Supercuts

The franchise fee is $39,500 — a standard single-salon development fee that covers the franchise rights for one location.

Total investment of $186K–$323K breaks down primarily into the physical build-out. Leasehold improvements are the largest variable: $65K–$135K depending on the space condition and landlord allowance. Furniture, fixtures, and equipment add $30K–$65K; signage runs $5K–$15K; technology and POS systems are $8K–$18K. Initial inventory and supplies are modest at $5K–$10K — hair salons aren't inventory-heavy businesses.

The ongoing fee structure is notable for its combined weight. Royalty starts at 4% of gross sales in Year 1 (a meaningful ramp-up concession), then jumps to 6% from Year 2 onward. The advertising fund runs approximately 5% of gross sales — making the total combined fee burden 11% before any local advertising requirements. That's among the highest fee burdens in the personal services category. For a $322K-revenue salon, you're sending roughly $35K per year to Supercuts in royalties and ad fees alone, before accounting for rent, labor, supplies, and your own salary.

The technology fee is charged monthly but the exact amount was not captured in the FDD extraction — confirm this number directly with the franchisor before signing. The transfer fee is $10,000 per salon; the renewal fee is $5,000 — both reasonable by franchise standards.

Supercuts discloses Item 19 data covering 1,661 salons that were open for the full reporting period in 2024 — a large and representative sample.

Average annual gross sales: $322,306 Median annual gross sales: $297,216

Revenue-only data is disclosed — no expense or profit data is provided. Without disclosed expense benchmarks, investors must estimate profitability independently. Using industry norms for a staffed hair salon: labor typically runs 45–50% of revenue, rent 10–15%, supplies 5–8%, and franchise fees 11%. That leaves a pre-owner-compensation operating margin of roughly 17–25% on the average location, or $55K–$80K on $322K revenue — before debt service on the initial investment.

The median is meaningfully below the average ($297K vs. $322K), suggesting a right-skewed distribution with some high performers pulling the average up. What percentage of salons meet or exceed the average is not disclosed. There is no disclosure of salons at the bottom quartile, which makes it difficult to assess downside risk. Given the declining unit count, it's reasonable to assume some underperforming salons have already closed.

Supercuts is a shrinking system — and the trend is consistent and accelerating. Franchised unit count has declined from approximately 1,950 in 2022 to 1,870 in 2023 to 1,790 in 2024 to 1,701 at the time of the 2025 FDD filing. That's a net loss of roughly 90 franchised units per year over three consecutive years. Company-owned locations have also declined from 130 to 100 over the same period.

A declining system is a significant red flag for prospective franchisees. It typically signals a combination of: underperforming unit economics that push operators to close rather than renew, reduced brand investment as the system contracts, and a weakening negotiating position with landlords and suppliers. It also raises questions about territory availability versus territory quality — the locations still in operation may be the better performers, while the gaps represent markets that couldn't sustain a salon.

Parent company Regis Corp has been through significant restructuring and financial difficulties over the past several years. The system decline reflects broader headwinds in the value-priced hair salon category, which faces competition from independent salons, booth rental concepts, and at-home cutting trends. Stabilization of the system would be a prerequisite before this investment makes sense.

The shrinking system is the primary risk. Entering a franchise that's losing 5%+ of its units annually means you're betting on local execution in a system that may have limited corporate resources to support you — fewer franchisees means less ad fund revenue to spend on brand awareness, fewer peers to learn from, and less leverage with suppliers.

The 11% combined royalty and ad fund (6% + 5%) is a heavy burden for a low-revenue-per-location business model. Hair salons operate on thin margins driven primarily by labor cost. At $297K median revenue, the combined fees consume $32,700 annually before you've paid any other operating expense.

The technology fee is not fully disclosed in the extraction — this is an unknown recurring cost. Confirm the monthly amount and whether it can increase before signing.

Supercuts leases are retail strip center locations, meaning you're dependent on lease renewal at your location as well as franchise agreement renewal. Both dependencies compound exit risk if you want to sell or close the business.