In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Sport Clips franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Sport Clips franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Sport Clips franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Sport Clips outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Sport Clips’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average gross sales for the 1,341 Sport Clips franchise stores that were in continual operation for the entire calendar years 2016, 2017, and 2018
- 2018 average gross sales for the 1,472 Sport Clips franchise stores that were in continual operation for the entire calendar years 2017 and 2018
- average same-store sales growth over the last 6 years measured by average weekly revenues for all stores open for at least 13 months at the end of the indicated year (2013 to 2018)
- 2018 average gross sales, variable costs, payroll, occupancy, advertising expenses, miscellaneous expenses, and operating profit for the 52 Sport Clips stores in Central Texas, Southern Nevada, and Oklahoma City, Oklahoma owned and operated by the company for the entire year of 2018
Section I – Background Information
17 Things You Need to Know About the Sport Clips Franchise
Headlines Annual Convention with News of Expansion Markets
1. In April 2019, Sport Clips held its annual convention, the Sport Clips Haircuts National Huddle, in Las Vegas, Nevada. The theme for this year’s convention was “Double Down,” which emphasizes the franchise’s strengthened commitment to operational excellence, growth, and philanthropy.
2. As the founder and CEO of the nation’s leading haircare provider dedicated to men and boys, Gordon Logan welcomed the record annual meeting crowd of 3,100 team members with news of plans to grow the franchise by more than 100 locations in 2019 in new markets along with expansion in current North American markets. Logan also detailed the franchise’s focus on the delivery of championship haircare experiences, measuring and improving franchisee profitability, and attracting and developing more professional stylists.
3. Logan said, “It’s an exciting time to be a part of Sport Clips as we begin our 26th year serving clients through an ever-growing number of locations and markets. Sport Clips’ leadership team remains committed to offering the best in operational support, while area developers and franchisees continue to lead the way in making Sport Clips the go-to guys’ haircare provider and employer of choice for more than 18,000 stylists, managers and team members.”
4. Logan added, “We’ve streamlined the client check-in experience through the Sport Clips app and online, and, even though we are the first haircare franchise to have locations in all 50 states, we want to make it even more convenient for clients by adding more stores for easy access to our popular MVP experience.”
5. Additional noteworthy news from the convention include the following:
- A total of $5.7 million in Sport Clips-generated donations over five-and-a-half-years are helping veterans go back to school through Sport Clips VFW Help A Hero scholarships; while national partnerships with St. Baldrick’s Foundation and the American Red Cross are helping save lives; and the internal Wayne McGlone Memorial Relief Fund is assisting Sport Clips team members in need.
- Sport Clips continues to support the work of Ageless Aviation Dreams Foundation in its efforts to take veterans living in assisted living facilities on “dream flights” in restored Stearman biplanes; and with Sport Clips’ support, the organization is adding a fourth plane into rotation this summer.
- More than 1,200 communities benefit from locally-owned Sport Clips franchise locations and are contributors to local economies through employment opportunities, philanthropy, and sales that increased system-wide by 10 percent in the past year.
Launches New Mobile App
6. In December 2018, Sport Clips launched a new mobile app that makes check-in for a haircare service faster and easier. The app offers check-in, information about wait times, the choice of a favorite store and preferred stylist, and the ability to set personal reminders for the next MVP Experience.
7. Dan Miller, chief information officer for Sport Clips, said, “We designed the Sport Clips mobile app with our client’s convenience in mind. Since we don’t schedule appointments, and walk-ins are always welcome, clients can get in line online before ever heading to the store. We’ve improved things further by enabling a choice for clients to receive text messages when the stylist of their choice will be available and by offering clients the ability to set their own notifications for future visits.”
8. After checking in, the client is provided an approximate time to arrive at the store. Once inside, a digital display mounted near the front counter will display the client’s first name and last initial. A quick check-in at the in-store kiosk upon arrival completes the process for the client.
9. The mobile app also allows for “guest” check-ins for clients who are bringing along a family member or friend for a haircare service. The app is available in the Apple app store for iPhones and through Google Play for Android devices.
New Vice President of Franchise Development
10. In mid-May 2019, Sport Clips announced that Jim Atkinson had been promoted to vice president of franchise development. Atkinson is based in Poway, California and has been with Sport Clips since 2013, most recently serving in the role of senior director of franchise development. Prior to joining Sport Clips, Atkinson held development, operations, and leadership roles with San Diego-based The UPS Store, Inc.
11. Greg Smith, chief development officer for Sport Clips, said, “Jim is respected in the franchising community and a valuable member of the Sport Clips Haircuts team. Jim continues to drive our vision of strategic growth across the country with the focus of bringing only the most qualified candidates into the system.”
12. In his new position, Atkinson will continue to work from the west coast with the Texas-based Sport Clips franchise development team to offer qualified candidates franchise opportunities in markets throughout the U.S.
13. The owner-investor model works best for individuals who have “people leadership” and business experience, more than $200,000 in liquid assets, and a minimum net worth over $400,000. Sport Clips aligns well with corporate professionals who are looking to build a business that can help them step away from their day job or create another source of income.
14. Sport Clips was founded in 1993 by Gordon Logan in Austin, Texas. Logan recognized the huge potential, and relative lack of competition, in the men’s and boys’ haircut market. He set out to create a place “where guys could take care of one of life’s necessities – a haircut – and say ‘This is my kind of place; I feel comfortable here’ when they walked in the door.” Logan put together a group of industry professionals and came up with the Sport Clips concept.
15. In 1995, Logan began franchising Sport Clips and had an interesting approach to choosing new locations – to save money on travel expenses, Logan targeted areas where Southwest Airlines flew. Sport Clips grew fairly slowly at first and it took five years for the brand to open 50 locations. However, Sport Clips’ growth picked up in the 2000s and by 2007, there were 500 shops across the United States.
16. Sport Clips opened its first international location in Canada in 2012 and continued to grow over the next few years. In 2018, Sport Clips hit a major milestone with the opening of its 1,800th store. That same year, Sport Clips celebrated its 25th anniversary.
Entrepreneur’s Franchise 500
17. Sport Clips ranked No. 17 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Sport Clips franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Sport Clips’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 1,423
- Outlets at the End of the Year: 1,552
- Net Change: +129
- Outlets at the Start of the Year: 1,552
- Outlets at the End of the Year: 1,644
- Net Change: +92
- Outlets at the Start of the Year: 1,644
- Outlets at the End of the Year: 1,703
- Net Change: +59
- Outlets at the Start of the Year: 32
- Outlets at the End of the Year: 32
- Net Change: +0
- Outlets at the Start of the Year: 32
- Outlets at the End of the Year: 56
- Net Change: +24
- Outlets at the Start of the Year: 56
- Outlets at the End of the Year: 69
- Net Change: +13
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
Part 1 – Statement of 2018 Gross Sales
- At the end of calendar year 2018, there were 1,703 franchised Sport Clips stores.
- The 2 Statements of Gross Sales below do not include 4 stores in Rochester, New York, which are not typical Sport Clips stores and operate under a special limited services license agreement that is not offered to new franchisees. Sport Clips knows that the gross sales of the stores in Rochester, New York are, on average, less than other stores in the System.
- The 2 Statements of Gross Sales below also do not include 69 Company-owned stores located in Central Texas, Southern Nevada, Oklahoma, and Arkansas.
- All stores included in the Statements of Gross Sales did not receive any services that were not generally available to other Sport Clips stores, and each store offered similar products and services as would generally be offered by a typical Sport Clips store.
Table 1A – Statement of Gross Sales – Year 2018 Gross Sales (1,341 Stores in Continual Operation During 2016, 2017, and 2018)
- The gross sales figures included in the first Statement of Gross Sales below are based upon all 1,341 Sport Clips franchise stores that were in continual operation for the entire calendar years 2016, 2017, and 2018. The gross sales figures are taken directly from gross sales reports made by the stores to the Company.