Franchising

The Marketplace

Since the late 1970s, the indoor tanning industry has grown into a business with an economic impact of more than $5 billion. Statistics suggest that there are about 20,000 tanning salons and another 20,000 locations such as health clubs, spas, video stores and beauty salons that offer indoor tanning.

According to the Indoor Tanning Association (ITA), most indoor tanning facilities in the United States are small businesses, and more than 50 percent of them have female ownership, as compared to 25 percent of businesses in other industries. The ITA estimates that the business of indoor tanning employs approximately 160,000 individuals and tans about 30 million people annually.

Industry experts agree that the only way the industry will grow dramatically is if there is an improvement in professional management of salon owners. That means salon owners must make a long-term commitment to the industry through a sound business plan. More professionally run salons will lead to the ability to present a better financial picture of the industry to lenders. It also will allow salon owners the ability to educate the public and grow the industry.

Independent salons account for the majority of salon ownership; however, more and more franchise operations have joined the market over the past few years. While some salon owners view franchise operations as intense competition, many industry veterans believe it is important for the industry to continue to become more mainstream—and that includes franchise operations. This thinking holds true for almost every other industry and helps expand the concept of indoor tanning.

Issues To Consider

Like every business, there are advantages and disadvantages to owning a franchise. First and foremost, with a franchise, franchisees have the backing and knowledge of a corporation. They also will share in the advertising costs, and because the corporation is dealing in mass equipment purchases they will get products at a discounted rate.

One of the biggest advantages of owning a franchise is name recognition. While name recognition is a huge advantage, the financial advantages also are tremendous. Some veterans agree that people want to buy a franchise because they want somebody to put them in a successful business overnight. Franchising is great for the industry as long as the franchisor is doing the right job. Franchisors have to provide support, otherwise the franchisees aren’t buying franchises—they’re simply buying a name.