Focus on "franchise"

A number of franchise schemes exist within the hairdressing sector. It is estimated that there are currently around 350 - 400 franchised outlets in the UK (approximately 1% or more of all salons). According to the Hairdressing And Beauty Industry Authority (HABIA), the role of franchising is currently gaining in importance within the hairdressing industry.

Franchise schemes range in size from small local operations with perhaps two to five outlets to large national organisations such as Tony and Guy (Mascolo). Although different schemes vary, most hairdressing franchises are based on the following principles;

• each franchisee is self-employed
• franchised salon owners operate within the corporate framework of the parent franchisor (using a corporate name, shop livery and identity etc)
• both the franchisor and the franchisee must fulfil certain obligations, which are set out in the terms of the franchise agreement or contract

Franchise schemes offer certain advantages to the independent salon owner. These typically include;

• prestige associated with an established company name
• centralised advertising and promotional support
• assistance with business planning, book keeping and management issues
• established paperwork, accounting and operating systems
• advice on recruitment, salon design etc
• induction and on-going professional training in all aspects of hairdressing and salon management
• discounts on purchases of stock

In return, a franchisee may be required to adhere to minimum standards and to accede a large amount of control over the business to the franchisor. Many franchisors, for example, specify that their own products must be used and sold by the salon.

A fee (or royalty) is normally paid to the franchisor; 5% - 10% of takings is common. Some franchisors also make a one-off initial charge to new franchisees.