Great Clips Franchise in 2024: Costs, Fee & FDD
Discover why Great Clips is a top choice for franchise investors. Explore key insights on its proven business model, strong brand recognition, and financial performance that make it a compelling opportunity in the beauty industry.
Table of Contents:
Great Clips is a powerhouse in the haircare industry, founded in 1982 by Steve Lemmon and David Rubenzer. What started as a single location in Minneapolis has grown into one of the most recognized names in the franchise world. The founders envisioned a no-appointment, walk-in salon that provided affordable, quality haircuts, which was a revolutionary concept at the time. Today, Great Clips is synonymous with convenience and consistency, making it a go-to choice for millions of people across the country.
At its core, Great Clips offers haircuts, styling, and related haircare services. The simplicity of its service menu is one of its biggest strengths, catering to a broad audience, from kids needing a quick trim to adults looking for a fresh style without breaking the bank. While haircuts are the bread and butter, Great Clips also offers products like shampoos, conditioners, and styling aids, typically from well-known brands. The brand’s primary market includes busy families, professionals, and individuals who appreciate value and efficiency.
In terms of scale and scope, Great Clips is a giant. With over 4,400 salons spread across the United States and Canada, it’s hard to find a community without a Great Clips nearby. Serving millions of customers each year, the franchise sees a diverse and steady flow of traffic daily. This vast network not only boosts brand recognition but also ensures a robust support system for franchisees, leveraging decades of experience and data.
Franchisees are supported with extensive training programs that cover everything from daily operations to customer service excellence. New owners go through a comprehensive onboarding process, including both classroom-style learning and hands-on experience in a working salon. Additionally, Great Clips offers ongoing support, with marketing assistance, technology upgrades, and operational guidance, ensuring that every location maintains the high standards that customers expect. This combination of strong brand presence and comprehensive support makes Great Clips an attractive option for anyone looking to invest in the beauty and personal care industry.
Great Clips Franchise Insights
- Affordable Entry Point: The franchise fee for Great Clips is $27,500, with an initial investment range between $183K and $414K, making it accessible compared to many other franchise opportunities.
- Strong Franchise Network: With 4,427 franchised units across the U.S. and no corporate-owned locations, Great Clips shows a strong commitment to its franchisees, providing them with extensive market opportunities.
- Consistent Revenue Stream: The brand’s focus on no-appointment haircuts ensures a steady flow of customers, contributing to a business model that has proven resilient even in economic downturns.
- Long-standing Success: Great Clips has been franchising since 1983, giving it over four decades of experience in supporting franchisees and refining its business model.
- Technological Advantage: The Great Clips app has been downloaded over 10 million times, offering customers the convenience of online check-ins and driving higher traffic to salons.
Great Clips Franchise Key indicators
Growth YOY (%)
0%
vs industry 6%
Total U.S. Franchised Units
4,427
3-Year Failure Rate
9%
vs industry 6%
Sales-to-Investment ratio
1.2:1
How much does it cost to open a Great Clips franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Great Clips franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Great Clips franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Great Clips below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $20,000 | $35,000 |
| Initial Advertising Contribution to the MDAF | $5,000 | $5,000 |
| Travel and Expenses While Training | $1,500 | $2,500 |
| Architecture Fees | $250 | $3,500 |
| Leasehold Improvements, including Labor | $70,000 | $200,000 |
| Rent and Security Deposits | $1,000 | $10,000 |
| Fixtures, Signage, and Furnishings, including Salon Technology Hardware | $40,000 | $55,000 |
| Freight | $4,000 | $7,000 |
| Sales Tax on Fixtures, Signage, and Furnishings | $0 | $3,000 |
| Opening Inventory and Supplies | $4,700 | $6,400 |
| Grand Opening Advertising | $20,000 | $25,000 |
| Insurance | $1,500 | $3,000 |
| Lease Liability Fee and Lease Review Fee | $0 | $4,000 |
| Additional Funds (6-12 Months) | $15,000 | $55,000 |
| Total | $182,950 | $414,400 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
For opening a Great Clips franchise, based on the data you’ve provided, here’s what’s generally required:
- Initial Investment As shown above, the total estimated initial investment ranges from $182,950 to $414,400. This includes all the startup costs such as the franchise fee, real estate, construction, equipment, initial inventory, and additional funds for initial operating expenses. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Franchisees usually need to have a minimum of $48,163 in liquid assets. This amount is important for covering initial expenses before the business generates cash flow.
- Net Worth While the exact net worth requirement for Great Clips isn’t explicitly stated, it’s common in the beauty and personal care franchise industry to require a net worth of at least $300,000 to $500,000. This estimate is based on the typical financial requirements for similar franchises in the industry.
How much does a Great Clips franchise owner make?
Calculating the salary of a Great Clips franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Great Clips franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Great Clips Revenue & Gross Sales
Great Clips has shown impressive financial stability and growth, with recent performance indicators highlighting its strength in the market. The median gross sales for a Great Clips location stand at approximately $366,735, showcasing the brand’s ability to maintain consistent customer demand. This figure reflects the franchise’s strong positioning within the beauty and personal care industry, making it an attractive option for potential investors seeking a reliable revenue stream. Additionally, the franchise’s robust business model supports franchisees in achieving steady financial returns.
Which key factors impact the average revenue performance of Great Clips franchisees?
Several factors likely contribute to the strong median gross sales performance of Great Clips franchisees. One key factor is the brand’s emphasis on convenience, with its no-appointment model catering to a broad customer base seeking quick, affordable haircuts. Additionally, the increased adoption of the Great Clips app, which allows customers to check in online, has likely driven more consistent foot traffic to salons. Economic conditions, such as a growing focus on value due to inflationary pressures, may have also played a role, as customers turn to trusted, cost-effective brands like Great Clips. Furthermore, effective marketing strategies and continuous support from the franchisor have helped franchisees maintain and even grow their sales, despite any challenges the broader economy might present.
Great Clips Franchise Operational Costs
When opening a Great Clips franchise, the key primary ongoing operational costs you should consider include:
- Lease and Utilities Rent for the salon space is likely to be one of your most significant ongoing expenses, along with utilities such as electricity, water, and heating/cooling, which are essential for daily operations.
- Staffing Costs Employee wages and benefits are a major ongoing cost, as you’ll need to maintain a team of qualified stylists and potentially additional support staff.
- Inventory and Supplies Regular replenishment of haircare products, styling tools, and other supplies needed to perform services will be a consistent expense.
- Maintenance and Equipment Upkeep of salon equipment, such as chairs, mirrors, and styling stations, along with routine maintenance of the facility, is another critical cost to budget for.
- Local Marketing and Advertising While national marketing is covered by the ad fund, you may also want to invest in local advertising efforts, community sponsorships, or promotions to attract and retain customers in your specific market.
These costs are essential to keep in mind as they will impact your profitability and the overall success of your franchise.
Great Clips Franchise Fees
When considering the ongoing fees for a Great Clips franchise, it’s important to be aware of several key costs that will be regularly due. These fees are essential for maintaining the franchise’s support and marketing efforts, which help drive traffic to your location. Here are the main fees to keep in mind:
- Continuing Franchise Fee This is 6% of your gross sales and is due biweekly. This fee supports the overall franchise system, including the brand’s reputation and ongoing operational support.
- Continuing Advertising Contribution to the Ad Fund Also due biweekly, this fee is 5% of your gross sales. It funds national and regional marketing efforts that benefit all franchisees by increasing brand visibility and attracting customers.
Additionally, there might be other fees that could arise based on specific circumstances, such as additional local marketing efforts, technology upgrades, or equipment maintenance.
It’s crucial to factor these into your financial planning to ensure a comprehensive understanding of your ongoing costs.
Great Clips Franchise Earnings
Based on the most recent data, a Great Clips franchise with median gross sales of approximately $366,735 can expect owner-operator earnings (operating profits) around $66,012 annually based on industry margins. This reflects both strong sales performance and effective operational management.
For franchisees, these figures suggest a solid potential return on investment, especially for those actively involved in the day-to-day operations of the salon. With consistent year-over-year growth in both sales and earnings, Great Clips continues to be a reliable and profitable opportunity in the beauty and personal care industry.
How to Open a Great Clips Franchise
Becoming a Great Clips franchisee involves several key steps, starting from the initial inquiry and culminating in the grand opening of your salon. Here’s a breakdown of the process:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Franchise Application After the initial inquiry, you’ll be asked to complete a formal franchise application. This provides a more detailed overview of your financial situation, experience, and reasons for wanting to join the Great Clips family.
- Initial Interview and Meeting You’ll be invited to a meeting with the franchise development team. This is an opportunity to ask questions, learn more about the brand, and discuss your goals as a potential franchisee.
- Due Diligence and Validation During this stage, you’ll have the chance to speak with existing franchisees, visit operational salons, and gather additional information to ensure that Great Clips is the right fit for you.
- Signing the Franchise Agreement Once you’re satisfied with your due diligence and ready to move forward, you’ll sign the franchise agreement and pay the initial franchise fee. This secures your place in the Great Clips network.
- Site Selection and Lease Negotiation Great Clips will assist you in selecting a suitable location for your salon. They provide support in analyzing demographics, traffic patterns, and negotiating lease terms.
- Training Program Before opening, you’ll undergo an extensive training program that covers all aspects of running a Great Clips salon. This includes both classroom instruction and hands-on training in a working salon.
- Salon Build-Out With the site secured and training underway, the build-out of your salon begins. Great Clips provides guidelines and support for the layout, design, and equipment needed for your location.
- Pre-Opening Marketing As your salon’s opening day approaches, Great Clips will assist in executing a marketing plan to generate buzz and attract customers. This includes local advertising and community engagement.
- Grand Opening Finally, after months of preparation, your salon is ready to open its doors. Great Clips continues to offer support as you launch operations and begin serving customers, ensuring your start is as smooth as possible.
Pros & Cons
Pros
Strong Brand Recognition: Great Clips is a well-known and trusted brand in the beauty and personal care industry, which can help attract customers from day one.
Proven Business Model: With decades of experience and over 4,400 locations, Great Clips offers a time-tested business model that has demonstrated consistent profitability.
Affordable Initial Investment: The relatively low initial investment and manageable ongoing costs make it accessible compared to other franchises in the beauty industry.
High Customer Loyalty: The no-appointment, walk-in model and convenient service offerings create a steady stream of repeat customers, ensuring consistent cash flow.
Cons
Competitive Market: The haircare industry is competitive, with many local and national players. Success will require effective local marketing and excellent customer service to stand out.
Limited Service Offering: Great Clips focuses primarily on haircuts and basic styling services, which can limit revenue opportunities compared to full-service salons that offer a wider range of beauty services.
Dependency on Foot Traffic: The success of your location heavily relies on its accessibility and visibility. Poor site selection or local competition could impact your salon’s performance.
