What is the 'Additional' transfer fee for a Cost Cutters Family Hair Salon franchise?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
ween the FRANCHISEE and COST CUTTERS, or the holders of Ownership Interests in the FRANCHISEE representing more than fifty percent (50%) of the voting power in the FRANCHISEE transfer their interests in the FRANCHISEE to another person or entity. If the FRANCHISEE simultaneously transfers its rights in this Agreement and the FRANCHISEE'S rights in any additional franchise agreements between the FRANCHISEE and COST CUTTERS for the operation of a Cost Cutters Business, then the amount of the transfer fee will be reduced for each additional transfer by Five Hundred Dollars ($500) until a minimum of Five Hundred Dollars ($500) per transfer as follows:
| 1 store | $2,500 |
|---|---|
| 2 stores | $4,500 |
| 3 stores | $6,000 |
| 4 stores | $7,000 |
5 stores $7,500 Each store thereafter is an additional $500 per store.
This fee is to cover the costs incurred by COST CUTTERS for attorneys' fees, accountants' fees, compliance with applicable laws, out-of-pocket expenses, long distance telephone calls, and the time of its employees and officers.
20.7 TRAINING PROGRAM DEPOSIT. If, pursuant to the terms of this Article 20, the rights granted in this Agreement are assigned, transferred or bequeathed to another person or entity, or if t
Source: Item 23 — RECEIPT (FDD pages 76–439)
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, the transfer fee structure is based on the number of businesses a franchisee is simultaneously transferring. The franchisee will pay $2,500 to transfer their rights in the agreement. However, if the franchisee is simultaneously transferring rights in additional franchise agreements with Cost Cutters Family Hair Salon, the transfer fee is reduced by $500 for each additional transfer, down to a minimum of $500 per transfer.
For example, if a franchisee transfers rights for 5 stores, the fee is $7,500. Each store transferred thereafter incurs an additional fee of $500 per store. This fee is intended to cover Cost Cutters Family Hair Salon's costs associated with the transfer, including legal and accounting fees, compliance costs, out-of-pocket expenses, telephone calls, and employee time.
This fee structure incentivizes franchisees to transfer multiple units simultaneously, potentially streamlining the transfer process for Cost Cutters Family Hair Salon. However, franchisees should be aware of these transfer fees when considering selling their franchise or multiple locations. Understanding the costs associated with transferring a franchise is crucial for financial planning and decision-making.