Is a Cost Cutters Family Hair Salon franchisee allowed to relocate their store?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
raining, and Customized Workshops. These programs are offered either at the Franchised Location or at various regional locations or online.
ITEM 12 TERRITORY
Franchise Agreement
You will operate the Cost Cutters Store at an approved location, and that approved location may be in a Walmart store. You may operate the Cost Cutters Store only at the site we approve. You receive no territorial rights. You may not relocate the Cost Cutters Store. Cost Cutters reserves the right to offer Cost Cutters franchises at approved locations outside Walmart stores. You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
You do not receive an exclusive territory or area when granted a single Cost Cutters franchise. Although your approved location is not dependent upon achieving a certain sales volume, Walmart has the right to deny yo
Source: Item 12 — TERRITORY (FDD pages 52–55)
What This Means (2024 FDD)
According to the 2024 Cost Cutters Family Hair Salon Franchise Disclosure Document, franchisees are not permitted to relocate their store. The FDD states that the franchisee must operate the Cost Cutters Family Hair Salon at an approved location, which may be within a Walmart store. The franchisee can only operate at the site that Cost Cutters Family Hair Salon approves.
This restriction means that a Cost Cutters Family Hair Salon franchisee cannot independently decide to move their business to a different location, even if they believe a new site would be more profitable. This is a significant limitation, as the success of a retail business often depends on its location. Franchisees need to carefully evaluate the approved location before signing the agreement, as they will be bound to that site for the duration of the franchise term.
Furthermore, the document specifies that if the Cost Cutters Family Hair Salon is located within a Walmart store, Walmart has the right to deny lease renewal if the salon's gross sales are lower than $150,000 per year. If Walmart does not renew the lease, the franchise agreement will terminate. This adds another layer of location-related risk for franchisees operating within Walmart stores, as their tenure is contingent not only on their performance but also on Walmart's decision to renew the lease. This could lead to unexpected termination of the franchise agreement, even if the franchisee is otherwise in good standing with Cost Cutters Family Hair Salon.