Hair-Care Franchises Are Ready for Growth

Although hair-care operators have faced some challenges in the past couple of years, for smart hair-care companies, the economic downturn has meant more opportunities than hardships. Here’s a closer look at why the future of hair-care franchising is lookin’ good.

Sport Clips chief executive officer Gordon B. Logan notes that since franchises dominate the “value priced” segment of the hair-care market, this is a great time for them to grab new market share as more budget-conscious customers have traded down to lower-priced services.

At Great Clips, vice president of franchise development Rob Goggins agrees. “We see this as an opportune time to gain market share from our competitors,” says Goggins. To do that, he says, Great Clips is “[focusing] our brand message to customers currently paying $15 for haircuts.”

Children’s hair salon Snip-Its is also focusing its marketing efforts on new client acquisition. “We have a great database where we can subtract our current customers and target only those households that have kids and are at a certain income level,” explains CEO Jim George.

Targeting select niches is another tactic many franchisors are using to grow. Sport Clips has found success focusing on men and boys, as has Snip-Its by entertaining kids during haircuts. Supercuts, which caters primarily to men, launched upscale barbershop concept Raze in 2008, says Alan Storry, vice president of franchise development. “We see that as a market niche that’s growing,” Storry explains. The company has also acquired Cool Cuts 4 Kids and is actively marketing the concept.

One challenge that may still exist for hair-care franchisees going forward, especially those in smaller systems, will be financing growth. To help with that issue, Sport Clips has established a relationship with Wells Fargo for financing stores, in addition to its relationships with conventional lenders and those backed by the Small Business Administration. Logan, however, adds that financing options have gotten a lot better in the past six months, a trend that should continue as the economy recovers.

The recession has already taken its toll on independent salons -- especially startups, Logan notes -- leading to consolidation in the industry. This means many good locations are opening up. Great Clips has introduced a lease incentive program that reimburses franchisees who secure a desirable site from an independent competitor. Fantastic Sams has invested in a real estate modeling tool that lets the company identify optimal locations for new salons, as well as evaluate current locations, says president and CEO Scott Colabuono.

Franchisors are also taking a variety of steps to help their franchisees cut costs, increase sales, and operate more efficiently. Fantastic Sams is providing extensive training on in-salon product sales to help franchisees drive more revenue from each customer. Sport Clips has implemented a store performance improvement program to help franchisees boost their sales and profits. Great Clips has built a world-class scheduling component into its proprietary StyleWare Touch point-of-sale system, enabling franchisees to more accurately coordinate their staff schedules with peak customer periods. And Snip-Its keeps a full-time field financial analyst on staff to work exclusively with franchisees, helping them figure out how to operate more efficiently. “We do a financial review with each of our owners and look at how to increase productivity,” explains George.

Overall, hair-care franchisors are confident about what’s to come. “The future is bright. The industry has confirmed it is recession-resistant,” says Colabuono. “For entrepreneurs with capital available or with favorable credit histories, now is the time to enter the field as real estate and stylists are abundantly available. Real estate in particular is priced at levels not seen for some time.”

For a list of hair-care franchises, visit the Hair Salon section of our AllBusiness.com Franchise Directory.

Maria Valdez Haubrich is chief liaison officer and Karen Axelton is chief content officer at GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses.