Cost Cutters Hair Salon Franchise Costs $150K – $309K (+ 2024 Profits)

Cost Cutters Family Hair Care, a well-regarded name in the family hair salon industry, traces its origins back to 1982 when it was founded by Joe Francis as part of a diversification from his initial venture, The Barbers Hairstyling for Men, established in 1963.

This expansion marked the beginning of Cost Cutters’ journey to provide convenient and affordable hair-care services for the whole family. Today, Cost Cutters is under the ownership of Regis Corporation, headquartered in Minneapolis, Minnesota, a major player in the hair salon sector that also owns several other well-known salon brands.

Cost Cutters stands out in the competitive hair care market for its focus on family-friendly services, offering a range of hair treatments and styling options for men, women, and children in a welcoming and relaxed environment.

Type of Expenditure	Amount
Initial Franchise Fee	$13,000 – $40,000
Leasehold Improvements	$60,000 – $120,000
Furniture, Equipment and Supplies	$25,000 – $50,000
Construction Management Services Fee	$6,000 – $8,000
Construction and Design Plan Review	$500 – $1,000
Post Build Review	$2,000 – $3,000
Computer Software (Point of Sale System)	$2,040
Computer Hardware/Installation and Onsite Training	$2,000 – $2,000
Opening Inventory	$5,000 – $10,000
Travel and Living Expenses during Orientation Training	$2,000 – $5,000
Rent and Security Deposit	$3,000 – $10,000
Grand Opening Advertising	$5,000
Signs	$6,000 – $12,000
Professional Fees	$6,000 – $12,000
Additional Funds – 3-6 Months	$15,000 – $30,000
Total	$150,000 – $309,000

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The initial franchise fee for a new Cost Cutters franchise is $39,500. For those who were franchisees prior to September 30, 2011, the fee is $12,500.

Royalty Fee

Franchisees pay a royalty fee of the greater of 6% of Gross Revenues or $100 per week throughout the franchise agreement term.

Advertising Fee

The advertising fee is 4% of Gross Revenues, due weekly for the preceding week.

Local Advertising

In addition to the Advertising Fees, franchisees must spend at least 1% of their Gross Revenues each quarter on approved local media advertising and promotion.

Lease or Rent Fee

Lease or rent fees vary based on location and lease agreements. A lease renewal fee of $1,500 is applicable upon execution of the lease renewal.

Lease Guaranty Fee

If Cost Cutters agrees to guarantee a franchisee’s lease obligations, a monthly Lease Guaranty Fee is charged, which is the amount by which 12% of the franchisee’s monthly Gross Revenues exceeds their monthly lease payments.

Franchise pros and cons

The Pros:

• Third-party financing: The brand offers its franchisees financing through third-party lenders. Qualified franchisees get funded for the franchise fee, equipment, inventory, development and ongoing costs.
• Real estate and construction: Cost Cutters Family offers its franchisees real estate experts for establishing and building their salons. It helps them with site selection, site approval, design, construction, development and lease negotiations.
• Comprehensive Training: The brand has a comprehensive initial 24 hour classroom training program for its franchisees and their staff to equip them with business management skills and best practices. Also, it offers them grand opening training and ongoing training sessions.
• Marketing and branding: The brand has a dedicated and professional marketing team to help franchisees attract and retain customers. It offers franchisees turnkey marketing tools and resources such as ad templates, web development, national media, loyalty apps and local salon promotional campaigns.
• Family-focused salon: The brand offers a well-designed, all-family-inclusive setting offering convenience to all members of the family. It helps franchisees stand out from the competition and improve sales.
• Multiple income streams: These include a range of coloring services, coupons and special deals for attracting new customers.
• Franchise-focused brand: The brand has qualified and experienced management to help franchisees succeed. It is owned by one of the largest haircare salon franchises, giving franchisees a well-proven business system and rich infrastructure to establish and grow their salons.

The Cons:

• Not a home-based business: The franchise cannot be operated from a home or mobile unit. Franchisees must have an office location, a retail facility, or a warehouse.
• Not a part-time business: The business does not present a part-time or side opportunity. The salons must work as per the brand’s operating hours.
• No exclusive territory protection Cost Cutters does not allow franchisees to operate their salons in an exclusively protected area. They may face competition from other franchisees licensed by the franchisor or from competing brands it controls.
• Not a passive business: The franchise does not allow for absentee ownership. Franchisees must take part in the day-to-day operations of their salons.
• Competition: Supercuts, City Looks, Roosters, First Choice Hair Cutters and Sport Clips, to name a few.

How to open a cost Cutters Hair Salon Franchise

Opening a Cost Cutters Family Hair Care franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Cost Cutters Family Hair Care franchise.

1. Initial Research and Consideration

• Start by understanding the Cost Cutters Family Hair Care brand, its position in the market, and how it fits within the broader portfolio of Regis Corporation.
• Consider how this franchise aligns with your business goals and personal interests in the hair care industry.

2. Financial Assessment

• Ensure you meet the financial requirements for opening a franchise, including the initial franchise fee, total investment range, and personal net worth.
• Evaluate your financial resources and consider financing options if necessary.

3. Contact the Franchisor

• Reach out to Cost Cutters or Regis Corporation to express your interest in opening a franchise.
• Request detailed franchise information, including the Franchise Disclosure Document (FDD) for a comprehensive understanding of the franchise terms.

4. Review Franchise Disclosure Document (FDD)

• Carefully review the FDD provided by Cost Cutters, paying close attention to investment costs, franchise fees, royalties, and obligations.
• Consider consulting with a franchise attorney to understand legal and financial aspects of the FDD.

5. Due Diligence and Meetings

• Engage in discussions with the franchisor to clarify any questions or concerns regarding the franchise opportunity.
• Attend discovery days or meetings with the franchisor and existing franchisees to gain insights into the operation of a Cost Cutters salon.

6. Franchise Application

• Complete the franchise application process, which may include background checks, financial verification, and interviews.

7. Secure Financing

• If necessary, secure financing through preferred lenders or financial institutions familiar with the Cost Cutters franchise model.

8. Franchise Agreement

• Upon approval, review and sign the franchise agreement with Cost Cutters, formalizing your commitment to opening your salon.

9. Training and Support

• Participate in the training programs provided by Cost Cutters and Regis Corporation, covering salon operations, staff management, and customer service.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.