started franchising Cost Cutters the same year the first location opened and by the end of that year, there were over 12 Cost Cutters salons. The Cost Cutters franchise continued to grow and by the end of the 1980s, there were around 300 salons across the United States.
11. Today, Cost Cutters is owned by the Regis Corporation, the largest hair salon operator in the world, which also owns MasterCuts, Supercuts, and SmartStyle. There are currently over 600 company-owned and franchised Cost Cutters locations in the U.S.
Entrepreneur’s Franchise 500
12. Cost Cutters has appeared on Entrepreneur’s annual Franchise 500 list every year in the past decade. The company’s highest rank was No. 89 in 2008, while its lowest rank was No. 350 in 2017.
Section II – Estimated Costs
- Please click here for detailed estimates of Cost Cutters franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Cost Cutters’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
Part 1 – Average Sales of Company-Owned and Franchised Cost Cutters Businesses (Fiscal Year Ended June 30, 2016)
- The average sales figures are derived from sales reports from those franchised Cost Cutters Businesses that were in operation for at least 104 weeks as of July 1, 2015, and that provided Cost Cutters with weekly statements of Gross Revenues for all of the last 52 weeks for the period ending June 30, 2016.