Franchise Information:
*The Too Hotties Haircuts franchise is a newer "niche market" concept that can be considered "higher risk" than more established salon franchises. New franchise owners will spend between $175,000 to $300,000 to build out and open a new Too Hotties Haircuts salon, as mentioned in the Franchise Disclosure Document. This range of investment includes operating capital of $20,000 to $40,000 for the first 90 days. Based on the experiences of the first 8 franchises sold, the total operating capital needed before reaching break-even may range from $125,000 to $175,000. This also means that it may take 18 to 24 months before the salon makes it to break-even.
Closures: As of October of 2008, there were 8 independently owned franchises open. As of December end 2009, there were 3 of the original 8 still operating, plus a new salon that recently opened in Virginia. The closure of 4 of the original 8 franchises were all cash related, where the franchise owners ran out of operating capital because they were not initially aware of the high amount that was needed. A 5th franchise left the Too Hotties franchise system, going independent. Because of this, it is highly recommended that a new franchise owner have operating capital availabiliy of at least $150,000 and would be best to open a salon without any financing for the store buildout, furnishings and inventory (in otherwords, pay cash for this).
*this information was compiled from ongoing discussions with current and previous franchise owners.
Validation:
**It is important to validate any franchise that you are looking into purchasing by reading all of the materials supplied by the franchisor. This includes brochures, websites and the Franchise Disclosure Document (known as the FDD). In addition, you should also call and talk with at least 3 previous and current franchise owners.
The FDD includes many topics about the franchise in general, the franchisor, franchise cost and opening expense, a list of existing and closed franchise owners, and a copy of the franchise agreement. While written in mostly legal language, you should be able to get a good idea of what the business is about, costs, etc. It is recommended that you have an attorney or financial advisor review the franchise agreement as well.
When speaking with the franchisor representatives, it is advisable to make notes of all conversations and keep all emails for future reference. If you decide to purchase the franchise, this information will be valuable during the times of getting started and while operating the franchise itself. The more information you have, the better chance you have to make the right choices.
Calling previous and existing franchise owners is a very important part of validation and the franchisor should encourage you to do this. This is your opportunity to learn from your peers about how things are working or not working for them. You should put together a list of questions and then ask them on each validation call. You will have many questions, here are a few sample questions:
If you had it to do over, would you purchase this franchise again?
How was the training that you received when you started?
How helpful was the franchisor during the construction phase of your location?
Did the franchisor have a solid pre opening marketing plan to help you get paying customers in the door and start making money on day #1?
What kind of ongoing support does the franchisor provide?
Does the franchisor discusses with you how your business is doing and provide proven solutions for improvement?
What other topics does the franchisor focus on and how does it help the franchisee?
Does the franchisor have an excellent relationship with the franchise owners?
...These are just a few of the questions that you should be asking.
Franchisees you would want to call to validate this franchise are:
Name Mobile Number Location
Joe Barnes 972-839-6028 Dallas Tx (now closed)
Jane Barnes 469-323-2105 Dallas Tx "
Ron Manfredi 512-788-1136 Austin Tx (now closed)
Donna Manfredi 512-565-8075 Austin Tx "
Todd Kemmerling 803-673-4236 Columbia SC (still operating but no longer a Too Hotties Salon)
Ross Rayner 813-335-9053 Tampa Fl (now closed)
Jason Keening 702-325-0903 Las Vegas
Phil Tompson 315-260 2435 Denver Co (now closed)
**this information is from the International Franchise Association and Franchise Times Magazine.