Hair and beauty salon franchises provide a lot of services. They are part of the broader personal care service industry, which according to the U.S. Bureau of Labor Statistics (BLS), includes barbershops and beauty salons, nail salons, and other personal care services.
While the industry was hit historically hard by the COVID-19 pandemic shutdowns and social distancing guidelines, it is expected to bounce back in a big way. And that rebound has already begun in many respects.
According to projections, the personal care services is projected to grow 8.1% from 2020 to 2030, nearly five times faster than the average 1.7% growth for total employment over the same time period. Per a BLS industry report, “most of the projected growth in this industry (about 24.9 percent) is likely to occur in the short term as cyclical recovery as employment returns to prepandemic levels. The remaining (about 8.1 percent) of the total projected growth (33 percent) in the industry is attributable to the long-term industry growth.”
Salon Suites Making Their Mark in the Industry
Every industry has employee turnover, but salons consistently rank among businesses with the highest employee turnover from year-to-year. There are several reasons, but many revolve around the desire of the stylist to find a work environment that better suits them personally. As a result, in their quest for more independence, health and beauty professionals have indirectly made property management a profitable segment of the hair and beauty salon franchise industry.
For context: Professionals within salons typically rent their booth from the salon owner and pay a commission to the owner for the space they use. “The unofficial rule is for stylists to find a busy salon that provides advanced education, build a clientele… and then take that clientele to a better commission deal at another salon… or set up camp as a booth or suite renter,” said Neil Ducoff of Strategies, a salon and spa consultancy.
For salon professionals who have decided to strike out on their own, salon suite rental franchises (such as Encore Salon Suites, Sola Salons, My Salon Suite, and others) allow their clients, the stylists, to avoid taking on the expense of a studio build out personally, instead spreading the cost of property costs among several tenets. The rentals also allow for the stylists to separate themselves from many of the constraints that come with working for traditional outlets.
Typically provided in the rental deals are access to fully-equipped studios alongside the tools needed to run a salon business and varying levels of support. According to Sola, salon suite rental services “offer salon professionals the freedom and benefits of salon ownership without the upfront costs and risks associated with opening a traditional salon.” It contends the salon suite rental model “empowers hairdressers, estheticians, nail techs, massage therapists and other like-minded professionals to take control of their lives and their careers.”
Men’s Grooming No Longer a Niche
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.
But while the men’s grooming franchise market is booming now, 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. “Many services are becoming available to men beyond basic haircuts, such as eyebrow threading, beard shaping, and body waxing at barber shops, hairstylist salons, and beauty salons,” according to the aforementioned BLS report. “Additionally, manicure and pedicure services are no longer exclusively for women.”
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.
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,” Atkinson says. But “the strength of the men’s centric health and beauty franchising segment is very clear.”
Initial Investment and Opening Costs for Hair & Beauty Salon Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements. The initial investment required for a hair & beauty franchise can range from a low in the tens of thousands to a high in the hundreds of thousands of dollars, mostly dependent on the kind of real estate required for the franchise.
Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the FDD is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Keep in mind these estimates are just that, though—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.
Ongoing Costs for Hair & Beauty Salon Franchises
Don’t forget about the additional costs required for nearly all franchise businesses. This includes expenses such as royalty fees, marketing fees, software fees, training fees, and more.
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.
It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.