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Tips for Potential Great Clips Franchise Owners to Navigate the Franchise Disclosure Document (FDD)

Great Clips, Inc.’s director of franchise development Beth Nilssen knows the FDD can be an intimidating document, so she recommends that potential franchisees break it down by item to gain meaningful insights.

By Helen Harris1851 Franchise Staff Writer
SPONSORED 7:07AM 09/13/22

Before signing on the dotted line to become a franchisee, it is critical to understand the ins and outs of the brand’s franchise disclosure document (FDD). According to the International Franchise Association, the FDD is a document including “23 Items to provide prospective franchisees with information about the franchisor and the franchise system so that they can make an informed decision about signing the franchise agreement.” And while this document may seem overwhelming at first, Beth Nilssen, director of franchise development at Great Clips, Inc., advises potential franchisees to simply break the document down by each Item to understand the foundational elements of the business better before you say “yes” to the brand.

“Once you start digging into the FDD, it’s not as overwhelming as it may feel at first glance,” assured Nilssen. “Also, the franchise development contact should be there to assist you during the FDD review to guide you through the document and make sure you understand what is important about each section.”

Each Item of the FDD Helps Tell a Brand’s Story 

Each Item of a franchise brand’s FDD holds a wealth of information for a potential franchisee to learn whether or not that brand is the best choice for them. Nilssen explains that this is why, as a person starts to get more comfortable with reading these documents, they will see which brands truly stand out for reasons such as lack of corporate bankruptcies, affordable training fees, longevity, and experience within the executive team.

For example, with Great Clips, Nilssen states that the brand’s FDD helps show how the company lives its vision statement of “working together to build the most profitable salons by delivering the most powerful and enduring brand.” And as prospective franchisees read through the brand’s FDD, they can get a clear picture of their role as a franchisee, along with how much support is behind them every step of the way.  

While the entire FDD is important to review (especially things like the company’s recent litigation and/or bankruptcy history), Nilssen points out that even some of what might seem like basic background information can tell a potential franchisee a great deal about the brand’s history and should not be overlooked. 

“Item 2 talks about key personnel and leadership within the company. This item can tell a franchisee a lot,” said Nilssen. “For example, you’ll see if the company is public or private, how much franchising experience the leadership team has and if the company sees patterns of high turnover or longevity. That can tell you a lot about a company’s culture if you’re paying attention.” 

Other sections of the FDD contain initial fees and ongoing fees. Nilssen says these sections are critical to a potential franchisee’s understanding of the investment required. Prospects will learn how much the franchise will cost them and can review the fees and understand them before signing a franchise agreement with the brand. 

Nilssen also stresses the importance of potential franchisees conducting their own research through existing franchisees to validate whether the support they are getting from corporate is a good value for the royalties and other fees that they will be paying. 

 “You want to understand things like training fees and advertising fees and how those advertising fees are used. Do franchisees have a say in how they are spent? A prospective franchisee will gain insight into how the relationship between franchisee and franchisor operates. Is this a relationship that values franchisee input and working together? Or does corporate make all the decisions and communicate that out?”

Many brands also have financing options or assistance for prospective franchisees. For Great Clips specifically, Nilssen states that while the brand does not offer any in-house financing, the brand does have long-term vendor relationships that they connect their franchisees with during their research process. 

“The FDD review should not be a daunting process for potential franchisees,” said Nilssen. “It should be a mutually beneficial process for both the brand and the prospective franchisee, where the franchisee learns the ins and outs of the brand and can come away from the document feeling knowledgeable and educated on the foundational elements of franchising with the company.”

The total investment to open a Great Clips salon ranges from $178,400- $376,900. For more information, visit https://www.greatclipsfranchise.com/.

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

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