Sunchain:

Sunchain:
A Masterpiece In The Making

by Karen Butler

Ed Chaney comes from an artistically-gifted family, yet claims he doesn't have an artistic bone in his body. What modesty prevents him from seeing is that his craft just takes a different form--he's sculpted a tanning franchise that truly is a work of art.

Raw Talent

In the early '80s, when Chaney was an Arizona State University student studying electrical engineering, he realized he didn't want to work on electronics--his true desire was to become a business owner. Like any anxious student, he craved the real-life experience the business world would give him.

Undercapitalized and full of enthusiasm, Chaney acted on his instincts--instincts that would pay off and continue to bring him success. In 1986, the full-time student and a partner opened a tanning salon, Tan Banana, next to a popular gym in the college town of Tempe, Ariz.

Business took off, and over the next few years, they opened three more locations. Through the endeavor, Chaney was able to identify his natural talents, which included developing a business, managing multiple locations and dealing well with customers and employees.

In 1992, he and his partner sold the salons, which, to their credit, are still in operation today. Chaney took a quick breather from the industry to develop a contracting company. In less than one year, he was ready to come back.

Sketch For Success

Chaney had developed a fondness for the indoor tanning industry--an environment that allowed him to hone his business skills and interact with people. Having already established a successful chain of salons, he needed a different challenge to stimulate his business acumen. The next venture would be building a franchise.

Chaney began to lay the foundation for Sunchain. At the cornerstone were two unique goals--developing a shared membership program for customers and ensuring uniform service from his employees.

Sunlink, his membership program enabling tanners to visit any of the Sunchain locations, has been a logistical challenge. Allowing customers to use any salon's services is a no-brainer within a chain, but when that door is opened in a franchise system, it entails a very unique atmosphere. After all, if each of the system's salons has a different owner, profit sharing becomes an arguable issue.

"First and foremost, the program had to be extremely convenient for tanners," asserts Chaney. "However, it also had to be inviting and rewarding to franchisees. I wanted them to be competitive with each other, yet still able to work as a team."

Hammering out the details--from the operations manual and franchise agreement to the disclosure statement--took nearly two years, not to mention plenty of money.

"Developing a franchise is no easy task," he explains. "If it's done correctly, it can cost up to $150,000--and that's just the development stage--before you ever open a single salon."

Most investors don't realize the amount of time and money that go into establishing a franchise. Chaney has interviewed many who were surprised that the cost exceeded $20,000. Add to that the misperception that the franchisor is sitting back raking in the profits, and expanding the system can be a test of anyone's patience.

Chaney doesn't have to worry about franchisees that obsess about money; his system won't allow it. In addition to paying Sunchain a $10,000 franchise fee, franchisees also are asked to have a considerable amount of working capital in the bank--a sum reflecting a true commitment to service.

To the outsider, the franchise fee may seem pricey, but it actually represents little to no profit for Chaney, who invested hundreds of thousands early-on to solidify the system. Realistically, the fee covers the man hours Sunchain allocates to developing the franchisee's location.

"If a franchisee is asked to pay $120,000 for their salon, the exact same setup without our system discounts would cost them approximately 15 percent more," he says.

Besides extending the privilege of quality equipment and services at a reduced rate, working with Chaney also entails being privy to his 14 years of experience in the industry--an involvement that has given him advantages money otherwise couldn't buy.

A Piece of Work

Chaney's experience also has been the driving force behind his second franchise goal, uniform service from employees.

"I want to know that no matter which Sunchain location customers visit, they are going to be treated the exact same way," he says.

Although many of the industry's salon positions are part-time, he recognizes that almost all employees respond to two perks--money and intellectual stimulation. In addition to generous wages, Sunchain's staffers see their first pay raise after 30 days and are evaluated at six-month increments thereafter.

As far as intellectual stimulation, each manager works with individual employees to keep them mentally challenged. Some staff members have an obvious knack for sales, but equally important are those employees who are neat freaks or who love to develop teams--they should be given responsibilities that draw on those skills.

The hiring process is designed to eliminate anyone who might not be up to the franchise's standards. Sunchain applicants generally have three screening interviews before being hired. They then go through a minimum of two weeks of on-site training, culminating in a final session with Chaney.

"No employee--whether it's the person cleaning the beds or selling lotion--gets into the system without going through me," he explains. "In order to ensure standardization, I have to take the time to be a part of the training process."

The Big Picture

Chaney's staff isn't the only top-notch aspect of his company. He also broke the mold of traditional salon setups, which resulted in a dual benefit--happier customers and a profitable retail business.

"Traditionally, salons tend to open up in shopping centers and strip malls, which by design are sliced up to be very long and thin," he explains. "This led to the typical setup: a retail area in front and then a long, dark hallway with rooms on either side. I wanted to change that, so I leased larger spaces and placed the tanning rooms around the perimeter, creating a large retail space in the center."

Sunchain's resulting retail area has done extremely well. One of Chaney's philosophies has been to limit the amount and type of goods sold, so the salons carry lotions from only three to five vendors, as well as swimwear from a wider range of suppliers.

Standardized equipment also is important to Chaney. He wants customers using the shared membership program to feel completely comfortable tanning--without requiring additional education about machinery--no matter which salon they visit. Because of this, his franchisees are required to purchase equipment from a Sunchain-approved manufacturer, SUN Ergoline.

"People shouldn't look at it as us trying to tell them what they have to stock--a wide array of retail items fit within our guidelines," he says, "But we have to establish boundaries or we'll end up with someone thinking it's appropriate to sell lingerie."

While some businesses will sell anything to make a buck, it's never been the primary focus for Chaney. He speaks idealistically of wanting to improve the industry--a preaching he practices by conducting an honorable business himself. Of course, it doesn't hurt that he boasts some of the market's highest annual sales per bed.

With three franchise salons consistently experiencing 30-percent growth annually, Chaney is well on the way to his current goal of penetrating the Phoenix market. Summer brings the opening of his fourth franchisee and once he has 15 locations, he'll evaluate the program and expand further. His commitment to quality and education give him enough patience to sit back and allow the company time to grow.

Chaney has lost patience, however, for undercapitalized operators. In order to financially solidify investors, his latest venture is in financing. As a lending agent, Sunchain can further perpetuate its own success while eliminating the perils of undercapitalized franchisees.

He admits his entry into the world of financing has more to do with providing himself better-funded investors for Sunchain locations than with gaining revenue from the lending transaction.

However, he does take responsibility for helping his investors prosper. His ability for bringing in people who will operate well with the business and guiding them to success is a modern-day exhibit well worth the price of admission.