Supercuts Franchise

The primary reason for choosing the Supercuts franchise is because it is at the top when it comes to matters hair care. Moreover, it stands at number 14 in the Franchise500 chart. Given the long period the company has been in existence, it is an indicator that they have established proper working procedures that range from financial issues to marketing. On the other hand, the investment in the franchise has a low of $144,000 and a high of $279,000 (Entrepreneur. 2018). The attractiveness of the franchise has seen it introduce new stores annually around North America. For this reason, its name recognition, an extensive network, overall support among other things have made Supercuts become the franchise of choice for most entrepreneurs. Hence, the business model is favorable as it offers the franchisees unlimited opportunities regardless of their location.

The success of Supercuts is attributable to their positive outlook. In particular, the leadership of the franchise has committed itself to ensuring the experience of the customers gets better by the day. It is important to note that Supercuts recently launched a mobile app that enables the guests to set up a profile that not only guides them when they need to find a nearby store but also identify a hair stylist. Further, the Supercuts app has provided guests with the ability to schedule a day they intend to visit a specific outlet (Babich & Tang, 2016). The many appealing services offered by Supercuts cannot be mentioned without including the Hot Towel Refresher. The primary objective of starting this service was to make customers continue with their daily schedule after visiting the haircut stores as they leave feeling fresh. Hence, the franchisees have the ability to generate income from different sources which have seen them becom profitable.

Background of the Franchise

Over the years, the number of outlets opened by Supercuts franchisees has gone up which has translated to easy access by guests who are spread in different locations. The headquarters of the hair care stores are in Minneapolis, Minnesota and the number of customers continues to swell as time goes by. It is important to note that Supercuts was founded in Albany, California by Frank Emmett and Geoffrey Rappaport in 1975 (Entrepreneur. 2018). The founders wanted to offer haircut services similarly to the way people pop into retails stores and emerge a few minutes later with goods they had planned to buy. The success of its first store saw Supercuts begin franchising in 1979.

In 1996, Regis Corp. which is also at the helm of franchising Pro-Cuts, Cost Cutters Family Hair Care, and City Looks took over Supercuts. The franchisees of the Supercuts outlets are located in the United States, the United Kingdom, Canada, and Puerto Rico (Babich & Tang, 2016). The current CEO for Regis Corp. is Dan Hanrahan. In December 2015, Supercuts managed to hit the one million mark when it came to customer check-ins through their mobile app. On the other hand, Supercuts launched their ‘Ready to GO’ campaign in the same year whose primary aim was to make the guests have an improved experience.

Costs and Earnings

The costs involved in the purchase of the Supercuts franchise include the development fee which was initially $10,000 and currently stands at $29,500. Similarly, there is the leasehold improvement cost which has doubled from the earlier $60,000 to $120,000. The other major costs include furniture, equipment and supplies, construction management fee, additional funds, computer software, signs, opening inventory, grand opening advertising costs, training costs, security deposit rent, and orientation training and the related expenses. Concerning the training costs, the franchisor is responsible for the training of the personnel that will work at the outlet. However, the franchisees have the opportunity to hire an extra individual who will serve as the manager. The location where the training takes place is in most instances Supercuts’ corporate offices unless another location is selected. The duration of training depends on the satisfaction by the franchisor. Concerning the earnings, the gross sales recorded for all the Supercuts outlets within the United States in 2014 were $370,710,000 (Babich & Tang, 2016). Therefore, since the number of outlets was 1,373, then the average earnings per location was estimated at $270,000. Despite the increase in the number of outlets which currently stands at 2,490 units, the average earnings remain at the estimated $270,000 mark.

Restrictions and Terminations

Termination by the Supercuts franchisor may take place if the days stipulated in a termination notice have elapsed. Therefore, termination is possible if the provisions of the termination-at-will category have been met. Similarly, termination by the Supercuts franchisor can occur if a deficiency within one of the outlets is not taken care of. For this reason, the underlying conditions have fuelled the need for termination (Federal Trade Commission, n.d). On the other hand, regarding restrictions by Supercuts, the franchisor is not allowed to discount, sell, or assign the entire or part of the financing arrangements to a third party. Secondly, the managers must undergo training offered by the franchisor. Lastly, the franchisees must attend the conventions organized by Supercuts on an annual basis.

References

Babich, V., & Tang, C. S. (2016). Franchise Contracting: The Effects of The Entrepreneur’s Timing Option and Debt Financing. Production and Operations Management, 25(4), 662-683.

Federal Trade Commission. (n.d) A Consumer’s Guide to Buying a Franchise. Federal Trade Commission. Retrieved 14 March 2018, from https://www.ftc.gov/tips-advice/business-center/guidance/consumers-guide-buying-franchise

Entrepreneur. (2018). 2018 Top Franchises from Entrepreneur’s Franchise 500 List. Entrepreneur. Retrieved 14 March 2018, from https://www.entrepreneur.com/franchise500