Does Cost Cutters Family Hair Salon offer direct or indirect financing to franchisees?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
| x. Dispute resolution | Article 23 of Franchise Agreement and Article 12 of Development Agreement | 17 |
ITEM 10 FINANCING
COST CUTTERS and its agents and affiliates do not offer direct or indirect financing or guarantee your note, lease, or obligation except as described below.
Sublease
While you are required to locate the site and lease the Franchised Location, Cost Cutters reserves the right to lease directly from the landlord and require you to sublease the Franchised Location from Cost
Cutters or an affiliate, including for any Franchised Location within a Walmart location. If you initially sublease the Franchised Location, Cost Cutters reserves the right to subsequently require you to lease directly from the landlord (including, without limitation, at lease renewal) and vice versa (i.e., if you initially lease directly, Cost Cutters may subsequently require you to sublease). If you request and Cost Cutters agrees to guarantee your lease obligations in any way (e.g., as tenant or guarantor), then Cost Cutters reserves the right to charge you the amount by which twelve percent (12%) of your monthly gross sales exceeds your monthly lease payments for as long as such guaranty is in effect (Walmart Franchised Location are subject to the $300 up charge described above in Item 8). Cost Cutters has no obligation to guarantee your lease in any way, but if it does, you must pay such monthly lease guaranty fee or $300 up charge, as applicable. If Cost Cutters requires you to sublease or if you open a Cost Cutters Business at a site that Cost Cutters or an affiliate leases from a third-pa
Source: Item 10 — FINANCING (FDD pages 42–43)
What This Means (2024 FDD)
According to the 2024 Cost Cutters Family Hair Salon Franchise Disclosure Document, Cost Cutters Family Hair Salon does not offer direct or indirect financing to franchisees. This means that prospective franchisees will need to secure their own funding through third-party sources such as banks, credit unions, or private investors to cover the costs associated with opening a franchise.
However, Cost Cutters Family Hair Salon reserves the right to lease directly from the landlord and require the franchisee to sublease the Franchised Location from Cost Cutters Family Hair Salon or an affiliate. If Cost Cutters Family Hair Salon agrees to guarantee a franchisee's lease obligations, the franchisee must pay Cost Cutters Family Hair Salon the amount by which 12% of their monthly gross sales exceeds their monthly lease payments. For Walmart Franchised Locations, there is a $300 up charge.
Because Cost Cutters Family Hair Salon does not offer financing, potential franchisees should carefully review their financial situation and explore all available funding options. They should also consult with a business advisor to develop a comprehensive financial plan. Understanding the terms and conditions of any financing obtained is crucial for the long-term success of the franchise.