What is the transfer fee for a Cost Cutters Family Hair Salon if it is the first transfer?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
tions of the Cost Cutters 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, the transfer fee is $2,500 when a franchisee transfers their rights in the agreement to another entity. This fee applies when the franchisee assigns the agreement between themselves and Cost Cutters Family Hair Salon, or when holders of more than 50% of the voting power in the franchisee's ownership interests transfer their interests to another entity.
The purpose of this fee is to cover Cost Cutters Family Hair Salon's expenses related to the transfer. These expenses include attorney's fees, accountant's fees, out-of-pocket expenses, long-distance telephone calls, administrative costs, and the time spent by employees and officers of Cost Cutters Family Hair Salon.
However, if the franchisee is simultaneously transferring rights in additional franchise agreements with Cost Cutters Family Hair Salon, the transfer fee is reduced by $500 for each additional transfer, down to a minimum of $500 per transfer. This tiered fee structure could incentivize franchisees to transfer multiple locations at once, potentially streamlining the process for Cost Cutters Family Hair Salon while reducing the financial burden on the franchisee for each additional transfer.