Sport Clips: $424K Average Sales vs. $276K-$463K Franchise Cost

In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Sport Clips franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Sport Clips franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned Sport Clips outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the Sport Clips franchise opportunity

Section V – Presentation and analysis of Sport Clips’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• number and percentage of mature (i.e., with more than 2 years in operations) Sport Clips franchise stores that were operational at December 31, 2023 that achieved certain levels of 2023 sales (over $1,000,000; $800,001 to $1,000,000; $600,001 to $800,000; $500,001 to $600,000; $400,001 to $500,000; $300,001 to $400,000; $250,001 to $300,000; and less than $250,000)

• 2022 and 2023 average weekly sales for the Sport Clips franchise stores that were open prior to January 1, 2020 and January 1, 2021, respectively

• 2023 average net sales, variable costs, payroll, occupancy, advertising expenses, miscellaneous expenses, and operating profit for the 74 Sport Clips company-owned stores in Central Texas, Southern Nevada, Oklahoma, and Arkansas markets that were open prior to January 1, 2023

Section VI – Key ratios, comparables, computations, and analyses for the Sport Clips franchise opportunity (exclusive content for Platinum subscribers)

Section I – Sport Clips Franchise Costs

• Sport Clips franchise costs, based on Item 7 of the company’s 2024 FDD:

• Initial Franchise Fee:  $30,000 to $69,500
• Travel and Living Expenses While Attending Initial Training:  $1,000 to $2,000
• Real Estate:  Amount Not Specified
• Opening Inventory:  $4,000 to $7,000
• Fixtures and Equipment (Including Computer Equipment):  $58,000 to $74,000
• Leasehold Improvements:  $100,500 to $165,000
• Supplemental Services Fee:  $3,000 to $5,000
• Professional Fees:  $1,000 to $5,000
• Permits and Licenses:  $1,000 to $5,000
• Lease Deposit:  $0 to $7,000
• Signage:  $4,000 to $10,000
• Miscellaneous Opening Costs:  $3,000 to $5,000
• Insurance:  $1,300 to $4,000
• Grand Opening Advertising:  $30,000
• Additional Funds – 6 Months:  $40,000 to $75,000
• Total Estimated Sport Clips Franchise Costs:  $276,800 to $463,000

Section II – Sport Clips’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Sport Clips’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2024 FDD:

• Initial Franchise Fee:  $30,000 to $69,500
• Royalty:  6% of Net Sales
• Advertising:  $300 per week, or 5% of Net Sales, whichever is more
• Local Advertising Coop Fee:  up to $300 per week

Section III – Number of Franchised and Company-Owned Sport Clips Outlets

Franchised

2021

• Outlets at the Start of the Year:  1,768
• Outlets at the End of the Year:  1,778
• Net Change:  +10

2022

• Outlets at the Start of the Year:  1,778
• Outlets at the End of the Year:  1,781
• Net Change:  +3

2023

• Outlets at the Start of the Year:  1,781
• Outlets at the End of the Year:  1,785
• Net Change:  +4

Company-Owned

2021

• Outlets at the Start of the Year:  70
• Outlets at the End of the Year:  72
• Net Change:  +2

2022

• Outlets at the Start of the Year:  72
• Outlets at the End of the Year:  74
• Net Change:  +2

2023

• Outlets at the Start of the Year:  74
• Outlets at the End of the Year:  75
• Net Change:  +1

Section IV – News Updates on the Sport Clips Franchise

• Sport Clips Haircuts 2024 National Huddle Is a “Game Changer” for Franchisees, Stylists, and Clients

• Sport Clips Haircuts National Huddle Celebrates the “Pro in You” During the Franchise’s 30th Anniversary

• From Stylist to Owner: How Three Sport Clips Haircuts Franchisees Built Their Future

• Sport Clips Ranked No. 44 on Entrepreneur’s 2024 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Sport Clips Franchise (Item 19, 2024 FDD)

Part 1 – Statement of Gross Sales – Year 2023 Gross Sales as Reported to the Company (1,645 Mature Stores (With More Than 2 Years in Operations) That Were Operational at December 31, 2023)

• At the end of calendar year 2023, there were 1,785 franchised Sport Clips stores.

• The 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 Sport Clips System.

• The Statements of Gross Sales below do not include 75 Company-owned stores located in Central Texas, Southern Nevada, Oklahoma, and Arkansas, or 7 stores in Tennessee owned for part of 2023 by a limited liability company in which SCI was a member.

• 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.

Over $1,000,000

• Number of Stores:  6
• Percentage of Stores:  <1%
• Cumulative Percentage of Stores at Each Level or Higher:  <1%

$800,001 to $1,000,000

• Number of Stores:  30
• Percentage of Stores:  2%
• Cumulative Percentage of Stores at Each Level or Higher:  2%

$600,001 to $800,000

• Number of Stores:  155
• Percentage of Stores:  9%
• Cumulative Percentage of Stores at Each Level or Higher:  11%

$500,001 to $600,000

• Number of Stores:  251
• Percentage of Stores:  15%
• Cumulative Percentage of Stores at Each Level or Higher:  27%

$400,001 to $500,000

• Number of Stores:  420
• Percentage of Stores:  26%
• Cumulative Percentage of Stores at Each Level or Higher:  52%

$300,001 to $400,000

• Number of Stores:  455
• Percentage of Stores:  28%
• Cumulative Percentage of Stores at Each Level or Higher:  80%

$250,001 to $300,000

• Number of Stores:  159
• Percentage of Stores:  10%
• Cumulative Percentage of Stores at Each Level or Higher:  89%

Less Than $250,000

• Number of Stores:  169
• Percentage of Stores:  10%
• Cumulative Percentage of Stores at Each Level or Higher:  100%

Total

• Number of Stores:  1,645
• Percentage of Stores:  100%

• These 1,645 stores had average sales of $423,055 for the entire year of 2023. 747 stores had sales above this average, and 898 stores had sales lower than the average. The median sales for these 1,645 stores were $406,876 for the entire year of 2023.

Part 2 – Average Weekly Franchised Store Gross Sales by Month for the Calendar Years 2022 and 2023 as Reported to the Company

• The tables 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 Sport Clips System.

• The Statements of Gross Sales below do not include 75 Company-owned stores located in Central Texas, Southern Nevada, Oklahoma, and Arkansas, or 7 stores in Tennessee owned for part of 2023 by a limited liability company in which SCI was a member.

2022 Average Weekly Sales by Month (Stores Open Prior to January 1, 2020)

• January (1,566 stores):  $7,107
• February (1,571 stores):  $7,663
• March (1,577 stores):  $7,912
• April (1,578 stores):  $7,893
• May (1,580 stores):  $7,930
• June (1,594 stores):  $7,936
• July (1,592 stores):  $7,826
• August (1,594 stores):  $8,526
• September (1,598 stores):  $7,893
• October (1,597 stores):  $7,898
• November (1,599 stores):  $7,709
• December (1,602 stores):  $7,814
• 2022 Average Weekly Sales (1,587 stores):  $7,842

2023 Average Weekly Sales by Month (Stores Open Prior to January 1, 2021)

• January (1,654 stores):  $7,837
• February (1,652 stores):  $8,041
• March (1,647 stores):  $8,258
• April (1,641 stores):  $8,267
• May (1,641 stores):  $8,345
• June (1,637 stores):  $8,348
• July (1,636 stores):  $8,182
• August (1,633 stores):  $8,791
• September (1,632 stores):  $8,108
• October (1,632 stores):  $8,039
• November (1,631 stores):  $7,704
• December (1,632 stores):  $8,128
• 2023 Average Weekly Sales (1,639 stores):  $8,171

Part 3 – Expense Reports for Company-Owned Stores During 2023

• Sport Clips owned and operated 75 stores in Central Texas, Southern Nevada, Oklahoma, and Arkansas markets during 2023. Sport Clips is not offering franchises in these markets. The table below does not include 1 non-mature Company-owned store that opened in Q4 2023.

• The managers of the Company-owned stores included in the Expense Reports did not receive any services that were not generally available to all other Sport Clips stores.

• Each store offered similar products and services as would generally be offered by a typical Sport Clips store, except for limited tests of procedures, products, and/or services that may or may not be eventually incorporated into the system, depending on the success of the tests.

• The Expense Reports below show the average expenses at each sales level and those expenses as a percentage of total revenue.

Sales Less Than $400,000

• Number of Stores:  18
• Net Sales:  $313,662 (100%)
• Variable Costs:  $24,592 (8%)
• Payroll:  $166,552 (53%)
• Occupancy:  $72,531 (23%)
• Advertising:  $18,042 (6%)
• Miscellaneous:  $12,150 (4%)
• Operating Profit:  $19,796 (6%)

Sales $400,001 to $500,000

• Number of Stores:  18
• Net Sales:  $432,665 (100%)
• Variable Costs:  $29,803 (7%)
• Payroll:  $206,175 (48%)
• Occupancy:  $74,304 (17%)
• Advertising:  $22,835 (5%)
• Miscellaneous:  $12,672 (3%)
• Operating Profit:  $86,876 (20%)

Sales $500,001 to $600,000

• Number of Stores:  19
• Net Sales:  $541,893 (100%)
• Variable Costs:  $36,480 (7%)
• Payroll:  $248,465 (46%)
• Occupancy:  $72,994 (13%)
• Advertising:  $28,006 (5%)
• Miscellaneous:  $13,613 (3%)
• Operating Profit:  $142,334 (26%)

Sales Greater Than $600,000

• Number of Stores:  19
• Net Sales:  $760,580 (100%)
• Variable Costs:  $49,791 (7%)
• Payroll:  $360,487 (47%)
• Occupancy:  $79,955 (11%)
• Advertising:  $32,164 (4%)
• Miscellaneous:  $14,415 (2%)
• Operating Profit:  $223,768 (29%)

Average of All Stores

• Number of Stores:  74
• Net Sales:  $515,958 (100%)
• Variable Costs:  $35,382 (7%)
• Payroll:  $247,016 (48%)
• Occupancy:  $74,987 (15%)
• Advertising:  $25,392 (5%)
• Miscellaneous:  $13,234 (3%)
• Operating Profit:  $119,946 (23%)

• Variable Costs include operating supplies, cost of goods sold, bank service charges, credit card discounts, and advertising to recruit Stylists.

• Payroll includes direct payroll, including payroll for an on-site full-time manager, payroll taxes, payroll processing, and fringe benefits, except 401K and medical insurance costs.

• Occupancy includes rent, pass-through expenses from the landlord, utilities, phone charges, and repairs and maintenance.

• Advertising includes the weekly payments to the Ad Fund plus other advertising and marketing expenses for the store.

• Miscellaneous expense includes magazine subscriptions, store insurance, awards, contributions to the Technology Fund, the Recruitment Fund, the Sport Clips Wayne McGlone Memorial Relief Fund, and overages and/or shortages from the cash drawer.

• Operating Profit does not include an amount paid for royalties or weekly training fees. The numbers in the expense reports are unaudited, but Sport Clips believes that these numbers are substantially correct.

Section VI – Sport Clips Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️