What are the different fees associated with a Cost Cutters
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
will not be refunded if FRANCHISEE or its District Manager
fails to complete the COST CUTTERS training program. The FRANCHISEE will be notified by COST CUTTERS in writing if either this Agreement or the FRANCHISEE is rejected by COST CUTTERS pursuant to Article 4.2. Except as specifically set forth in this Article 4.3, the Initial Fee payable by the FRANCHISEE pursuant to Article 4.1 will not be refundable to the FRANCHISEE.
ARTICLE 5 CONTINUING FEES
- 5.1 CONTINUING FEES. In addition to the Initial Franchise Fee, the FRANCHISEE will, for the entire term of this Agreement, pay COST CUTTERS weekly Continuing Fees equal to a percentage of the FRANCHISEE'S weekly Gross Revenues, as defined herein, which are received, billed or generated by, as a result of or from the FRANCHISEE'S Cost Cutters Business. Unless the Cost Cutters Business hereunder was formerly a company-owned Cost Cutters store or affiliated branded salon that was acquired by FRANCHISEE from COST CUTTERS or its affiliate to be operated as FRANCHISEE's Cost Cutters Business under this Agreement for the first (1st) through the fifty-second (52nd) weeks of the FRANCHISEE'S operation of its Cost Cutters Business pursuant to this Agreement, the FRANCHISEE will pay COST CUTTERS a weekly Continuing Fee equal to four percent (4%) of the FRANCHISEE'S Gross Revenues. For the fifty-third (53rd) and each subsequent week of the FRANCHISEE'S operation of its Cost Cutters Business for the balance of the remaining term of this Agreement, the FRANCHISEE will pay COST CUTTERS a weekly Continuing Fee of six percent (6%) of the FRANCHISEE'S Gross Revenues and One Hundred Dollars ($100) per week. If FRANCHISEE's Cost Cutters Business hereunder was formerly a company-owned Cost Cutters store or affiliated branded salon that was acquired by FRANCHISEE from COST CUTTERS or its affiliate to be operated as FRANCHISEE's Cost Cutters Business under this Agreement, then the weekly Continuing Fees will be the greater of six percent (6%) of FRANCHISEE's weekly Gross Revenues and One Hundred Dollars ($100) per week for the entire term of this Agreement. The Continuing Fees paid to COST CUTTERS will not be refundable to the FRANCHISEE under any circumstances.
- 5.2 FRANCHISEE'S OBLIGATION TO PAY CONTINUING FEES. The Continuing Fees payable to COST CUTTERS under this Article will be calculated and paid to COST CUTTERS by the FRANCHISEE on a weekly basis during the entire term of this Agreement, and the FRANCHISEE'S failure to pay the weekly Continuing Fees to COST CUTTERS will be a material breach of this Agreement.
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, franchisees can expect to pay several fees throughout the term of the agreement. These fees include a weekly Continuing Fee, which is either 4% or 6% of weekly Gross Revenues plus $100 per week, depending on whether the location was previously a company-owned store or affiliated salon. Franchisees also pay a weekly Advertising Fee equal to 4% of weekly Gross Revenues. Additionally, franchisees are required to spend at least 1% of their Gross Revenues on local advertising each quarter; failure to do so requires them to deposit the difference with Cost Cutters Family Hair Salon, which Cost Cutters Family Hair Salon will then use for advertising in the franchisee's area.
There are also other potential fees. If a franchisee fails to submit their weekly Gross Revenues report with their Continuing Fees payment, Cost Cutters Family Hair Salon may charge a $100 late fee. Furthermore, if a franchisee fails to pay Advertising Fees, Cost Cutters Family Hair Salon can estimate the amount due, and this estimated amount will accrue interest. The franchisee is also responsible for covering all costs Cost Cutters Family Hair Salon incurs while collecting unpaid Advertising Fees, including attorney's fees and other related expenses.
Prospective franchisees should be aware that these fees are generally non-refundable and are uniformly imposed. However, Cost Cutters Family Hair Salon does reserve the right to vary fees at their discretion based on factors such as store performance or if the store was purchased directly from Cost Cutters Family Hair Salon or an affiliate. Understanding these fees and their potential impact on profitability is crucial for anyone considering investing in a Cost Cutters Family Hair Salon franchise.