Health & Beauty Franchise Industry Report

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Health and Beauty Industry Overview

Health and beauty franchises cover a wide range of products that help customers feel their best (health/wellness) and look their best (beauty). Businesses, both franchises and not, within this service field are also referred to as the personal care service industry. The United States is the largest beauty and personal care market in the world.

Popular segments of the industry include:

• Barbershops
• Beauty salons
• Diet and weight reduction centers
• Hail removal salons
• Massage centers
• Makeup salons
• Nail salons
• Tanning salons

Also, per the North American Industry Classification System (NAICS), these establishments count as part of the industry as well:

• Day spas
• Hair replacement services (except by physician offices)
• Health resorts and spas that provide lodging (except casino hotels)
• Saunas
• Steam or Turkish baths
• Tattoo parlors

A number of franchises in the industry provide services in multiple segments. Some franchises can also crossover into the fitness franchise industry as well.

Outlook for the Major Health and Beauty Industry Segments

Considering the industry has done well even during slower economic times, it’s not surprising that nearly all segments of the industry are expected to remain in growth mode for the immediate future, according to IBISWorld. The notable exception is in-person weight loss services, which the industry analysis company says is adjusting to the availability of online and lower-cost alternatives.

Below are the overall annual revenue numbers and growth rate over the past five years for five of the major health and beauty industry segments (United States only).

And the popularity of the franchise industry specifically isn’t showing any signs of waning either. In the 2019 State of Small Business survey by Guidant Financial, health and beauty (along with fitness) was ranked the most popular franchise industry.

Men’s Grooming Franchise Options Explode

Once upon a time, men’s grooming was seen as a luxury, a practice reserved for those of a certain age, class and/or wealth. Not anymore. The walls have been broken down, the stigma surrounding men’s grooming is fading, and men of all ages and within virtually all socioeconomic strata are indulging themselves more. So much so that the men’s personal care industry is predicted to hit $166 billion worldwide by 2022—an approximate growth rate of 5.4% in the six years from 2016, according to Allied Market Research.

Relatedly, the men’s grooming franchise market is booming too, though it isn’t an entirely new space. Franchises in the industry segment date back to at least the early 1990s. At first, though, the concepts featured themes that were expressly masculine, a “safe” way for men to venture into the health and beauty market without straying too far from conventional norms.

However, a more unapologetic men’s luxury is now taking hold. Newer franchise concepts to the scene are promoting environments that “make you feel comfortable and at home” with complementary beverages (both alcoholic and not), leather chairs, and ambiances more befitting a lounge than a typical barbershop.

As one the original franchises in the space, Sport Clips sees the newcomers as encouraging. “Sport Clips keeps its finger on the pulse of the growth of the male grooming franchise opportunities and we are very much aware of the increased interest in the male grooming segment. It is encouraging to see how strong this segment continues to be,” says Jim Atkinson, the franchise’s Vice President of Franchise Development. “The increase in franchise opportunities in our segment also encourages us, as the franchisor, to keep our Support Team and our franchise owners focused on the quality of in-store experience. We are always working on incremental improvements to our model to ensure we retain our position as the dominant brand in the male haircare space.”

A notable area contributing to the explosion of the men-focused health and beauty franchises is the resurgence of the straight-razor shave, one of the biggest micro trends within these men’s grooming businesses.

There’s been a societal shift in the past decade largely sparked by media images (see: Don Draper on the TV show Mad Men, James Bond, etc.) portraying the glamour of a time when shaving was treated as an indulgence instead of more contemporary media messages where shaving was presented as a chore, something to do as quickly as possible.

“Men have been told that shaving is a pain for so long,” Kevin Kent, owner of Canadian company Knifewear, told the Calgary Herald. “But I argue that, when done right, it’s a meaningful ritual. It’s a moment of focus and self-indulgence…And it feels good.” Analysts have also pointed to the reusability, thus more environmentally-friendly nature, of these razors as another contributing factor of their popularity.

Plus, its proponents say it’s simply the best way to get a shave. “The best shave you are going to get is from your barber who will have all the professional equipment, lighting, tools and know-how to give you a close shave, remove every little hair, and leave your skin with the right products to prevent razor burn and keep you moisturized,” says Kirk Riley, lead barber at Otis & Finn in Long Island City, New York.

Going forward, the future of this industry segment looks bright. “Ultimately, some brands will drop off and others will find their space in the market,” Jim says. But “the strength of the men’s centric health and beauty franchising segment is very clear.”

So how many options do you have? Here’s a rundown on six men-focused health and beauty franchises. (For more information on any of the franchises, click the name of the franchise.)

Franchises Offering Eyelash Extensions Also Growing

Another big beauty trend with a corresponding growth in franchise opportunities is semi-permanent eyelash extensions. Eyelash extensions are synthetic fibers that are attached to a client’s natural lashes in order to get a longer, thicker lash and curb the usage of makeup products like mascara. Customers typically can choose from a variety of styles, lengths and curls to create their desired look.

In addition to the aforementioned fact that health and beauty franchises have sustained well even in relatively down economic times, the wide potential customer base for this kind of service is seen as a plus to many prospective franchisees. “Lash extensions appeal to all women,” says Heather Elrod, CEO of Amazing Lash Studio. “We have members who are 20 and our oldest member on record is 83.”

Recurring business is a hallmark of this type of franchise. Although lash extensions can last for months with the right care, beauty experts recommend that customers get a touch-up every few weeks.

And, like so many other franchises have shown in the health and beauty industry, dedication to creating an appealing atmosphere has been paramount to maintaining and growing business. As Michael Blair, co-founder of Deka Lash states, a lot of work goes into the experience a customer has during each visit: “From the modernized studio design to the music, the ergonomic beds, and even a custom aroma inside the studio, it is all designed to be a WOW experience.”

Beyond the look and feel, when looking for a franchise within this branch of the industry prospective franchisees need to be sure the service offerings of the company now and for the future align with their vision for their career. Some franchises, like Deka Lash, are currently content with one area of focus. “Our brand is unique as we focus on being experts at one thing, eyelash extensions,” Michael says.

While others, like Amazing Lash Studio, have plans to diversify their offerings sooner rather than later. “Our next launch will be brows — brow shaping, brow tinting and that will occur [in late 2019],” Heather divulged in a February 2019 interview. The franchise is also reportedly looking into various types of face masks and lip plumping techniques.

And others, like Idolize Brows & Beauty, have had diverse service offerings since the beginning. In addition to lash extensions and additional lash services, the franchise also offers eyebrow and facial threading, full body waxing, and facials. As does Touch n Glow, which offers eyelash extensions along with eyebrow threading and tinting, henna tattoos, luxury facials, makeovers, skincare products, and more.

To get more information on these franchises, check out the links below.

Hotel Franchises Getting in on Health and Beauty Trends

According to Nikos S. Morantis, co-founder of Hotelier Academy, “wellness travel, which is no longer linked only with spa facilities but with the travelers’ overall rejuvenation and well-being experience, is growing rapidly.”

In recent years, hotel franchises have found it more and more important to add elements of health and beauty to their services beyond being a place for travelers to rest. In a post on the Hotelier Academy website, Nikos detailed ways hotels could increase their revenue through “providing an upgraded holistic wellness experience through beauty services and wellbeing.” The examples included:

• Offering special beauty packages within their rooms
• Developing special beauty and wellness facilities
• Organizing beauty events with local experts
• Making beauty services accessible through in-hotel communication channels

In addition to the above, like the health and beauty franchises featured in previous sections, hotels are also finding out how much atmosphere impacts customers’ decisions—particularly women.

“Women have traditionally been more geared toward health and well-being than men, and they are increasingly making the booking decisions. There are also more women running hotels; this is certainly true of the spas,” says Jennifer Hawkins, CEO of Hawkins International Public Relations, a firm serving primarily high-end lifestyle and travel clients.

To entice guests to their properties, hoteliers have largely renovated their rooms to reflect an environment encompassing of their guests’ health, wellness and beauty desires in a variety of ways. Over the past several years many hotel franchises have touted their new mattresses, different bedding, changes to room lighting, etc.

But in cases, some hoteliers have gone further. In 2012, InterContinental Hotels Group (IHG) created another franchise brand specifically to cater to travelers’ wellness needs: EVEN Hotels. As of this posting, 10 EVEN Hotels are operational and three are being built. “We intentionally designed every aspect of the EVEN Hotels experience to empower guests to maintain their wellness routine while on the road,” says their vice president of global marketing.

Buying a Health and Beauty Franchise

Please note: the provisions and fees referred to below are some of the most common and not a complete listing. Please review the Franchise Disclosure Document (FDD) of a franchise for all of the provisions and fees related to investing in that particular franchise.

Opening Costs

Franchisors offer estimates on the opening costs in their Franchise Disclosure Document (FDD) based upon their experience establishing, and in some cases operating, units. However, prospective franchisees should keep in mind these estimates are just that—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.

The following graphic provides the initial investment range associated with opening 10 health and beauty industry franchises. These ranges come from the FDDs of each respective franchise, dated 2019. Please review the FDD of a franchise for all of the provisions and fees related to investing in that particular franchise.

Ongoing Franchise Fees

Throughout the length of the agreement there are costs for being a part of the franchisor’s business system. These costs include items such as royalty fees, charges for technical support, and continued marketing costs.

The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support.

In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training. Prior to investing, prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs.

For more information on a number that help people feel and look their best, please see our health & beauty franchise profiles.

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