Franchising Your Business

Every now and then, a successful salon or spa owner (usually someone whose business has grown quickly and is fast approaching full capacity), will seek out my advice on their decision to either enjoy the ride and milk their business for all its worth, or to take a risk and open a second location. For those who lean towards expansion, some inevitably contemplate the notion of franchising their “brand”. At first glance, creating a franchise system holds a great deal of appeal; allows someone else to shoulder most of the investment risk of starting up a new location, while charging them an up-front branding fee and collecting a monthly royalty check. Franchise groups also benefit by pooling their budgets for advertising and promotions, by using their larger buying power to negotiate better deals with vendors and landlords, and by obtaining more access to customized training programs.
If it sounds too good to be true, it often is. Although many salons have attempted to franchise their business, for some very predictable reasons many have failed in the process. Frequently the second location does not perform as expected or the franchisee fails to maintain the same image and quality that made the first location successful. In other cases the original concept becomes so diluted and the business generates so little income that the franchisee is unable to pay the royalties, or worse, refuses to pay, claiming a lack of education, support, marketing etc. By the middle of the second year the disgruntled franchisee files a suit, removes the name from the building and dissociates from the brand. Court battles often ensue.
Despite the abundance of failed attempts, many people still believe that franchising is the holy grail of retailing. We see franchise concepts in every mall, on every commercial street and littered throughout the yellow pages. Franchises are readily available in almost every commercial area imaginable including Fast Food, Hotel Hospitality, Living Assistance, Clothing, Nutrition, and Financial Services to name just a few. In the Canadian Salon and Spa industry, however, there are a limited number of successful franchise stories. The most recognizable franchises include Chatters, Trade Secrets, First Choice Haircutters, Magicuts and Supercuts. The majority of these salon franchises share a few key characteristics; they are usually positioned in the mid to low end market, are located in high traffic areas, have a well-known name in a specific geographical area, and develop their franchises in close clusters to gain exposure quickly.

Just as successful salon franchises share a few key characteristics, so do their owners. The best franchisees are skilled operators who are very strong at applying a business model and at following established operational systems. Most successful franchisees are people who are already in retail or operations management and who want to become owners, but do not want to take the risk of starting a concept from scratch and investing large sums of money to see it take off gradually. They are willing to forego the creative and entrepreneurial aspects of being in business for a sense of security by running a well-planned business that has proven success and growth potential.

The biggest challenge in operating a successful salon or spa franchise is maintaining service standards and ensuring the customer is going to have a consistent experience at any location. A franchise company that sells a product has some degree of control over what the customer gets, by delivering the same hamburger, coffee or clothing to all of its franchisees. But a franchise that is based on services depends a great deal on human variables that are much harder to control.

Building your own franchise system is a costly and time consuming process with very little guarantee of success. Before you go the franchise route, ensure that you have two or three profitable locations first and an operating system that you can replicate systematically.
Alain Audet is the president of Solnyx Consultants Inc., a business development consulting firm that specializes in retail planning, merchandising and education for the fashion and beauty industries.

See more from Alain Audet & Solnyx Consultants Inc:
Twitter:       @solnyx

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