I've been asked my opinion about a couple of new discount (they call them affordable) facial franchises that have sprung up recently. Why are they needed? Who will use them? What do they portend for the future of the esthetics business? Are they a good investment idea? And so forth. I do have some background knowledge of this concept but, for the purpose of this post, can only offer my personal business perspective. This is how I see it:
• What is an "affordable" facial? Does pricing it under $50.00 make it affordable or merely cheaper than one that costs, say, $70.00? Is the $49.00 client likely to come in more often or in greater numbers than others that pay more? Are facials sold above $50.00 unaffordable? More importantly, is the lower cost client really the one you want to attract? And what kind of employee wants to work at the discount facial salon? Will she/he prove ambitious, or someone looking for an easy way to build their career? Is this the beginning of the SuperCuts facial concept? And what's the message to the facial market here? Is the franchise implying that the rest of us are gouging customers by charging them more for facial treatments than they're really worth?
This concept troubles me for all the above reasons. In my many years as an esthetician I know that there were numerous people that couldn't afford my facial treatments, not that I met many of them since they don't usually come into the spa to tell you this fact. They just don't come in. How do you know that by shaving off a third of the price you'll be teeming with formerly priced-out customers? I can tell you this much, if you run a special for facial treatments you'll temporarily attract a certain number of people that will only pay the reduced price. Raise the price back up and they flee, for good. How reliable is this lower-end facial customer anyway? I built my business on clients that valued my treatments enough to pay what I charged for them—a premium price. What happens when you fill your schedule with clients that yield 1/3 less income per treatment? You work just as hard for 1/3 less income, that's what. Now, if you believe that your work isn't worth $75.00 per treatment or more, or if you believe that this is too high a price to charge for them then it's time to build up some personal self-confidence, not volunteer to work for less money. I know that I would never hire anyone that held those beliefs as they would not make an effort to grow the company's income. They'd just be too afraid to promote and sell.
And what about your retail sales? Is this low-end facial client going to spend the savings on your high-end treatment products? Not very likely.
If the idea is to make facial treatments more affordable as a sort of goodwill gesture for a less fortunate potential customer, what about those poor folks for whom even $49.00 is too steep? Why stop at $49.00 when you could sell an hour treatment for only $39.00 or even $19.00? I'm not seeing the heart in this price, just a discount. Are you being greedy by not going rock-bottom on service pricing? Look what's happened to nail service prices in the last 20 years. It's become a low-ball game. Spas may charge more for a manicure or pedicure but, if you can buy one cheaper somewhere else, does it make yours unaffordable? I know that many of my premium facial clients, ones that had oodles of tech money and the rock to prove it, were plenty happy to go to the cheap nail salon nearby because they could get a good deal there, not because they couldn't afford more. We've all had the doctor's that wife recoiled at the price of our $40.00+ moisturizer yet happily drove the MBZ 500 to Long's for a $12.00 so-called equivalent.
Should I carry Nivea to please her? Not a chance.So, say you go ahead and buy an affordable facial franchise. What's the payoff for you? Will you make more money than you would by going it on your own? Let's see: you'll have a monthly franchise fee, your prices will be controlled by the parent company as will most of your methods (franchises are NOT ideal for creative types) and you'll most likely be forced to buy their products at the usual and profit-killing 50% gross profit margin. They may even dictate the level at which you reorder, too, whether or not you need to restock. Here's some information from NY State on buying a franchise:
The Truth about Legitimate Franchises: What Every Investor Needs to Understand
One reason why many franchises are so successful is because the system creates a certain synergy. Businesses brought together under one trademark can achieve things not possible for individual business people, such as group advertising and buying power. Along with success, however, comes a certain number of failures. There is no guarantee of success. Therefore, it is vital that potential franchisees understand that:
Franchises are not guaranteed to make money. Even if you own a business which is part of the most successful franchise in the country or the world, your store may lose money, especially in the beginning. Be prepared to deal with this type of situation.
A franchise is a long-term investment. You will not get rich quick. It may take you several years to develop your business to a point where you have paid off any loans and are making the amount of money you anticipated. If your business does not make money or you tire of it, you cannot simply close up shop and forget about it. Like it or not, you must continue to work for the full amount of time agreed to in your contract.
Franchisees cannot under any circumstances deviate from the norm. You will be told exactly how to run your business, right down to how to organize your finance books or where to keep the napkins. Even if you believe that the franchisor’s decision is not the best one for your particular store or regional location, you will be required to follow the rules. If you are a natural entrepreneur who has a creative mind and wants to operate your business your own way, franchising is probably not for you.
A franchise requires a very large amount of money. The startup fees may number in the hundreds of thousands of dollars. Make sure you and your family can afford to sustain this kind of loss, should your business fail. There will also be continuous fees for royalties and advertising which will continue for as long as you own the business. They may be quite high and you may not want to pay them after learning the business and doing all the work, but you will be bound to continue to pay them as part of your contract.
You are not guaranteed the right to alternate vending of inventory, product, service or supplies beyond those that are disclosed in the UFOC. The franchisor may require you to buy everything you need from an approved vendor or group of vendors. Often, these vendors charge more than independent vendors because they give the franchisor a part of the earnings. Even if you know that you could buy the same items elsewhere for significantly less money, you may be required to use only the vendors accepted by the franchisor. Also, find out what factors could affect the franchisee’s ability in the future to obtain essential goods economically from a reliable source.
The franchisor may be bought out or may go out of business. If the franchisor sells to or merges with a company that does not understand franchising or if it has different goals that allow the system to deteriorate, you may suffer.
For more info go to: http://www.oag.state.ny.us/franchise/befor...e_brochure.html
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So, my friends, you'll have to use your own judgment and decide about this concept on your own. However, for my money and the money I got from my career as a solo spa business, I'd rather pass on this "opportunity."
Best of luck to you!
Douglas Preston