Pigtails & Crewcuts is a Profitable Franchise at a $178K Cost

One of the leading hair salon franchises in the US, Pigtails & Crewcuts offers franchisees a simple and recession-proof business model at a very affordable cost.

Indeed, it would cost you on average $178,000 to open a new location (vs. $450,000 on average for salons franchises in general).

But is Pigtails & Crewcuts a profitable franchise? How much profits can you really make with this business? Is this worth investing the $178,000 upfront?

In this article we are looking at Pigtails & Crewcuts and its Franchise Disclosure Document to find out all you should know about this franchise. Let’s dive in!

Key stats

Franchise fee	$30,000
Royalty fee	5.0%
Marketing fee	2.0%
Investment (mid-point)	$178,000
Revenue per unit	$260,000
Revenue per sq. ft.	$175
Sales to investment ratio	1.5x
Payback period*	6-7 years
Minimum net worth	$250,000
Minimum liquid capital	$150,000

What is Pigtails & Crewcuts?

Pigtails & Crewcuts is an American children’s hair salon franchise based in Atlanta, Georgia.

Pigtails & Crewcuts was founded by Wade Brannon in 2002.

It provides a fun, friendly and convenient environment for kids and their parents to enjoy a great salon experience. In addition, it provides a custom line of kid-centric hair products and a private party room that you can customize for your dream party.

Pigtails began franchising in 2004 and currently has 69 locations in the United States, 67 of which are franchised.

Pigtails & Crewcuts franchises pros and cons

The Pros:

• Site selection and construction: The franchisor assists its franchisees in identifying a viable business location. Also, it helps them in the design and buildouts of their ideal salons as well as lease negotiations.
• Marketing and advertising: The brand offers its franchisee a complete marketing and collateral package to reach a large customer audience. These include national media, social media and regional advertising and loyalty programs.
• Extensive training: Pigtails & Crewcuts provides its franchisees with an extensive training program for their franchise owners and their staff. It trains them about its business concept, best salon practices and equipment use and prepares them for a successful launch of their salons.
• Exclusive territory protection: The franchisor allows its franchisees to operate in a protected territory. Under the agreement, it does not license any other franchise or operate competitive units in the development market.
• Financial assistance: The brand has established relationships with third-party sources to help finance the franchise fee, startup costs and ongoing costs of its franchisees.
• Multiple income streams: The franchisor offers its franchisees a variety of channels to add fun to their services and increase earning potential. These include throwing birthday parties and carrying a large selection of unique gifts, along with a custom line of children’s hair care products.
• Extensive corporate and ongoing support: The brand provides its franchisees with a turnkey package and proven system to establish and grow their salons. Franchisees get access to business insights and a network of successful business partners.

The cons:

• Not a home-based business opportunity: The franchise does not present a home- or mobile-based investment. Franchisees must have an established office space, retail facility, or warehouse.
• Not a passive investment: The franchisor does not allow absentee ownership. The franchisees must be actively involved in the operations of their salons.
• Not a part-time business: A Pigtails & Crewcuts franchise cannot be run on a part-time or side business basis. Franchisees must adhere to the parent company’s working hours.
• Competition from other kid hair salon franchises such has Cookie Cutters and Sharkey’s Cuts For Kids to name a few

How much does a Pigtails & Crewcuts franchise cost?

On average, you may need to invest around $178,000 to open a Pigtails & Crewcuts franchise. This amount is on the lower end compared to other salon franchises ($450,000).

The investment amount is an average that depends on factors like the hair salon’s location, size, etc. According to the latest FDD, the investment ranges between $99,500 and $256,000.

Startup costs

The investment covers all the startup costs you may need to start a kids hair salon. You must need to pay an initial franchise fee of $30,000 to the franchisor. In addition to this franchise fee, the investment also covers:

• Formation Costs: initial training fee, leasehold improvements, equipment, furniture, fixtures, decorating, computer system, signage, permits, business licenses, professional fees, etc.
• Initial Marketing: initial supply of marketing and promotional materials, grand opening advertising
• Operating Costs: opening inventory, opening supplies, insurance, rent, and working capital for the first 3 months, etc.

Type of Expenditure	Low	High
Initial Franchise Fee	$30,000	$30,000
Formation Costs	$45,500	$173,250
Initial Marketing	$3,500	$4,750
Operating Costs	$20,500	$48,000
Total	$99,500	$256,000

What is the revenue of a Pigtails & Crewcuts salon?

A Pigtails & Crewcuts franchised salon generates $260,000 in revenue per year.

This is the annual median sales of 57 franchised salons operating in 2021 as disclosed in the FDD. Indeed, there were a total of 62 franchises at the end of 2021, but 57 of them were in full operation for the whole fiscal year.

To give you an idea about the overall revenue you can make, the top performing salon had a revenue 6x times higher ($520,000) vs. the lowest performing salon ($88,000).

When it comes to revenue per sq. ft., an average Pigtails & Crewcuts franchise makes $174 revenue per square foot. That’s slightly below the average revenue per sq. ft. for salons franchises in general ($250-300 on average).

How profitable is a Pigtails & Crewcuts franchise?

We estimate that a Pigtails & Crewcuts salon makes about $53,000 in profits per year.

That’s a 20% EBITDA margin. Yet note that this profit margin is on the lower end compared to similar franchises (~25% industry average).

Note that Pigtails & Crewcuts does not disclose EBITDA information for its franchises. They only provide some limited information about royalty (5% sales), rent ($51,000 per year), and marketing fees (2%). In addition to the marketing fee, you may need to pay for local advertising. Indeed, we had to use the industry average to calculate the margin.

Profit and loss	Amount	% revenue	Source
Revenue	$260,260	100%	as per FDD
COGS	$(7,808)	3%	industry average
Staff	$(104,104)	40%	industry average
Rent	$(51,000)	20%	as per FDD
Royalties	$(13,013)	5%	as per FDD
Marketing*	$(13,013)	5%	industry average
Other Opex	$(18,218)	7%	industry average
EBITDA	$53,104	20%

Note that the profits you can make with your franchise may differ depending on factors like your location, market size, market demand, salon size, etc. So there is no guarantee your business will perform as well as what is presented in this article.

Is Pigtails & Crewcuts a good franchise investment?

We know that, at a $178,000 investment cost, Pigtails & Crewcuts is an affordable franchise among all hair salon franchises. Yet, with a 20% profit margin, is this a good investment? In other words, are the profits worth investing the $178,000 upfront?

Well we think it does: we found that Pigtails & Crewcuts has a payback of 6 to 7 years on average, which is in line with most beauty and salons franchises.

Therefore, you would reimburse the initial investment of $178,000 within 6 to 7 years max, after which you can reap the profits of your franchise, not a bad investment right?

How does it compare vs. other franchises?

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