What is the 'Present' transfer fee for a Cost Cutters Family Hair Salon franchise?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
utters Business.
20.5 ACKNOWLEDGMENT OF RESTRICTIONS. The FRANCHISEE acknowledges and agrees that the restrictions on transfer imposed herein are reasonable and are necessary to protect the Cost Cutters Business System and the Marks, as well as COST CUTTERS' reputation and image, and are for the protection of COST CUTTERS, the FRANCHISEE and all other franchisees who own and operate Cost Cutters businesses. Any assignment or transfer permitted by this Article 20 will not be effective until COST CUTTERS receives a completely executed copy of all transfer documents and COST CUTTERS consents to the transfer in writing, and any attempted assignment or transfer made without complying with the requirements of this Article 20 will be void.
20.6 TRANSFER FEE. If, pursuant to the terms of this Article 20, the rights granted to the FRANCHISEE in this Agreement are assigned, transferred or bequeathed to another person or entity, or if 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, then the FRANCHISEE will pay COST CUTTERS a transfer fee. The amount of the transfer fee is based on the number of Cost Cutters Businesses that the FRANCHISEE simultaneously transfers to another person or entity. The FRANCHISEE will pay COST CUTTERS a tra
Source: Item 23 — RECEIPT (FDD pages 76–439)
What This Means (2024 FDD)
According to the 2024 Cost Cutters Family Hair Salon Franchise Disclosure Document, a franchisee must pay a transfer fee if they assign, transfer, or bequeath their franchise rights to another party, or if more than 50% of the ownership interests in the franchisee's business are transferred. The standard transfer fee is $2,500 for assigning the franchise agreement.
However, the Cost Cutters Family Hair Salon transfer fee structure includes a discount if the franchisee is simultaneously transferring rights in multiple franchise agreements with Cost Cutters Family Hair Salon. The transfer fee is reduced by $500 for each additional franchise agreement transferred at the same time, with a minimum fee of $500 per transfer.
For a prospective Cost Cutters Family Hair Salon franchisee, this means that if they decide to sell their franchise, they will likely need to pay a $2,500 transfer fee to Cost Cutters Family Hair Salon. However, if they own multiple Cost Cutters Family Hair Salon locations and sell them all at once, they could receive a discounted transfer fee for each additional location beyond the first. This fee covers Cost Cutters Family Hair Salon's administrative costs and ensures that the new franchisee meets their standards.