Thinking of franchising?

There’s more than one way to run a beauty business – and maybe franchising could be the way forward for you, explains NBF chief executive, Hilary Hall…

Depending on your situation, you can consider becoming a franchisee or a franchisor. Either way, make sure you do your homework and understand exactly what you’re signing up to. 

Becoming a franchisee

As a franchisee you’ll pay a fee to a recognised and successful beauty business for permission to use their branding and business model to run your own beauty salon.

There are a number of benefits, including being associated with a known brand, initial help with start-up, and on-going business support such as training and marketing.

However, running your franchise business will still be hard work and you will be sharing your profits with your franchisor. You may also feel restricted by the need to stick closely to the franchisor’s business model. Becoming a franchisee may not be for you if you want to put your own stamp on the business and decide on your own décor, uniforms, and the types of service you offer.

Do your research

Don’t rush into anything. Carefully research potential franchisors and find out as much as you can about them including how long they have been in business and the type of on-going support they provide to franchisees. You could ask to speak to their existing franchisees to find out more.

Other important issues to consider include how much support and training you can expect. For example, this includes employment law, health and safety requirements, and how to comply with local and national laws and regulations.

You’ll also need to understand the business model you’ll be expected to follow, what help is available if you experience difficulties, and the terms of the contract you will have to sign. Always find out how long the agreement is for and in what circumstances you can end it earlier.

Most importantly, always take legal and professional advice before signing up.

Becoming a franchisor

If you have a successful and profitable beauty business and enough money to set up and develop a franchise network, you could become a franchisor. It’s not an easy option, but franchising is a well-established and cost-effective business model so worth considering if you want to expand.

As a franchisor you allow other people – franchisees – to set up their own beauty business using your trading name, branding and logo. The franchisee pays you to do this and must stick to your way of doing business so your brand and reputation are protected.

For this reason, watertight contracts must be drawn up by a legal professional that specialises in franchises. The contract must include, among other things, the length of the franchise agreement, how it can be ended, how much the franchisee will pay you and what will happen if your franchisee’s business doesn’t work out.

It takes a significant amount of time and money when you first set-up as a franchisor and it may be a few years before you start making a profit – so be realistic. You’ll need a detailed business plan and will be expected to provide a comprehensive and on-going support package for your franchisees.

NBF Members can download in-depth guides to aid running a beauty business at www.nhf.info