What is the 'Minimum Development Quota' for Cost Cutters Family Hair Salon franchisees, and how is it determined?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
During the term of the Development Agreement, you must at all times faithfully, honestly, and diligently perform your contractual obligations and continuously exert your best efforts to promote and enhance the development of Cost Cutters Stores within the Franchised Area. You also must have open and operating within the Franchised Area the minimum agreed upon number of Cost Cutters Stores at the end of each Development Period, which may be one Store or 3 or 6 Stores total ("Minimum Development Quota"). The Development Periods are fixed for all franchisees to locate and open Stores. Therefore, once you sign the Development Agreement and Franchise Agreement for the first (and, if applicable, only) Store to be developed in the Franchised Area, you will have 12 months to find a site for and then open that Store. If you commit to the Fast Start Program described in Item 1 of this disclosure document, you will have 12 months from contract signing to find a site for and then open your first Store, 18 months from the deadline for opening your first Store to find a site for and then open your second Store, 18 months from the deadline for opening your second Store to find a site for and then open your third Store, and then a final 18 months from the deadline for opening your third Store to find a site for and then open your fourth Store.
Source: Item 12 — TERRITORY (FDD pages 52–55)
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, the Minimum Development Quota refers to the minimum number of Cost Cutters Family Hair Salon stores a franchisee must have open and operating within their Franchised Area by the end of each Development Period. This quota can be one, three, or six stores in total. The Development Periods are fixed for all franchisees.
For the initial store, franchisees have 12 months from signing the Development Agreement and Franchise Agreement to find a site and open the store. If a franchisee participates in the Fast Start Program, the timeline is more structured. They have 12 months from contract signing to open the first store, an additional 18 months to open the second, another 18 months to open the third, and a final 18 months to open the fourth store.
Cost Cutters Family Hair Salon determines the size of the territory based on the number of stores the franchisee agrees to develop, demographics, competitive businesses, and site availability. The franchisor determines the number of stores a franchisee must develop and the deadlines for development to maintain their development rights, which are then documented in a schedule within the Development Agreement. Failure to meet the Minimum Development Quota can result in the termination of the Development Agreement, with no refund of development fees paid.