With over 4,400 hair salons across the US and Canada, Great Clips is the world’s largest hair salon brand. Since its foundation in the 1980s, the brand has put an emphasis on value for money, providing inexpensive haircuts in no-frills, stripped-down salons.
Over the past decade, the company has made good use of technology to make its business more efficient and customer friendly. For a decade, customers have been able to use the company’s app to check how busy salons are and add themselves to the wait list for a cut. Other software tracks customers’ visits and haircut preferences to provide them with a more efficient service.
How much is a Great Clips franchise?
The estimated costs of establishing a Great Clips franchise range from $146,750 to $302,400 (Item 7, FDD 2021). This includes initial franchise fees, improvements to a leasehold property to prepare it to be a Great Clips, initial supplies, and the costs of a grand opening.
How much is the Great Clips franchise fee?
The initial franchise fee for a single salon is $20,000. However, there are many ways to get a discount on this, especially if you want to open multiple salons. Under a Master Development Agreement, you can open a string of Great Clips salons for an initial fee of $10,000 each. The Three Star Program lets you set up three franchises for a total initial fee of $35,000 for all three, instead of $60,000. There’s a $5,000 rebate for veterans and other possible rebates through the expediter program, to obtain a specific location for the outlet (Item 5, FDD 2021).
Once a salon is set up, the main fees are a continuing franchise fee of 6% of gross sales and a contribution to the ad fund of 5% of sales, both payable biweekly (Item 6, FDD 2021).
How much does a Great Clips franchise make?
The average gross sales for a Great Clips outlet in 2020 were $299,604 (Item 19, FDD 2021). This 2020 average is down over 20% from the previous year’s average due to COVID restrictions. As those restrictions and customers’ reticence to enter a salon recede, business is likely to recover. Even during periods of economic hardship, consumers continue to spend on personal grooming, making a Great Clips franchise relatively resilient to economic downturns.
Of course, the majority of the gross sales don’t turn into profits, even on a lean franchise like Great Clips. To estimate the earnings you could make from a Great Clips, you need to calculate ongoing costs and deduct these from sales. Comparison with similar franchises can also help in understanding a salon’s value. Franchise Chatter’s in-depth reviews and franchise comparison tools can help with this, providing more detailed information.
How do you franchise a Great Clips?
The path to running a Great Clips franchise starts with an online application covering areas such as your personal experience and financial data.
This is followed by a six- to eight-week period of mutual evaluation. During this time, the company’s representatives will talk with you and evaluate your application to determine whether you’re a good fit. This is also your chance to ask questions and learn more about the company, to assess whether it’s a good fit for you. You’ll be provided with more information and given a chance to follow up on it.
If both sides decide that you’re a good fit, then you’ll sign a franchise agreement and get started setting up your salon. The company has both financial and personal criteria it looks for in potential franchisees.
Personal characteristics:
- Willingness to follow a system.
- Entrepreneur and leadership skills.
- Engaged in operations: Ownership doesn’t require a daily presence in the salon, but you do need to be actively leading.
- A growth mindset: The company encourages multi-unit ownership.
- People and community focused.
Financial requirements:
- Net worth of $300,000 ($500,000 in high-cost markets).
- Liquid assets worth $50,000 ($75,000 in high-cost markets).
- Credit score of 675.
Other requirements:
- Clean background and criminal record.
- New franchisees must live in an open geographic market.
Is the Great Clips franchise for you?
Great Clips is a good franchise for someone ambitious who wants the opportunity to expand and run multiple units of the same business. The company encourages expansion through mechanisms such as its Master Development Agreement (Intro, FDD 2021), which is designed for franchisees running a chain of salons, and its Three Star Program (Item 7, FDD 2021) which offers a significant fee discount for a franchisee launching three salons instead of just one.
It’s also good for if you want to start your franchise investment while maintaining another job. Many franchisees start their first Great Clips salon while still working full-time jobs, and the company discusses this option on its website. This allows franchisees to get started, gain some experience, and then expand to a multi-unit franchise, letting go of the day job once this becomes financially viable.
The downside of this is that it’s less suitable for a franchisee who wants to focus on a single project, or who gets nervous about leaving the day-to-day management of outlets to others. If the Great Clips model isn’t for you, or you want to learn more about how it compares with competitors, then subscribe to Franchise Chatter for access to our detailed reviews and franchise comparison tools.
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