Sport Clips FDD Item 12 is the section of the Franchise Disclosure Document that addresses the territory rights granted to Sport Clips franchisees. For prospective investors evaluating a Sport Clips franchise at an investment of $276,000 to $463,000, understanding the geographic protections you receive, and how they change over time, is essential. At Lopes Law LLC, we review territory provisions carefully because they directly affect whether your customer base is protected from intra-brand competition.

This guide breaks down exactly what Sport Clips discloses in Item 12, explains the time-limited nature of the exclusive territory grant, and identifies the provisions every prospective buyer should evaluate before signing the franchise agreement.

What Is FDD Item 12 and Why Does It Matter for Sport Clips?

Item 12 of any Franchise Disclosure Document is titled “Territory.” The FTC Franchise Rule (16 C.F.R. Part 436) requires franchisors to disclose what territorial protections, if any, the franchisee receives. Item 12 must explain whether the territory is exclusive, how it is defined, and under what circumstances the franchisor can modify it or place competing units nearby.

For Sport Clips, Item 12 is important because the hair salon industry is inherently local. Your customers come from a defined geographic radius around your location. If another Sport Clips opens within that radius, both locations compete for the same pool of customers, potentially reducing your revenue. The territory provisions determine whether and how Sport Clips can place that competing location.

Does Sport Clips Grant Exclusive Territory?

Yes, but with significant time limitations. Based on publicly available FDD information, Sport Clips grants an exclusive territory during the initial five-year term of the Franchise Agreement. The territory is defined as the lesser of a one-mile radius around the franchisee’s location or a radius that encompasses a population of 25,000 people.

During this initial five-year period, Sport Clips agrees not to establish company-owned units or license other Sport Clips franchises within the protected territory. This is a meaningful protection for the initial term of the agreement.

What Happens After the Initial Five-Year Term?

After the initial five-year term, franchisees do not have an exclusive territory. However, Sport Clips provides the franchisee with the first right of refusal to open a location within the territory, as long as the franchisee is not in default of the Franchise Agreement.

This right of first refusal is not the same as exclusive territory. It means that if Sport Clips identifies an opportunity within your former territory, they must offer it to you first. If you decline or cannot exercise the right (perhaps because you lack the capital or do not want an additional location), Sport Clips can proceed to place another franchisee or company unit in that area.

How Is the Territory Defined?

The territory is defined as the lesser of two measures: a one-mile radius around the franchisee’s location or a radius that encompasses a population of 25,000 people. In densely populated urban areas, the 25,000-population threshold may result in a territory that is substantially smaller than one mile in radius. In suburban or rural areas, the one-mile radius is likely the binding constraint.

Understanding which measure defines your territory requires mapping the population density around your specific proposed location. A franchise attorney can help you perform this analysis to determine your actual territorial footprint.

What Are the Risks of Territory Expiration After Five Years?

The expiration of exclusive territory after five years creates several risks:

• Revenue dilution: A new Sport Clips within your original territory directly competes for the same customers.
• Reduced resale value: A franchise with expired territory exclusivity is worth less to buyers than one with ongoing protection.
• Marketing overlap: Competing with another same-brand location increases marketing costs without expanding the total market.
• Limited recourse: The right of first refusal only helps if you want and can afford an additional location.

How Does Sport Clips’ Territory Compare to Other Salon Franchises?

Territory provisions vary significantly across salon franchise systems. Some grant exclusive territory for the full franchise term, while others follow Sport Clips’ time-limited approach. Comparing the territory provisions across competing salon franchises can help you evaluate which system provides the strongest long-term protection for your investment.

At Lopes Law LLC, we provide side-by-side comparisons of territory provisions when clients are evaluating multiple franchise opportunities. For more on what to review in an FDD, see what to expect from an FDD review and franchise agreement red flags to watch for. If you are considering your options with an existing franchise, learn about our franchise exit audit.

Frequently Asked Questions About Sport Clips FDD Item 12

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Last updated: March 12, 2026