If you are an entrepreneur who wants to invest in a salon-related franchise, then you might have come across Great Clips. And if you want to know how much does a Great Clips franchise owner make, then you have landed on the right page.
In this guide, we reveal to you what it takes to own a Great Clips franchise, how much you can expect to earn, what is their franchise payback period, and more. So make sure you stick to this till the end.
About Great Clips
Great Clips is an American Salon chain that was founded by David Rubenzer and Steve Lemmon in Minneapolis, Minnesota, in the year 1982.
The idea of starting a salon came to David’s head during a time when people cut their hair themselves or went to a barber.
With changing demands, he came up with the idea of Great Clips, and it didn’t take much time to become a hit. And right in the next year, they started offering franchises, and today, there are more than 4,500 Great Clips salons throughout the U.S.
In order to become a franchise owner of Great Clips, you must pass a couple of criteria. To find out what they are, to find how much does a Great Clips franchise owner makes, and much more, keep reading!
How Much Does A Great Clips Franchise Owner Make?
The money that a Great Clips franchise owner makes may vary based on their operating expenses, location, number of staff, service, etc.
However, as per our calculation, a Great Clips franchise owner made a revenue of $586,000 per year in the year 2021, which was a +53% increase from the revenue of $369,000 earned in the previous year.
So you can expect to make more or less than this ballpark number.
Great Clips Franchise Fee breakdown
| Franchise fee | $20,000 – $35,000 |
| Investment (mid-point) | $278,000 |
| Royalty fee | 6.0% |
| Marketing fee | 5.0% |
| Revenue per unit | $586,000 |
| Payback period | .2-3 years |
| Minimum net worth | $300,000 |
| Minimum liquid capital | $75,000 |
Great Clips Franchise Investment Breakdown
| Investment | Low | High |
|---|---|---|
| Franchise Fee | $20,000 | $35,000 |
| Initial Ad Fund Contribution | $5,000 | $5,000 |
| Leasehold Improvements and Site Fees* | $119,800 | $268,900 |
| Additional Funds for 12 Months | $15,000 | $55,000 |
| Grand Opening Advertising | $20,000 | $25,000 |
| Training, Travel, and Living Expenses (per participant) | $1,500 | $2,500 |
| Insurance | $2,100 | $3,000 |
| Total | $183,400 | $394,400 |
((https://www.greatclipsfranchise.com/is-great-clips-right-for-you/investment))
How Much Does a Great Clips Employee Earn?
According to ZipRecruiter, a Great Clips employee earns $8.89 an hour to $32.69 an hour, depending on their position.
If we look at this on a yearly basis, then Great Clips employee earns a minimum of $18,500 a year and a maximum of $68,000 a year on average.
Please note that this is an average, and a Great Clips employee’s salary may vary depending on their skills, department, location, designation, etc.
Pros And Cons Of Great Clips Franchise
Pros of Great Clips Franchise
- Offers exclusive territory protection.
- Provides training and support.
- Offers site selection and construction support.
- Third-party financing is available.
Cons of Great Clips Franchise
- No absentee-ownership.
- Fierce competition in the local market.
- Charges high royalty (6%) and marketing fees (5%)
Great Clips Franchise Average Revenue & Profit
As mentioned earlier Great Clips franchise’s average revenue is $586,000 a year. Since the FDD did not disclose the revenue of Great Clips we had to obtain it ourselves by dividing the total revenue of all the Great Clips franchise by total number of Great Clips franchise salons in 2021 – (2.6 billion/4,447).
And if we talk about Great Clips franchise average profit then taking a 31% profit margin (hair salon industry standar) we found that Great Clips franchise generates a profit of $183,977 a year on average.
| Profit and loss | Amount | % revenue |
|---|---|---|
| Revenue | $586,423 | 100% |
| Labor | $(234,569) | 40% (industry average) |
| COGS | $(29,321) | 5% (industry average) |
| Royalties | $(35,185) | 6% |
| Marketing fee | $(29,321) | 5% |
| Rent | $(33,000) | 6% |
| Other operating costs | $(41,050) | 7% (industry average) |
| EBITDA | $183,977 | ~31% |
Great Clips Franchise Failure Rate
The franchise failure rate considers any franchise that ceased operations, non-renewals, or franchise termination. Determining the Franchise rate is crucial to investing in any franchise.
So, over the past three years, the Great Clips franchise failure rate has been 10%. Without comparison, this data doesn’t mean much, so make sure to compare the sale rate of Great Clips with more than 2000 hair salon franchises and industry franchises.
Great Clips Franchise Payback Period
To find out the payback period of the Great Clips Franchise, let us do some calculations:
| AVERAGE INVESTMENT | $288,900 |
| AVERAGE REVENUE PER OWNER | $586,000 |
| AVERGAGE PROFIT PERCENTAGE | 31% |
| AVERGAGE PROFIT PER YEAR | $183,977 |
| AVERAGE PAYBACK PERIOD | 1.5 years |
PAYBACK PERIOD = TOTAL INVESTMENT / PROFIT PER YEAR
= 2315900/354019 = 1.5 = 1.5 Years based on median
The average investment for a Great Clips Franchise is $288,900.
With an average profit percentage of 31%, the average profit per year is $183,977.
This means that the average payback period for a Great Clips is 1.5 years, and the total investment of $288,900 would be recovered within this period.
What is Great Clips Best known For?
With more than 4,400 hair salons in the United States and Canada, Great Clips is one of the largest hair salon brands in the world.
Great Clips offers high-quality haircuts to men, women, and kids for competitive pricing.
They are best known for providing hair-related services throughout the week, including weekends and nights, so that their customer can get a haircut whenever they want.
Another thing that differentiates them from others is that they offer an online check-in service along with Clip Notes, a technology that allows them to keep notes on their customer’s hairstyles and preferences.
So, all in all, Great Clips is highly focused on customer service and convenience, which is the reason for its popularity.
Is Great Clips franchise Profitable?
As we saw in the data shared in the article above, Great Clips is a profitable franchise to own, and you can make as much as $183,977 in profit on average each year.
We should also like to point out that you can pay back the initial investment amount of $288,900 within just 2-3 years, which is one of the shortest franchise payback periods for the hair-salon industry that we have found.
However, this is just an estimation based on average profit; you might be able to make more or less than a profit of $183,977, depending on various factors.
Great Clips Franchise Earning Potential
It is tough to talk about the earning potential of the Great Clips franchise. We do know that this is a profitable franchise to own.
However, the salon industry is a highly-competitive niche, and if a customer likes a service of a particular salon or hairstylist, then more often than not, they like to stick to them for their lives.
As such, there is not a massive room for new customers to come in.
Depending on your customer service, skills, advertisement, and other factors, you may be able to increase your profit potential more than the average.
Wrap Up
After looking at the franchise details of Great Clips, this is what we conclude:
Great Clips is a profitable business to own, and the best part is that is has a lesser franchise payback period.
To own this franchise, you are required to have investments ranging from $183,400-$394,400, but the good news is that the company offers third-party financing, so that can be taken care of.
Another hurdle that you may face is that in order to be eligible for this franchise, you need to have a net worth of $300,000 – $1,000,000, liquid assets of $75,000 – $250,000, and a minimum credit score of 675.
Overall, Great Clips is a good franchise to own, and we did not find any major red flags in this franchise opportunity.
FAQ
What is the initial franchise fee of Great Clips?
In order to own a Great Clips franchise, you need to pay an initial franchise fee of $20,000-$35,000.
What are the requirements to open a Great Clips franchise?
If you want to be eligible for Great Clips franchise, then you need to have the following:
- Net worth of $300,000, $500,000, or $1,000,000, depending on the needs of each market.
- Liquid assets of $75,000, $100,000, or $250,000.
- A credit score of 675.
- And primary residence in an open geographic market where the franchisor wants to open the Great Clips salon.
((https://www.greatclipsfranchise.com/is-great-clips-right-for-you/investment))
Does Great Clips offer financing?
Great Clips has a long-standing relationship with lenders, and they offer third-party financing to choose from, including small business loans. You can get in touch with them to learn more about this.