What Is FDD Item 6 and Why Does It Matter for Great Clips?

Item 6 of any Franchise Disclosure Document is titled “Other Fees.” It is required by the FTC Franchise Rule (16 C.F.R. Part 436) and must disclose every recurring fee, contribution, or payment obligation the franchisee will owe during the term of the franchise agreement. Item 5 covers the initial fees. Item 6 covers everything that comes after.

For Great Clips specifically, Item 6 is critical because the hair salon industry carries operational costs that interact with the franchise fee structure in ways that significantly affect profitability. When you layer the franchise system’s fees on top of these operating costs, the margin available to the franchisee narrows considerably. Understanding every line item in Item 6 is essential for making an informed investment decision.

What Fees Does Great Clips FDD Item 6 Disclose?

Great Clips Item 6 covers several categories of ongoing financial obligations. Here is a breakdown of the major fee categories:

Each of these line items deserves analysis. Let us walk through the most consequential ones.

The Royalty Fee

The royalty fee is the core ongoing payment to Great Clips. At 6% of gross sales, this represents the franchisee’s ongoing cost for the right to operate under the Great Clips brand and use the franchise system’s operational model. For a location generating $350,000 in annual gross sales, the royalty alone can represent a significant annual obligation. This fee is calculated on gross sales, not net profit. Whether your location is profitable or not, the royalty is owed on every dollar of revenue.

Advertising and Marketing Contributions

Great Clips requires franchisees to contribute to marketing efforts. The advertising contribution of 5% of gross sales goes toward national brand marketing and may also support local advertising initiatives. The franchisee has limited control over how the national marketing fund is spent, though local advertising cooperatives may provide more input.

Technology and Additional Fees

Technology fees cover the operational platforms required to run a Great Clips location, including point-of-sale systems, operational software, and customer-facing technology. Additional fees include Transfer fee, training costs, insurance, equipment upgrades.

How Do Item 6 Fees Add Up for a Typical Great Clips Location?

To illustrate the real financial impact of Item 6 fees, let us look at a hypothetical Great Clips location generating $350,000 in annual gross sales:

That is 12% to 14% of gross sales going to franchise-related fees before the franchisee pays for labor, rent, supplies, insurance, or any other operating expense. Understanding this total fee burden is essential for building a realistic financial model. For a deeper look at financial performance data, see our guide on FDD Item 19 financial performance representations.

How Does Great Clips Item 6 Compare to Competitors?

Sport Clips charges a 6% royalty with a 5% ad fund. Supercuts charges a 6% royalty with a 3.5% to 5% ad fund contribution. The total fee burden across hair care franchises typically falls in the 10% to 13% range.

When comparing franchise opportunities, always calculate the total Item 6 fee burden as a percentage of projected revenue. This total percentage is the number that matters for your profitability analysis, not the headline royalty rate alone. For more on evaluating franchise agreements, see our guide on franchise agreement red flags to watch for.

Why Legal Review of Item 6 Is Not Optional

The fees disclosed in Great Clips Item 6 represent contractual obligations that will continue for the full term of the franchise agreement. Signing without fully understanding these obligations is the financial equivalent of signing a long-term commercial lease without reading the rent schedule.

A franchise attorney can help you model the total fee burden against realistic revenue projections, identify fees that may increase over the term, evaluate the technology fee escalation risk, and compare the total cost structure against other franchise opportunities. If you are also evaluating your exit options, our franchise exit audit can help.

At Lopes Law LLC, we review hair salon franchise FDDs regularly. Our flat-fee FDD validation review is $3,000 and covers all 23 items of the FDD, with particular attention to the fee structure in Item 6 and the financial data in Item 19. For a complete overview, see our guide on what to expect from an FDD review.

Frequently Asked Questions About Great Clips FDD Item 6

Reach out, we are friendly. Call now for a free consultation at (267) 777-9117 or schedule your free 20-minute consultation online.

Last updated: March 12, 2026