Sport Clips Franchise Disclosure Document Analysis

Renewal Requires Then-Current Agreement With Potentially Different Terms

On renewal, franchisees must sign the then-current franchise agreement, which may contain materially different fees, territory rights, or operational standards than their original agreement, and must also remodel the store and execute a general release of all claims against Sport Clips.

Source: p.51

Broad Post-Term Non-Compete Restricts Industry Participation

Following termination or expiration of the franchise agreement, franchisees are prohibited from participating in any competing hair care business for 2 years within a 10-mile radius of any Sport Clips location anywhere in the United States, not just their own former territory.

Source: p.52

Advertising Fund Governance Provides Franchisees Minimal Oversight

Sport Clips controls the Advertising Fund with sole discretion over spending decisions, with no requirement to audit the fund independently, no obligation to spend contributions proportionally across the system or in any franchisee's local market, and only a minimum 80% requirement that funds be spent on consumer advertising.

Source: p.14