Cost Cutters Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Cost Cutters is a value hair-salon franchise offering affordable cuts, color, and styling for the whole family. Franchisees run salons managing stylists, walk-in and appointment service, and retail products.
FranchiseVerdict summary · 2026
A Cost Cutters franchise requires a total initial investment of $181K – $342K, including a $13K – $40K franchise fee and an ongoing 4.0% royalty[2]. Per the 2025 FDD, average unit revenue was $280K[2]. FranchiseVerdict grade: C (Average), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $181K – $342K
- 18th pct Personal Care…
- Avg gross sales
- $280K
- 1st pct Personal Care…
- Royalty
- 4.0%
- 1st pct Personal Care…
- Units
- 405
- 55th pct Personal Care…
- SBA charge-off
- N/A
Quick verdict · Personal Care & Beauty · color = vs category peers
Green = favorable by >10% vs Personal Care & Beauty avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $181K – $342K including a $40K franchise fee, 4.0% ongoing royalty.
- RETURNSAverage unit revenue of $280K/year (median $261K).
- RISKVerdict C (Average), verdict score 46/100 (higher is better).
- LEGAL11 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
Corporate structure & franchisor financials
- Legal entity
- The Barbers, Hairstyling for Men & Women, Inc.
- Parent company
- Regis Corporation
- CEO title
- Interim President and Chief Executive Officer, Regis Corporation
- Jim Lain
- Incorporated in
- MN
- HQ
- 3701 Wayzata Boulevard, Suite 600, Minneapolis, MN 55416
- Auditor
- Not specified in extracted text (PCAOB-registered firm)
- Audited financials
- Franchisor revenue
- $210.1M
- vs $203.0M prior year
Overview
About
- CEO
- Jim Lain
- Headquarters
- MN
- Founded
- 1968
- FDD year
- 2025
- States available
- 31
Can you afford it, and what does the money buy?
Entry cost runs 50% below the typical personal care & beauty franchise.
Source: FDD 2025 · Items 5–7
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.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $181K – $342K
- Top 40% of category vs category
- Liquid capital req'd
- $15K – $45K
- Top 40% of category vs category
- Franchise fee
- $13K – $40K
- Top 40% of category vs category
- Royalty
- 4.0%
- tiered · 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 |
| Inventory (initial) | $5K – $10K |
| Total fee load | 8.0% of rev |
What do units actually make?
Average unit sales run 65% below the personal care & beauty norm.
Source: FDD 2025 · Item 19
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
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one Cost Cutters unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
21%
Below the 30–60% attractive-franchise band
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 Cost Cutters units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$840K
on $4.2M purchase
Total debt
$3.4M
SBA $2.1M + senior + seller note
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Avg gross sales
- $280K
- Per unit, per year
- Median gross sales
- $261K
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- Gross Sales by performance tier (top/mid/bottom)
- Sample size
- 323 outlets
- vs category median 38 · large
- Range (low → high)
- $8K→$1.1M
- Cohort dispersion (min → max)
- Quartile band
- $148K→$432K
- Bottom 25% → top 25%
- Reporting year
- 2025
- Fiscal year the figures cover
- Source filing
- FDD 2025
- The FDD edition these figures were read from
- Transparency
- 4 / 10
- vs category median 4 / 10 · typical
Compared against 179 Personal Care & Beauty brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $280K/year in gross sales. Revenue-to-investment ratio: 1.1x.
Fee burden
Total ongoing fee load of 8.0% (near the Personal Care & Beauty average).
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System contracting at -36.9% CAGR over 3 years. Investigate whether closures are franchisor-driven consolidation or franchisee exits.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Personal Care & Beauty averages
How Cost Cutters Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 405
- Opened
- 2
- Last reporting year
- Closed
- 136
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 16.1%
- Company-owned
- 76
- Corporate units in the system
- % franchised
- 81%
- vs corporate-owned
- Net growth (3-yr)
- -36.9%
- Net unit change over 3 years
- 3-yr CAGR
- -36.9%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 0
- Closed (3yr)
- 53
- Terminated (3yr)
- 0
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 18
- Reacquired (3yr)
- 81
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 9 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
- N/A
- limited sample (9 loans) — rate not shown below 10
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- N/A
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 7
- Defaults
- N/A
Explore lender portfolios on Bank Reports or regional data on State Reports.
What could kill this investment?
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
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.
Litigation (Item 3)
11 cases involving affiliated entities (Supercuts, RPC, The Barbers, Regis); mix of collection/counterclaim arbitrations, misrepresentation claims, a trade secrets suit (Propoint), and a consumer class action (Delamarter); majority settled with payments to franchisees; one current matter (Aboukoura) in process of settlement documentation.
Largest disclosed settlement: $1,015,104
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Not specified in extracted text (PCAOB-registered firm)
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results — the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 46 / 100 verdict
- 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
- 03MINORNo 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
What are you signing up for?
Ongoing fees run about 8.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 15 years |
|---|---|
| Renewal term | 15 years |
| Territory type | none |
| Protected territory | No |
| Exclusive territoryℹ | No |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 6 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Curable defaultsℹ | 10 |
| Mandatory arbitration | Yes |
| Arbitration location | Minneapolis, Minnesota (Hennepin County) |
| Jury trial waiver | Yes |
| Governing law | State where franchised business is located |
| Litigation count | 11 |
View Item 3 litigation summary
11 cases involving affiliated entities (Supercuts, RPC, The Barbers, Regis); mix of collection/counterclaim arbitrations, misrepresentation claims, a trade secrets suit (Propoint), and a consumer class action (Delamarter); majority settled with payments to franchisees; one current matter (Aboukoura) in process of settlement documentation.
Items 10, 11
Training & Operations
- Classroom training
- 10 hrs
- On-the-job training
- 0 hrs
- Training location
- Online/virtual learning, Cost Cutters Corporate Office in Minneapolis MN, or other location designated by franchisor
- Ongoing training
- Required
- Time to open
- 2 mo
- From signing to launch
- Site selection
- Franchisor must approve proposed sites; franchisee identifies and proposes sites within franchisor criteria
- Franchisor financing
- Not offered
- Item 10
- POS system
- Zenoti (Soham, Inc.)
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Zenoti (Soham, Inc.)
Item 20 · call current owners
Franchisee Contacts
385 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 Item 19 in the Cost Cutters FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Cost Cutters FDD and qualifies whose outlets they describe.
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. 2 new units were opened in the latest reporting year.
Is Cost Cutters a good franchise to buy?
FranchiseVerdict rates Cost Cutters as a C-grade franchise with a verdict score of 46 out of 100 (higher is better), 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.
For franchisors
Are you the franchisor?
If you represent Cost Cutters, you can request corrections or provide updated information.
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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.