COST CUTTERS
Cost Cutters provides value-priced, family-oriented hair care services including haircutting, hairstyling, shampooing, conditioning, and other related services for men, women, and children, along with sales of hair care products and merchandise. Some Cost Cutters salons operate inside Walmart stores and Supercenters, following a business model focused on affordable, high-quality hair care through franchised locations. The target market is the general public seeking convenient, budget-friendly salon services.
Franchise Costs
4% royalty first 52 weeks then 6% (min $100/week) + 4% ad fund (1% currently collected) + $170/mo POS software + $10/mo gift card fee + up to $500/yr electronic comm fee
Financial Performance
Item 19 Financial Performance
Data Based On: 451 franchised salons that reported sales in each month of the 12-month period July 1, 2023, through June 30, 2024.
* Average gross revenue and median gross revenue are directly from the 'TOTALS' row of the provided table for Fiscal Year 2023. The total average sales of $263,638 is confirmed as a weighted average of the Top, Mid, and Bottom segments. Revenue top quartile uses the 'Average Sales' from the 'Top' segment ($404,817), and revenue bottom quartile uses the 'Average Sales' from the 'Bottom' segment ($142,058). No net income, net profit, EBITDA, or profit range could be determined as the document explicitly states: 'This financial performance representation does not reflect the cost of sales, operating expenses, or other costs or expenses that must be deducted from gross revenue or gross sales figures to obtain your net income or profit.'
Extracted Item 19 Section
How COST CUTTERS Compares
Key Insights
- #1 largest franchise system in Personal Care Services
- One of the lowest SBA loan default rates in Personal Care Services
| Franchise | Investment | Fee | Royalty | Locations |
|---|---|---|---|---|
COST CUTTERS Current | $176K – $323K | $40K | 6.0% | 463 |
| COMFORT KEEPERS | $120K – $191K | $55K | 5.0% | 619 |
| PALM BEACH TAN | $639K – $1.0M | $30K | 6.0% | 398 |
| HOUSE OF COLOUR | $33K – $52K | $30K | 4.0% | 312 |
| DRYBAR | $410K – $1.0M | $50K | 7.0% | 176 |
| WAXING THE CITY | $311K – $646K | $43K | 6.0% | 166 |
Personal Care Services Average 20 franchises | $418K – $817K | $43K | 5.9% | – |
* Comparison based on latest FDD filings. Investment ranges from Item 7, fees from Item 5. Showing top 5 of 20 Personal Care Services franchises by location count.
Locations & Growth
Outlet Growth Over Time
Total outlets at end of each year
Geographic Distribution (2024)
Outlets by state across the United States
+21 more states
SBA Loan History
Historical SBA 7(a) loan data for COST CUTTERS franchisees (2015 – 2020)
Loans by Year
SBA 7(a) loan activity over time
* Data sourced from SBA 7(a) FOIA loan records. Default rate calculated from charged-off loans.
Due Diligence
Litigation (Item 3)
Primarily franchisor-initiated collections for unpaid royalties, advertising fees, and rent against franchisees, with counterclaims alleging violations of state franchise laws (Virginia and Minnesota), fraud, and sales misrepresentations; franchisee-initiated arbitrations claiming misrepresentations in franchise sales process, inadequate support, constructive termination, and breach of contract. All resolved via settlement or arbitration award, often with payments to franchisees.
Bankruptcy (Item 4)
System Health (Item 20)
Franchise system changes reported in the most recent fiscal year
Frequently Asked Questions
The total initial investment to open a COST CUTTERS franchise ranges from $175,990 to $323,140. This includes a franchise fee of $39,500. Ongoing royalty fees are 6.0% of gross sales.
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