Franchising for Nail Salons?

 “Let me tell you about nail franchises. They’re not worth it. They look great on paper, but the fact is you spend so much time filling out forms and federal reports that you don’t have any time left to work with your clients. Now that’s what I call real aggravation---world-class. And it’s true. So based on my experience, my advice to anyone thinking of spending her hard-earned money and her time on a franchise is ---don’t!” Those were the candid opinions of Ingrid “G G” Evans, owner/operator of GG Nail Systems in Fort Lauderdale, Florida. Her experience in nails comes partly from Europe (Austria, mainly) and partly from the Gold Coast in southeast Florida. You can reach GG at (305) 491-7799.

 “Everyone thinks about it at some time or other. After all, there are so many other kinds of franchises. So I thought about it. For a long time. But I decided no, because there are too many nail salons ‘out there’ who do bad work, and I don’t want to be responsible for them. Even the girls who’ve been trained aren’t ‘ready’ by no means.” Those are words from Mrs. Sandra Roller, owner of Nails Plus/School of Nails, in Margate, Florida. You can reach her at (305) 979-5052.

 “I’m a franchiser. I began franchising in 1975 and my handcare salons (called My Nails) were all over the country. The concept went so well that the U.S. Small Business Administration named me Ohio’s Small Businessperson of the Year. I loved it! I was further honoured by receiving an award from President Jimmy Carter in the Rose Garden of the White House. I loved it! But after four-and-a-half years of mountains of franchise bookwork and an eruption of tension and headaches stemming from my responsibility to provide quality control in each of my many franchised salons, I quit. I no longer loved it! I’d been looking to center my life on red nails, not red tape! I was never so happy as the day I quit. What I do now is run one business---my own---and I do nothing but distribute my nail product. Of course, I run my nail salon, too--- once a salon-keeper, always a salon-keeper. Let me repeat once more about quality control. To me that’s the crux of the matter in all nail-salon franchises. Nails are an art form. Everyone’s opinion has to be respected. How do you impose quality control over an art form? You can’t. When a client dislikes a certain art form, she simply goes to another salon. She exercises her own quality control. It’s pretty much to each her own whether it be nails, pizza, oil paintings, or novels.” Bonnie Fisher, whose opinion you just read, can be reached at (614) 431-1757 or 431-1135, as well as (614) 816-2155—all three in Columbus, Ohio, where her company Easy Nail is located.

 “No more! I don’t franchise anymore! It’s finished! Just too much ***** paperwork! If someone wants my help to open a shop, I’ll help. But it’ll be for a flat fee. I’m a consultant now, not a franchiser. Too much paperwork in franchising. Always looking over someone’s shoulder at their bookkeeping. That’s  not for me. And quality control! Impossible!” The gentleman who mentioned these words prefers anonymity, but he’s been in the business for 10 years, all in Plantation, Florida, and in other large cities along the Gold Coast when he was franchising beauty salons under his trade name. “I’m happy now. No franchises to worry about.” Those were his final words.

And so it went, on and on, with no one expressing positive feelings about franchises. One brave soul even said, “Franchises? You gotta be kidding! A beauty salon is far too personal a thing for a franchise. I can see franchised barber shops, franchised beauty salons, but never, never franchised nail salons. It’s almost a contradiction in terms.”

The word franchise comes from an Old French word franchir, meaning to set free. In the late 15th century in England, a franchise was the district over which the privilege of a corporation (or an individual) was exercised. The district was the group’s territory, domain, where it was free to do its thing. Today, in the USA, a franchise is the legal right to “lease” a name, to do business and receive profits (or losses) under that name, all in return for a consideration (fee). What you’re doing is making a living off someone else’s good name, that is, her reputation (in the instance of a nail salon) for providing excellent work with excellent products.

The business of franchising began some 60 years ago with the automobile. Since then, franchising has extended to hundreds of types of businesses (2000 at latest count) and their licensed outlets now number half a million. In 1983 franchises brought in $419 billion; of that sum, $368 billion was for retail franchising: and that last sum was 32 percent of the total USA retail sales.

Franchising is truly an American way of doing business. You’re probably very familiar with franchises dealing with food (restaurants, drive-ins, carry-outs, ice cream, candy, popcorn), hotels/motels, laundries and drycleaners. You may have heard of some beauty-salon and supply franchises. Most likely you have heard of no nail-salon franchises. Rightly so, they constitute, if they still exist, possibly no more than half a percent of all franchises. Most of them come and go, failing early in their idealistic careers.

In return for your license (franchise) to distribute the owner’s product/service/method, usually within a specific geographic area, often for 10 years, you pay initial and periodic fees. You give up your psychological liberty. You work within someone else’s system, under his/her supervision, generally for long hours. If you’re not acquainted with the business before you signed your name to the contract, you’ve probably initiated your future bankruptcy statement. You must be able to cope with stress, and you must certainly enjoy the franchise’s approach to nails.

In most instances, the franchisor retains control of marketing methods and should provide assistance in organizing, training, merchandising, and management. In return, therefore, for a minimum-risk maximum profit situation, and the franchisor’s good will, you give up personal options, and freedom of action in business decisions. Nothing is really free. Some franchises are generally successful (low-risk blue-chip groups); some, less so (high-risk no chippers). Like love and marriage, nothing is risk-free.

If you’re lucky, the state you live in may regulate franchises and try to make everything above-board. But there are only 15 states that have such statutes: California, Florida, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. That doesn’t mean the franchisors have carte blanche elsewhere. It just means that you must be more judicious in your dealings outside those states.

Stop to think of this for a minute. What is it that your clients care about? Ownership of the salon where their nails are beautiful? Or the beautification of their nails? Whether the salon is independently owned, part of a chain, member of a franchise, leased in some other way, or the property of a partnership or corporation is of little concern to a customer. What she wants is great nails at great prices. Franchise is too much a behind-the-scenes activity for clients to be concerned about it. Customers choose their nail techs after a long period of trial and error and stay with them wherever the techs go, for whatever reason. So there’s really no need to buy into a nail franchise if you are already successful and have all the clientele you need to be happy. Entering into a franchise is not for the successful; if it’s for anyone at all, it’s for the beginner, a beginner who must be circumspect, full of horse sense, and tough. That’s the world of business.

Assuming that you have found a franchisor who wants to enter into negotiations with you, you must examine all details of the franchise before you sign the contract. Talk is cheap but a John Hancock will cost you thousands. Let your lawyer examine the contract, too. Here are a few samples of the questions that need to be answered in depth as you look over the franchise. (The questions merely skim the depths.)

1. Who really owns the franchise? What’s their business experience?
2. Were there over any bankruptcies, lawsuits?
3. Are there any other franchises? How many? Where? When?
4. What’s the proposed volume of business and profit for the new franchise (yours)? Where did the estimates come from?
5. Who determines the location of the business? Who owns the land?
6. Who pays for advertising? Are there any celebs involved?
7. Do you get training and management assistance? How is it paid for?
8. Who settles the disputes between franchisor and franchisee? Between two franchisees?
9. Is your territory delimited so that no other franchisee can encroach upon it?
10. What is the true cost of the purchase of the franchise? Are there periodic fees after the initial outlay? (Are you merely seeing only the tip of the iceberg?)
11. Can all the fees, royalties, payments, etc. be identified to the point where the franchisor can add no others?
12. Do you have to reach a certain quota every month? And if you don’t, what happens?
13. Who determines the system you must use for your housekeeping and banking?
14. Who pays for repairs and maintenance?
15. Are your employees under your control or does the franchisor have all the final say?
16. Who chooses your insurance?
17. Who determines what products you’re to use? The size of your inventory? The quantity of supplies and the type of equipment?
18. Who sets your hours, prices, sales, and general policy?
19. If you want to get out of the contract, how can it be done? Can the franchisor unilaterally cancel your contract? Can it be transferred? Renewed?
20. How do you sell the franchise back to the owner?
21. What does the law in your state say about franchises? (You can never afford to be illegal and plead ignorance...)
22. What can you recoup if the franchisor is revealed to be a cheat? How do you recoup?

Never omit to protect yourself (before signing any contract) by investigating everything you can think of---and your lawyer can think of, and your advisors can think of, and your business associates can think of... Read all the disclosure statements meticulously. Question their earning claims. Obtain professional advice. Know your legal rights. Use your common sense.

Beware of promises, promises, promises. Beware of promises of big income from little input. Finally, remember that the franchisor is doing this for profit. The question is, “How much?”

 

The word ‘franchise’ is derived from the Old French word ‘franchir,’ meaning ‘to set free.’

What you’re doing is making a living off someone else’s good name: Her reputation for providing excellent work with excellent products.

The franchisor generally retains control of marketing and provides assistance in organizing, training, merchandising and management.