Fantastic Sam’s Franchise: High Profits at a $398K Cost

With more than 650 hair salons in the US alone, Fantastic Sam’s is one of the leading hair salon franchise. So if you’re considering getting into the salon franchise industry, you should seriously consider Fantastic Sam’s.

Indeed, it’s not only a very profitable business (31% EBITDA margin) yet it’s also affordable: the initial investment ($398,000) is lower than the average for most salon franchises ($450,000).

What does it mean for you as a franchisee? How much profits can you realistically make with a Fantastic Sam’s franchise?

In this article we are analysing Fantastic Sam’s and its Franchise Disclosure Document to find out how much it really costs, how profitable it really and whether it’s a good investment. Let’s find out!

Key stats

Franchise fee	$30,000
Royalty fee	6.0%
Marketing fee	5.0%
Investment (mid-point)	$241,000
Revenue per unit	$262,000
Revenue per sq. ft.	$218
Sales to investment ratio	1.1x
Payback period*	6 years
Minimum net worth	$500,000
Minimum liquid capital	$60,000

What is Fantastic Sam’s?

Fantastic Sam’s is an American full-service haircare salon franchise headquartered in Woburn, Massachusetts.

It was founded by Sam Ross in 1974 in Memphis, Tennessee. It is the pioneer of no-appointment walk-ins and its salons provide a full range of hair care products and services to men, women and children. 

 Fantastic Sam’s began franchising in 1976 and currently has over 658 salons, of which 652 are in the US.

Fantastic Sam’s franchises pros and cons

Pros

• Full-service haircare concept: The brand offers full-service haircare salons, making it very appealing to a wider market segment, making the concept appealing to all types of gender demographics.
• Simple real estate: The brand utilizes simple and small real estate and design. Franchisees can get started with low equipment and staff requirements and scale their businesses easily.
• Comprehensive training: The brand has a detailed virtual and classroom training program to help franchisees establish, build and grow successful Sam’s Salons. Franchisees are trained in the development and operation of the system, hairstyling techniques, sales training, the accounting system, inventory control, and customer relations.
• Marketing and publicity: Fantastic Sam’s franchise provides its franchisees with aggressive marketing strategies to help them attract customers and boost their sales. It offers them turnkey marketing and advertising tools such as national media, social media, loyalty programs, regional advertising, and targeted promotional campaigns for their local salons.
• Third-party financing: The franchisor provides its franchisees with financial guidance and funding for startup costs, franchise fees, equipment, inventor, and payroll expenses through third-party partnerships.
• Site selection and construction: The franchisor provides its franchisees with the site selection, layout designs, and construction of their salons. In addition, it provides them with lease agreements and negotiations.

Cons

• No exclusive territory protection: The franchisor does not grant the franchisees the right to operate their salons in a protected area. Franchisees may face competition from other franchises or affiliates and competitive channels controlled by the parent company.
• Not a passive investment: The franchise does not allow for absentee ownership. Franchisees are actively involved in the day-to-day operations and decision-making of their salons.
• Not a part-time business: The business cannot be run part-time. Franchisees must follow the set working hours of the franchisor.
• Not a mobile or home-based franchise: The franchise cannot be operated from home or a mobile unit. Franchisees are required to establish fixed office space, such as a warehouse or retail facility.
• Competition from hair salon chains like Sport Clips, Supercuts, Great Clips or even Roosters Men’s Grooming Center

How much does a Fantastic Sam’s franchise cost?

You have to invest around $241,000 to open a Fantastic Sam’s franchise haircare salon.

This is an average; indeed, it varies based on many factors, such as the location of your salon, its size, market conditions, and other factors.

In addition to the initial franchise fee of $30,000, which you must pay to the franchisor, you would also pay for the leasehold improvements, furniture and fixtures, signage, equipment, insurance, etc.

Fantastic Sam’s startup costs

Here’s the full breakdown of costs:

Type of Expenditure	Amount
Initial franchise fee	$30,000
Leasehold improvements	$30,000 – $150,000
Salon equipment	$35,000 – $40,000
Fixtures, furnishings, and other equipment	$6,000 – $10,000
Signage	$5,000 – $15,000
Insurance	$3,500 – $6,500
Working capital (3 months)	$10,000 – $30,000
Other	$31,000 – $80,500
Total	$150,500 – $332,000

What is the revenue of a Fantastic Sam’s salon?

A Fantastic Sam’s franchise makes $262,000 in revenue per year on average.

This is the average annual sales of 426 franchises operating in the fiscal year 2021.

Here is the breakdown of average revenue by tier:

In terms of revenue per square foot, Fantastic Sam’s is typically 1,000 to 1,400 sq. ft. in size so that’s $218 revenue per year per sq. ft., not in line with salon franchises as per our benchmarks ($270).

Note that the franchisor didn’t report more recent numbers than 2021 in its 2023 Franchise Disclosure Document.

How profitable is a Fantastic Sam’s franchise?

We estimate that a Fantastic Sam’s franchised salon makes $110,000 in profits per year.

Fantastic Sam’s is a profitable franchise: we estimate it has a 31% EBITDA margin, higher than the average salon franchise as per our benchmarks (25% on average).

Note that we calculated this number using the information available in the Franchise Disclosure Document 2022. Unfortunately, Fantastic Sam’s does not provide detailed cost information, especially for cost of goods sold (COGS) and labor costs which we had to estimate instead using as per industry benchmarks.

Profit and loss	Amount	% revenue	Source
Sales	$359,013	100%	as per FDD
COGS	($10,770)	3%*	industry average
Labor	($143,605)	40%*	industry average
Royalties	($21,541)	6%	as per FDD
Rent	($30,000)	8%	as per FDD
Marketing	($17,951)	5%	as per FDD
Other Opex	($25,131)	7%*	industry average
EBITDA	$110,015	31%

Should you invest in a Fantastic Sam’s franchise?

When we compare profits to the required initial investment, we obtain a 7 years payback for Fantastic Sam’s.

In other words, you would repay all creditors (banks) and any investors (including yourself) within 7 years on average if you were to invest in a Fantastic Sam’s franchised salon today.

This is a good payback in line with salons franchises (7-8 years on average). Therefore, it’s safe to say Fantastic Sam’s is a good investment as you would be able to quickly reimburse the initial investment before you can reap the profits of your salon.

How does it compare vs. other franchises?

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