Franchise Deep Dive: Cost Cutters Franchise Costs, Fees, Profit and Data

Built on a promise of speed and affordability, Cost Cutters offers a grooming concept with a relatively low initial investment and potential for high returns.

By Morgan Wood1851 Franchise Contributor

Updated 1:13PM • 03/29/23

LAST UPDATED: March 2023

FRANCHISE WEBSITE: https://www.regiscorp.com/franchise-opportunities

NUMBER OF LOCATIONS: 740-plus

REPORTED COST TO GET IN: $150,466–$308,558

REPORTED ROI (Item 19): $233,076

Cost Cutters, one of four personal care concepts under the Regis Corporation umbrella, is a hair salon concept that is built on “a universal desire: to get more, pay less and save time.” Founded in 1982, Cost Cutters grew from Joe Francis’ The Barbers Hairstyling for Men salon, which was opened in Minnesota in 1963. As Francis expanded his offerings to include women’s hair services, and later family services, the concept grew to be the franchised brand Cost Cutters.

Now, the concept is among a range of affordable hair salon franchise concepts, such as Sport Clips*, Supercuts and Great Clips*, that offer business owners a lucrative investment opportunity.

How Many Cost Cutters Locations Are There?

According to the Regis Corporation’s website, there are over 740 Cost Cutters locations. However, FranchiseChatter claims to have reviewed the brand’s 2022 Franchise Disclosure Document (FDD) and reports 604 franchised locations and one company-owned location at the end of 2021.

After a climb in unit count from 2019 to 2020, Entrepreneur reflects a steady decline in the brand’s presence over the course of the past three years. Though the industry was seemingly hit quite hard by the pandemic, and some concepts have yet to make a turnaround, larger industry trends are looking up. With its affordable initial investment and strong capability to secure a return for business owners, Cost Cutters seemingly has great potential to turn things around and begin to rebuild the system in the coming years.

What Is the Cost Cutters Business Model?

The Cost Cutters model hinges entirely on the premise that consumers are looking for a great experience at a low cost. The concept employs professional stylists who use elevated product lines to offer a great experience to customers, regardless of their budget or time crunch.

By providing hair cut, color, styling and treatments for men, women and children, as well as waxing and a retail selection, each store packs a punch. Cost Cutters owners are prepared to secure business from a range of clientele instead of narrowing the offerings in a way that eliminates a broad scope of potential customers.

How Much Can Cost Cutters Franchise Owners Make?

The financial representations provided in Cost Cutters’ 2022 FDD were determined based on reports of the fiscal period from July 1, 2021 to June 30, 2022. The calculations account for franchised locations that conducted business in all 12 months.

A total of 573 locations reported average sales of $233,076. However, over 42% — 244 — locations exceeded this amount. The highest reported sales number among the included locations was $1,107,117, and the lowest was $16,092.

It is important to note that all Cost Cutters locations offer essentially the same services, so discrepancies in revenues cannot reasonably be attributed to a limited set of client offerings. Further, all of the reported sales, though accurate, represent gross income. Owners still need to account for costs of doing business to determine net profit.

How Much Does It Cost to Open a Cost Cutters?

The estimated initial investment to open a Cost Cutters business is $150,466–$308,558. This total includes the following costs:

Initial Franchise Fee: $12,500–$39,500
Leasehold Improvements: $60,000–$120,000
Furniture, Equipment and Supplies: $25,000–$50,000
Construction Management Services Fee: $5,500–$7,500
Construction and Design Plan Review: $500–$1,000
Post Build Review: $1,500–$3,000
Computer Software (POS System): $2,040
Computer Hardware—Installation and On Site Training: $1,876–$2,418
Opening Inventory: $5,000–$10,000
Travel and Living Expenses for Orientation Training: $2,050–$4,500
Security Deposit and Rent: $2,500–$9,600
Grand Opening Advertising: $5,000
Signage: $6,000–$12,000
Professional Fees: $6,000–$12,000
Additional Funds: $15,000–$30,000

Cost Cutters also assesses ongoing fees, including an advertising fee of 4% of gross revenues and a weekly fee. For weeks one through 52, franchise owners will pay 4% of gross revenues. For weeks 53 and on, franchise owners will pay either 6% of gross revenues or $100 per week, whichever is greater.

What Is the Franchise Fee for Cost Cutters?

FranchiseChatter lists Cost Cutters’ franchise fee as $12,500–$39,500, though it does not clarify which circumstances may reduce the initial fee. Across other franchise publications, a strict $39,500 fee is widely accepted.

Who Is the Leadership of Cost Cutters?

What Helpful Articles Can I Read to Learn More About Cost Cutters?

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*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.

Franchise Deep Dive: Cost Cutters Franchise Costs, Fees, Profit and Data

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