There are more than 3,000 franchise brands currently operating in the U.S. If you live in the U.S., you probably patronized one today. As David Crisalli, former Massage Envy CEO and head of Crisalli Ventures points out, more than half are food brands, a category that often nails how to run a franchise (think Arby’s or Subway).
How do those brands’ successful actions translate for salon, spa, or medical spa owners considering a franchise model? How do you know if and when franchising is right for you? What are the top considerations for managing a successful franchise?
At Innergize 2023, the premier beauty and wellness event run by Zenoti, Crisalli and four other industry leaders answered those questions, giving a room full of ambitious owners food for thought (pardon the joke) as to when and how to become the next great franchise.
The experts:
Ryan Rose, CEO, VIO Med Spa
Fredrick Tennet, Director of Franchise Operations, The NOW Massage
Dmitry Nartov, CEO, Sugaring NYC
Daria Nartov, Founder & Managing Partner, Sugaring NYC
How do you know if you’re ready to start a franchise?
For any owner looking to scale their business, franchising can be very attractive, and may feel like a natural (and more cost-effective) next step for your brand.
However, having a successful brand doesn’t automatically mean you’re ready to build a successful franchise – or that your business will appeal to enough people in enough markets to make it profitable. You’ll need to determine whether your business is both franchise-worthy and franchise-ready.
While franchising is undoubtedly exciting, it’s important that you’re prepared for the unique challenges that come with leading a network of franchised stores. Before taking the leap, there are crucial factors to consider.
“Franchising is very, very alluring. It's very enticing. It is not for the faint of heart. It's a complicated profession and it is really challenging even if you've got a great business.”
- David Crisalli, former CEO, Massage Envy
1) Determine your business scalability by testing your concept.
Scalability is not just about your ability to expand. It's about ensuring that your business's unique identity and success can be replicated across different locations. By proving your concept up front, you not only gain valuable insights into its potential for growth but also pave the way for a successful and sustainable franchising venture.
One strategy is to launch across multiple locations as a proof of concept. Fredrick Tennet, Director of Franchise Operations at The NOW Massage, recommends this approach: By opening four locations in LA initially, Tennet and team could make some key data decisions that confirmed they had a viable concept to go out and franchise.
2) Make sure you have a business name that’s scalable, too.
Your brand is everything so, before franchising, it’s crucial to ensure that your business name is legally available, unique, and can be trademarked anywhere you would franchise. This avoids your brand and business running into any issues down the line.
Ryan Rose, CEO of VIO Med Spa, recalls how the business originally had another name. But when an intellectual property search showed that name having already been used 83 times in the country, the team spent six months rebranding before moving forward.
If your current business name or brand isn’t unique, heed Rose’s warning: “You can't scale that business, you'll run into trademark violations everywhere that you go.”
3) Understand what your business does best in the marketplace.
For franchising to be successful, you need to know your business – and its niche or market position – inside out. Study similar businesses in the market and analyze their growth strategies. Identify what they do well and translate that knowledge into improving or differentiating your franchise concept.
The Sugaring NYC team knew they had a unique service. By initially scaling their corporate locations, CEO Dmitry Nartov was “super comfortable with all the operations” and felt confident the time was right to grow the brand and scale it nationwide.
Despite having a smaller team, Nartov looked at Sugaring NYC’s biggest competitors and identified areas where Sugaring could be faster and more efficient. “We realized where we could save time and effort, but at the same time how we could grow the company at a similar pace to them.”
4) Check your ego at the door.
There’s no room for emotional attachment and ego when you’re leading a franchise. Being passionate about your brand is fine, but the more resistant you are to franchisees’ feedback, the more frustrations you'll encounter. Franchisees – entrepreneurs in their own right – will question your decisions, as Ryan Rose knows all too well.
“Every single franchisee that you're going to sell to knows your business better than you - just ask 'em”, says Rose, who emphasizes how taxing it can be for franchisors to be under daily scrutiny.
“It's going to take a lot of capital,” he adds, “and being a franchisor is the most thankless job you could probably ever have in your life.”
What are the best practices for managing a franchise for the first time?
1) Recognize that your store managers are invested in your brand.
When someone buys a franchise, the relationship with your brand is bigger than having a manager running a location of your corporate business. It’s important to remember that they are buying into your brand and have a vested interest in its success.
“They paid for it,” explains Daria Nartov, Sugaring NYC’s Founding and Managing Partner. “It's their business now, and they want to make sure it's running the best way possible.”
By acknowledging and valuing the investment each franchisee has in your brand, you cultivate a more collaborative and loyal team environment, contributing to the franchise’s long-term success.
This vested interest is often what makes franchising the best and most cost-effective way to expand, according to Daria Nartov.
“When you’re expanding alone, you have to pay for the build out, manage these locations, hire the people and make sure everything is running smoothly – and it's all on you,” she explains. "We figured out that if you want to expand and have a business that’s working, franchising is the best way."
2) Understand the laws that apply to your business – in every state.
When asked the top three risks the VIO Med Spa team considered when deciding to franchise, Ryan Rose answers, “Compliance, compliance, compliance.” That should give everyone an indication of just how vital it is to understand the applicable laws of every state you’re going to operate in.
As a medspa brand offering medical procedures, Rose and his team spent the first five years collectively figuring out state compliances, hiring attorneys, and eventually bringing on their own internal healthcare counsel.
“The laws change depending on whether it’s a ‘corporate practice of medicine’ state, or a ‘layman can own a med spa’ state,” Rose explains. “Really understanding foundationally how that would transition throughout the country is the hardest part about med spa franchising.”
Regardless of your business category – medspa, day spa, full-service salon – to safeguard your franchise, Rose strongly advocates for careful franchisee selection.
“It's important to consider who is going to represent your brand the same way that you believe your brand should be represented... especially for medical spas,” Rose says. "They have to be respectful of the first time that retail and medical have combined into a setting. It’s a complicated factor.”
3) Stay on top of market and consumer trends for your franchisees.
To give your brand a competitive edge, be sure to consistently stay ahead of new trends and monitor where business is going so you can always be leading, not following.
This is something Dmitry Nartov has practiced since the beginning of Sugaring NYC and strongly recommends. “From the day we established the business, we’ve been trying to introduce new services,” he explains. “We’re constantly researching services that are not widely offered in the USA and looking at trends from Europe.”
Nartov has also found success testing new offerings and models at corporate stores, measuring the results, and then presenting the offerings to franchisees. That gives him reasons he can share as to why a service or strategy should be implemented.
4) Focus on communicating with franchisees – and giving them the “why”.
Franchising is a partnership between the franchisor and franchisees, and like any good partnership, communication, respect, and transparency are key.
Always take time to communicate how and why you’ve made the decisions you have – and remember that those decisions are affecting someone else’s business. Daria Nartov suggests focusing on how franchisees will benefit.
“When our franchisees are not happy with the decision we’re making, most of the time they just aren't seeing it the way we see it,” she explains. “We usually try to explain it to them like, ‘This is the benefit for you’, and that’s when it clicks.”
As mentioned above, testing out what works on your own business is a great way to foster trust in your decisions with franchisees. According to longtime industry leader and former Massage Envy CEO David Crisalli, this is what food brands have done well.
"They’ve got to nail it before they scale it. So, they test on themselves, not on franchisees.” Crisalli emphasizes the success doesn’t have to be 100% – but it should be at least 50%.
“Franchisees have a reasonable expectation that you've done your homework, understand the consumer and have profit engineered the offering so it doesn't lose money,” Crisalli adds.
“Franchisees should feel that you're equipping them with great communication and training tools and all these other types of things to see their success through, and then you get better and better as time goes on.”
- David Crisalli, former CEO, Massage Envy
Summary
While franchising can often be the best and most cost-effective way to expand your brand, it’s not for everyone. It will take careful planning and management to achieve long-term success.
Franchise owners will tell you there are many tactics you can employ to ensure franchising works for your brand. Among them: Testing business scalability, understanding market positioning, applying careful legal compliance, and prioritizing effective communication with franchisees.
Leading industry experts agree that, while there are many risks and challenges involved, there’s potential for a lot of reward when you take the necessary steps before diving in.
If you think your brand is ready for franchising, get expert tips on how franchise brands can maximize revenue in any economic climate.
Learn how the Zenoti platform helps growing brands by maximizing efficiencies.
