Salon Startup: Franchise Facts (The McSalon: Would You Like A Franchise With That?)

Imagine you have an all-too-familiar craving for a late-night snack and—diet be damned—you’re going to get one. In your neighborhood are two convenience stores: the generically named Stop-and-Shop and a 7-Eleven. Both are about the same distance from your house and are similar in price, service and products. So which do you choose?

Well, if you’re like most people, you went with the name you know best. Of course, while you were polishing off that Slurpee®, you didn’t really think about the fact that your decision illustrates one of the advantages of being part of a franchise—name recognition. While the 7-Eleven that just received your business is individually owned and operated, as is the Stop-and-Shop, you chose the 7-Eleven because you knew what to expect.

Tanning clients will behave similarly. When they want to tan, they’ll look to salons they are familiar with ... even if that just means a name they recognize. Of course, name recognition isn’t the only advantage to joining a franchise. Many other components—such as the parent company’s ability to support the individual franchisees and the likelihood of profit early on—influence the choice to franchise.

Support

First-time business owners tend to have the most risk associated with a launch simply because they haven’t done it before. Franchising minimizes that risk and provides a pre-packaged business model, supplies, additional start-up capital and support throughout the life of the salon.

Of course, this support isn’t free. Joining a franchise often comes with an annual fee and other repeating financial encumbrances, such as royalties or revenue sharing. It’s this income that allows the franchisor to provide the ongoing support it boasts.

Take South Beach Tanning Co., based in metro Miami, for example. For an initial fee of $25,000, this franchise provides extensive pre-opening support, including help with picking a location and décor, and an intensive training program. After you’re off the ground, CEO Brian Hibbard says South Beach provides e-mail and phone support, as well as marketing and advertising materials. As far as royalties, South Beach is slightly different from the industry standard of 6 percent of gross revenue going back to the franchise; it only requires 4 percent after the first year and 5 percent after the second. A mandatory 2-percent contribution to the franchise-wide marketing fund also applies.

If a salon starter wants to play on the Marrero, La.-based Planet Beach team, he or she must pay $30,000 up front, says Franchise Marketing Manager Tiffany Rhodes, and send 6 percent of its gross sales back to the company. But the benefits to joining with Planet Beach include some of the most thorough market analysis in the business and a significant amount of revenue spent in research and product development to stay on the cutting edge of what tanners want.

Another heavy-hitter in the industry, Maple Valley, Wash.-based Desert Sun Tanning, charges an initial fee of $50,000 with a three-year tiered royalty schedule similar to South Beach. However, Desert Sun’s marketing campaign demands only 1 percent of gross sales, according to Bareq Peshtaz, the company’s vice president of franchising. In addition, among Desert Sun’s fairly standard support options is access to its proprietary intranet—a convenient way for all locations to stay connected.