Cost CuttersFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A Cost Cutters franchise requires a total initial investment of $181K – $342K, including a $40K franchise fee and an ongoing 4.0% royalty[2]. Per the 2025 FDD, average unit revenue was $280K[2]. Verdict grade: D. Run a live ROI scan →
Data last verified June 21, 2026 · figures per the 2025 FDD issuance
Overview
- Investment
- $181K – $342K
- 15th pct Personal Care…
- Avg gross sales
- $280K
- 3rd pct Personal Care…
- Royalty
- 4.0%
- 2nd pct Personal Care…
- Units
- 405
- 44th pct Personal Care…
- SBA default
- 0.0%
- system-wide median varies by category
Quick verdict · Personal Care & Beauty · color = vs category peers
Green = >15% above Personal Care & Beauty avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Franchising since 1970. Systems this mature have refined operations and brand recognition.
The system contracted 29% year-over-year. Investigate why units are closing.
11 legal cases disclosed in the FDD. Read Item 3 before signing.
Bottom line
- Total investment $181K – $342K including a $40K franchise fee, 4.0% ongoing royalty.
- Average unit revenue of $280K/year (median $261K).
- Verdict D (Below Average) with a risk score of 77/100.
- 11 litigation matters disclosed in Item 3, higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
- Legal entity
- The Barbers, Hairstyling for Men & Women, Inc.
- Parent company
- Regis Corporation
- Incorporated in
- MN
- HQ
- 3701 Wayzata Boulevard, Suite 600, Minneapolis, MN 55416
- Auditor
- Grant Thornton LLP
- Audited financials
- Franchisor revenue
- $203.0M
- vs $210.1M prior year
Overview
About
Cost Cutters franchisees operate hair salon and personal grooming service centers offering haircuts, styling, and basic grooming services to value-conscious consumers. Day-to-day operations involve managing staff, scheduling appointments, inventory management, and customer service in a retail salon environment. The model relies on high-volume, low-margin service delivery with significant labor costs.
- CEO
- Jim Lain
- Headquarters
- MN
- Founded
- 1968
- FDD year
- 2025
- States available
- 31
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $40K | $40K |
| Working capital (3–6 mo) | $15K | $45K |
| Equipment, build-out, other | $126K | $258K |
| Total initial investment | $181K | $342K |
Source: Cost Cutters 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$62K
22.0% margin
Unlevered ROIC
21%
EBITDA / total invested capital
Payback
4.7 yrs
cash-on-cash, unlevered
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $181K – $342K
- Better than avg vs category
- Liquid capital req'd
- $15K – $45K
- Better than avg vs category
- Franchise fee
- $13K – $40K
- Better than avg vs category
- Royalty
- 4.0%
- Gross Revenues · typical 6–8%
- Ad fund
- 4.0%
- typical 3–5%
- Total fee load
- 8.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 4.0% of gross sales |
| Marketing / ad fund | 4.0% of gross sales |
| Technology fee | $500 |
| Transfer fee | $3K |
| Renewal fee | $0 |
| Total fee load | 8.0% of rev |
Financial Performance
- Avg gross sales
- $280K
- Per unit, per year
- Median gross sales
- $261K
- Item 19 type
- gross_sales
- Sample size
- 323 units
- vs category median 35 · large
- Range (low → high)
- $8K→$1.1M
- Cohort dispersion (min → max)
- Transparency
- 4 / 5
- vs category median 4 / 5 · typical
Compared against 186 Personal Care & Beauty brands
vs Personal Care & Beauty averages
How Cost Cutters Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 405
- Opened
- 0
- Last reporting year
- Closed
- 53
- Turnover rate
- 13.1%
- Company-owned
- 76
- Corporate units in the system
- % franchised
- 81%
- vs corporate-owned
- Net growth (yr3)
- -28.9%
- Net unit change last year
- 3-yr CAGR
- -36.9%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 18
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 10 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
A system losing more than 10% of its units year-over-year is a red flag. Check whether closures are concentrated in specific regions.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA loan disclosures. This brand has only 9 7(a) loans on file; statistical reliability is limited below 10 loans.
- Total loans
- 9
- Loan volume
- $5.5M
- Median loan
- $641K
- 50th percentile
- Charge-off rate
- 0.0%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 100.0%
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 7
- Defaults
- 0
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Cost Cutters's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 7 lenders with concentration factor
- Per-state charge-off rates across 7 states
- Startup risk premium and job creation velocity
- 6-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Cost Cutters exhibits extreme risk with a collapsing franchise network (-28.9% units), pervasive fraud litigation, undisclosed profitability, and a going concern problem that signals the franchisor itself may be financially unstable.
Audited financials (Item 21)
Yes · Grant Thornton LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Score breakdown · what drove the 77 / 100 rating
- 01MEDSevere unit decline of 28.9% YoY indicates systemic franchisee distress and system contraction
- 02HIGHMultiple fraud and misrepresentation litigation claims including build-out costs and financial performance misstatements undermine credibility
- 03HIGHNo average net income disclosure combined with 'Going Concern: False' suggests financial instability and profitability concerns
- 04MINORUnprotected territory creates direct competition risk between franchisees and cannibalization within existing market
- 05MINOREscalating royalty structure (4% to 6%) after year one increases burden during critical cash flow periods when franchisees are most vulnerable
- 06HIGHClass action litigation regarding credit card data security on receipts indicates operational/compliance failures and liability exposure
- 07HIGHCollections litigation against franchisees with counterclaims of fraud suggests adversarial franchisor-franchisee relationship and potential predatory practices
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 15 years |
|---|---|
| Renewal term | 15 years |
| Protected territory | No |
| Online sales rights | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Jury trial waiver | Yes |
| Governing law | Minnesota |
| Litigation count | 11 |
Items 10, 11
Training & Operations
- Classroom training
- 10 hrs
- On-the-job training
- 0 hrs
- POS system
- Zenoti
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Zenoti
Item 20 · call current owners
Franchisee Contacts
97 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Cost Cutters · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Cost Cutters franchise?
The total investment to open a Cost Cutters franchise ranges from $181K – $342K, with an initial franchise fee of $40K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Cost Cutters franchise owners earn?
According to Item 19 of the Cost Cutters FDD, the average gross sales per unit is $280K. The median is $261K. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Cost Cutters's franchise failure rate?
SBA 7(a) loan charge-off data is not available for Cost Cutters (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
How many Cost Cutters franchise locations are there?
As of their most recent FDD filing, Cost Cutters has 405 total units in the United States, including 329 franchised units and 76 company-owned units.
Is Cost Cutters a good franchise to buy?
FranchiseVerdict rates Cost Cutters as a D-grade franchise with a risk score of 77 out of 100, based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.