Did you know that the global hair care industry is expected to reach $112.97 billion by 2028? No matter what happens with the global economy or consumer preferences, people will continue getting hair cuts to look and feel their best.
Great Clips is a chain of hair salons in the United States and Canada. They offer a no-frills hair maintenance services that simply consists of haircuts, hairstyling, and shampooing. They’ve been franchising since 1983 and have over 4,200 locations in the United States and Canada.
How much does it cost to open Great Clips? To begin, you’ll need a minimum liquid capital of $75,000 and a minimum net worth of $300,000. The average investment range for this salon is $178,400 to $376,900 which includes the franchise fee of $20,000 to $35,000. You can open this concept within the United States or internationally.
Are you ready to open your own Great Clips franchise? I’ve put together in-depth details about the finances behind this hair salon so you can determine if Great Clips is the right franchise to bring to your area. Click here to take our 7-minute quiz to be matched with the right franchise opportunity for you.
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Great Clips Franchise Facts
- How Much Does Great Clips Make in Profit?
- Advantages of a Great Clips Franchise
- Challenges of a Great Clips Franchise
- Is the Great Clips Franchise Right For You?
Financial Requirements and Fees
The following are the financial requirements that Great Clips looks for in their franchise applicants:
|Fees / Expenses||Financial Amount|
|Liquid Capital||$75,000 to $250,000|
|Net Worth||$300,000 to $1,000,000|
|Total Investment||$178,400 to $376,900|
|Franchise Fee||$20,000 to $35,000|
For further clarification, the liquid capital and net worth depends on the needs of each market. So the liquid capital can range from $75,000, $100,000, or $250,000. As for the net worth, it can range from $300,000, $500,000, or $1,000,000.
The total investment mentioned above is for the United States franchise applicants only. For Canada, the investment range is $106,400 to $305,880.
In addition, the royalty fee is 6% and the ad royalty fee is 5%. The term of agreement is 10 years and can be renewable.
Average Sales / Revenue per Year
As mentioned above, the hair care business is a billion dollar industry. According to reports, the global sales of Great Clips have reached $1,364,000,000 in 2021. You read that right. The salon chain did more than $1 billion in hair cut sales globally this year. This means the average unit revenue was $306,723 annually for the calendar year.
Obviously, $1 billion is a lot of haircuts. But global sales was still lower than the calendar years of 2017 – 2019. In 2019 alone, the company generated more than $1.5 billion in revenue so the company has yet to return to pre-pandemic levels.
Great Clips Franchise Facts
|Total Units||4,317 (United States)|
|Incorporated Name||Great Clips|
Great Clips was founded in 1982 by Steve Lemmon and David Rubenzer. Their first location was in Minneapolis near the University of Minnesota campus. The business was able to expand quickly and by 1985 Great Clips had over 100 locations.
Great Clips offers are haircuts for men, women, kids, and seniors. Specialty services include neck trims, beard trims, bang trims, and hair shampoo. They also offer hair styling for men and women that range from short style, long style, formal style, and even a perm. Their prices vary by location so it’s best for customers to check with the location before proceeding to avail of Great Clips’ services.
Great Clips is known as the fastest and largest hair care business in the North America. They have almost a 50% market share of all franchised hair salon units. They’re so well-known that they’re ranked number 13 in Entrepreneur’s Franchise 500 for the year 2021 with a recorded 5.0% growth in the rankings for over 3 years.
To franchise Great Clips, start by submitting an application here. This application includes questions about personal data, financial statements, and other business related questions. Once received, the Great Clips Franchise Development team will contact you for an evaluation process that lasts six to eight weeks.
You’ll be given Great Clips’ Franchise Disclosure Document (FDD) and you’ll get to discuss how it is to run a hair care business from the financial side to real estate, what the operational requirements are, and more. Your skills as a franchisee will also be discussed such as the way you run a business, your people development skills, customer service, and community outreach. You’ll also be able to connect with other Great Clips franchisees so you can ask them questions regarding how to handle the business. Throughout the process, you and Great Clips will learn more about each other. Finally if both parties agree on the terms, you will sign the Franchise Agreement and be approved.
After going through this process, you’ll finally be able to open a salon. You’ll be going through training which can be a mix of online training, in-person, and in-salon training. You’ll also get to select your location whether it’s somewhere you know already or you can choose from a list of pre-identified locations that Great Clips has. The brand also has a Real Estate team that has connections with landlords and brokers in the area of your choice.
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From there on, you’ll build your salon, hire your staff using Great Clips’ online careers website, and then proceed to open your business. You also don’t need to worry because even after your grand opening, someone from Great Clips will still be there to support your location and offer guidance.
Great Clips is considered a “tech-leader” in the hair care business. For franchisees, they have online business tools that help them run their salons in real time. For customers, an app is readily available for them to download that can help them find a Great Clips salon nearby, check for any waiting time, and add their name to the list. They also have Clip Notes, an app that has the customers’ haircut information so stylists will know what their customers want. As for the stylists, they are provided with online courses and interactive training to help them grow their skills.
Aside from the business aspect, Great Clips is known to reach out to the community. They have outreach programs such as providing durable and quality wigs to children and young adults that have to deal with hair loss, gifting free haircuts to veterans, and partnering with Operation Second Chance that helps active and retired soldiers. They also offer complimentary cuts to customers undergoing cancer treatments and participate in charitable gift giving as well as helping local hospitals.
At present, Great Clips is run by Chief Executive Officer Steve Hockett. Their headquarters is located at Minneapolis, Minnesota.
How Much Does Great Clips Make in Profit?
There is no official record of how much Great Clips make in profit but the average gross sales for one location was $299,604 in 2020. Of course, 2020 in particular was a challenging year for all salon operators when you consider this was the time period with the highest number of global lockdowns.
Advantages of a Great Clips Franchise
Are you ready to own a Great Clips near you? Here are some more advantages to expect if you decided to franchise them.
Great Clips has been around since 1982. That’s over 40 years of experience in franchising and running the business. For them to reach more than 4,000 locations and over $1 billion in global sales means that they have a business model that works. They’re also located in Canada which means that they have a wider coverage. As a future franchise applicant, you can be assured you’re in good hands with a long-running business like Great Clips.
As mentioned above, Great Clips relies on technology to run their business and to reach their customers. One would think that a hair salon does not need such technology since they’re a simple business. But Great Clips made it a point to adapt their business in these modern times. It’s reassuring to know that Great Clips would go to such lengths to make sure their business continues to run smoothly.
Great Clips isn’t just all about doing business and making money. They do their part by being involved with the community. From providing wigs to free haircuts for veterans, they make sure their presence is felt as a brand that does more than just business.
Franchising with Great Clips is an advantage wherein you’ll be working with a business that has outreach programs that help the community.
Challenges of a Great Clips Franchise
By now, you’re probably sold in franchising Great Clips. But wait! There are also challenges you should expect when operating this salon.
The services that Great Clips offers are quite simple. There are only hair cuts, hair styling, and hair shampooing. For a brand that has over 4,000 locations and have lasted over 40 years, one would think they were able to offer more hair care services than just the ones mentioned above like hair rebonding, waxing, coloring, or massage. Services like this also yield higher profit margin for salon operators.
We’re not sure why there are only limited services. Maybe Great Clips like to keep it simple. But an addition of hair care services could help boost their overall revenue.
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Not everyone is fond of getting their hair cut at Great Clips. Some say it’s an awesome place to get a hair cut while others claim their stylists are untrained resulting in a bad hair cut. Fair or not, Great Clips even has a reputation for making bad hair cuts. There don’t seem to be a lot of favorable reviews at the location near me. One customer reports the experience being the “worst cut in my life” in all caps lock text. But all reviews of Great Clips are all mixed. Hopefully, Great Clips can train their stylists more or improve the training process before hiring stylists.
Is the Great Clips Franchise Right For You?
Great Clips is a proven business within the hair care industry. But do know that there are still a lot of mixed reviews surrounding this business. There are numerous pros and cons. One important challenge is the failure rate of Great Clips is 9% over the past 3 years.
But if you want to give it a try and you have the financial where with all. And you can still get to talk to other Great Clips franchisees to get more information on how it is to handle a unit.
What is an alternative Great Cuts franchise?
One hair salon that you can also franchise is Supercuts. They’ve been around since 1975 and have over 2,500 locations. They offer more than just hair cuts such as waxing and coloring.
To franchise Supercuts, expect to invest between $1,000,000 to $1,200,000 with an initial franchise fee of $39,500.
On average, hair salon owners generate $245,000 in revenue annually with some salon concepts. With Great Clips, you might just be able to have a successful and profitable hair salon business depending on several factors such as having the ideal location and a team of well-trained stylists. I hope this guide helps you determine whether or not to provide these “great” haircuts to consumers.