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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Sport Clips’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average gross sales for the 1,463 Sport Clips franchise stores that were in continual operation for the entire calendar years 2017, 2018, and 2019
- 2019 average gross sales for the 1,585 Sport Clips franchise stores that were in continual operation for the entire calendar years 2018 and 2019
- 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 (2014 to 2019)
- 2019 average gross sales, variable costs, payroll, occupancy, advertising expenses, miscellaneous expenses, and operating profit for the 67 Sport Clips stores in Central Texas, Southern Nevada, and Oklahoma City, Oklahoma owned and operated by the company for the entire year of 2019
Section I – Background Information
19 Things You Need to Know About the Sport Clips Franchise
Donates $1.25 Million to VFW for Its Help a Hero Scholarship Program
1. In early December 2019, Sport Clips announced that its $1.25 million donation to the Veterans of Foreign Wars Foundation will boost the impact of the Help A Hero Scholarship program that supports education for civilian careers. Sport Clips founder and CEO Gordon Logan, who is a veteran and VFW Life member, presented the million-dollar-plus check to VFW National Commander William “Doc” Schmitz at the VFW National Headquarters.
2. Logan said, “There’s a common misconception that GI Bill benefits and military training are enough to secure education or training for civilian occupations, but that’s often not the case. For many service members, additional degrees and certifications are needed to secure sought-after post-military work. There are 165 student veterans attending colleges and certification programs right now with the aid of Help A Hero Scholarships and more than 1,450 student veterans have benefited from these scholarships since 2014.”
3. He added, “This year’s fundraising will make even more scholarships available to U.S. service members and veterans in the year ahead. We are so grateful to the men and women who serve, and to their families, and we owe the success of the Help A Hero campaign to our generous Sport Clips clients, team members, and product partners. It’s an honor to say ‘thank you’ to them all.”
4. Schmitz added, “To date, the program has awarded more than $6.5 million in scholarships, which places it among the top-awarding service member and veteran scholarship programs in the country. Higher education doesn’t come easily to all of our student veterans. It often takes the support of scholarships or burdensome loans beyond what the GI Bill covers to get the education needed for meaningful careers as they transition from military service. Working with veteran-friendly companies such as Sport Clips is one way we can help make the transition from service member to the civilian world easier for veterans and their families.”
5. More than $120,000 of the money was raised from Sport Clips’ own $1 per haircare service donation made on Veterans Day while clients, individual supporters, and Sport Clips team members donated the largest portion of the money raised. Sport Clips partners Direct Beauty Express, American Crew, John Paul Mitchell Systems, Nioxin, Sexy Hair, Gibs Grooming, and Darlington Raceway also made substantial contributions.
6. The Help A Hero program started in 2007 when Sport Clips first worked with the VFW to provide phone calls to home for deployed and hospitalized service members and veterans. After the drawdown in troops began a few years later, the partnership transitioned in 2013 to become the VFW’s “Sport Clips Help A Hero Scholarship” program. Sport Clips is the Official Haircutter of the VFW, and its Help A Hero campaign is just one of the many ways it supports active-duty military and veterans.
IFA Awards Founder Gordon Logan with Hall of Fame Award for a Lifetime of Achievement in Franchising
7. In February 2020, the International Franchise Association (IFA) announced Gordon Logan, founder and CEO of the hair care company Sport Clips Haircuts, as the winner of this year’s Hall of Fame award. As the oldest and most prestigious award conferred by the IFA, the Hall of Fame award is given to members who show contributions through successful franchising programs and innovative activities towards the advancement of the franchising community.
8. Upon receiving the award, Logan said, “To be inducted into the IFA Hall of Fame is very special to me; to be recognized by my peers is a high honor indeed. I have been privileged to serve on the IFA Board, as Chairman of VetFran, and on the IFA Foundation Board; these experiences have been a tremendous help in the development of our brand. The IFA has always been at the forefront of positive changes in franchising, and I only hope that my contributions have helped move the franchise business model forward.”
9. Robert Cresanti, president and CEO of the IFA, added, “From his home in the Texas Hill Country, Gordon has touched thousands of lives around the country. Whether it’s through Sport Clips, his leadership at IFA, or his undying commitment to America’s veterans, Gordon embodies a commitment to doing things the right way. IFA is lucky to be able to rely on his counsel and honored to call him a friend.”
10. Gordon began his career in franchising when he became a franchisee in 1978 and began operating salons throughout Texas. Recognizing the lack of attention to men’s and boys’ haircuts, the first Sport Clips was opened in Austin, Texas in 1993. Sport Clips now has over 1,800 franchised locations in all 50 states and five provinces in Canada, demonstrating the power of franchising to build an international brand.
11. Gordon has a long history of supporting America’s veterans through programs such as the IFA Foundation’s VetFran. As an Air Force veteran, Gordon realizes the leadership potential of active duty military and veterans, and works to help veterans become owners of their own franchises.
Publishes Clean Certification Reopening Standards
12. In late May 2020, Sport Clips posted an update on its blog regarding what the brand was planning to do as some states lift stay-at-home orders during the ongoing COVID-19 pandemic. Sport Clips Haircuts said that it is on the forefront of making the necessary changes businesses must undergo as the world adjusts to COVID-19, first with the rapid closedown of its entire system – over 1,800 locations – and now, the planning and execution to reopen better than ever.
13. As a brand, Sport Clips was already the dominant haircare provider in the men’s and boys’ haircut space. With such a strong reputation, it was clear early on, internal planning had to focus on making sure the brand reopened as the leader in the industry for cleanliness standards.
14. That’s why Sport Clips developed the Sport Clips Clean Certification program, which provides enhancements to the company’s Cleaning, Maintenance and Sanitation (CMS) Standards, along with a new training program for team members. Every team leader (franchisee) is required to have their team members successfully complete the new Sport Clips Clean Certification training course prior to reopening their store.
15. The number one priority for Sport Clips is the health and safety of all clients and team members. By completing this course, team members are educated on the additional measures needed to ensure the store’s cleaning, maintenance, and sanitation standards are consistent for every client. These standards and training include:
- Proper use of disinfectants/sanitizers and the addition of disinfectant at each cutting station, hand sanitizer throughout the store, and cleaning and wiping down surfaces between each client;
- A fresh, clean cape for every client;
- Masks to be worn by all Sport Clips team members;
- Proper hand washing techniques before each service;
- Wellness screenings for team members and clients;
- Social distancing in-store in the waiting area, cutting floor, and showers (hair washing stations).
16. Sport Clips was founded in 1993 by Gordon Logan in Austin, Texas. At the time, Logan saw that there was huge potential and a relative lack of competition in the men’s and boys’ haircut markets. Logan wanted Sport Clips to be a comfortable place for men to get their haircut without all the extra frills of a women’s hair salon. With the help of industry professionals, Logan and his team developed the Sport Clips concept and settled on a sports theme.
17. Not long after opening the first Sport Clips, Logan opened a second salon in Houston followed by another location in Dallas. Logan started franchising Sport Clips in 1995 and based further expansion plans on where Southwest Airlines flew to keep travel expenses at a minimum.
18. Growth was initially slow and steady as it took five years to open 50 stores. However, by 2007, Sport Clips had grown to over 500 stores. A few years later, in 2012, Sport Clips expanded into Canada. More recently, in 2018, the brand celebrated the opening of its 1,800th location. Today, there are Sport Clips stores all across North America.
Entrepreneur’s Franchise 500
19. Sport Clips ranked No. 37 on Entrepreneur’s 2020 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 2020 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 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- 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: 1,703
- Outlets at the End of the Year: 1,750
- Net Change: +47
- 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
- Outlets at the Start of the Year: 69
- Outlets at the End of the Year: 70
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Part 1 – Statement of 2019 Gross Sales
- At the end of calendar year 2019, there were 1,750 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 70 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 2019 Gross Sales (1,463 Stores in Continual Operation During 2017, 2018, and 2019)
- The gross sales figures included in the first Statement of Gross Sales below are based upon all 1,463 Sport Clips franchise stores that were in continual operation for the entire calendar years 2017, 2018, and 2019. The gross sales figures are taken directly from gross sales reports made by the stores to the Company.