ALL HANDS OFF-DECK

Inside Franchise Business - - Contents -

Look­ing for an in­vestor fran­chisee role?

Gen­er­ally, a fran­chise is not con­sid­ered a pas­sive in­come source, says Smart Fran­chise co-founder Kate Groom. If a fran­chise sys­tem ad­ver­tises an in­vestor-type model in­volv­ing min­i­mal ef­fort, po­ten­tial fran­chisees should first read the fine print, she warns.

“Cer­tainly in the be­gin­ning you would need to be in­volved in the busi­ness,” she says. But can fran­chises be run by an in­vestor who ap­points ground-level man­agers?

Here, In­side Fran­chise Busi­ness ex­plores some fran­chises that are geared for in­vestor-types..

JUST CUTS

Just Cuts is a salon busi­ness that has been fran­chis­ing for more than 27 years, and fran­chisees do not need a hair­dress­ing back­ground.

“Many of our fran­chisees spend less than 30 hours each week work­ing on their busi­ness,” says busi­ness devel­op­ment man­ager Luke Man­ning. “Our sys­tems, pro­cesses, sup­port model and train­ing op­por­tu­ni­ties help em­power stylists to eas­ily run the busi­ness for fran­chisees.

“This can hap­pen as soon as the stylists, who all must be qual­i­fied hair­dressers, re­ceive the nec­es­sary in­duc­tion and guid­ance from the Just Cuts Academy. Fran­chisees then ap­point a team leader who can run the day-to-day ac­tiv­i­ties.”

But can a buyer ex­pect pas­sive in­come from a Just Cuts fran­chise?

“With Just Cuts, fran­chisees also set their own pace,” says Man­ning. “As client num­bers and re­tail sales grow, so does a fran­chisee’s earn­ing po­ten­tial. ”In fact, most Just Cuts fran­chisees are not hair­dressers. “We pro­vide our fran­chisees with a proven, suc­cess­ful sys­tem that guides them through ev­ery step of open­ing a salon,” he says. “All you need is a pas­sion for peo­ple and a will­ing­ness to learn and grow.”

A Just Cuts kiosk salon starts from $80,000 and a full in-line salon from

Busi­ness is known for the gru­elling hours en­tailed in kick-start­ing growth,

but what is in­volved when an in­vestor role is of­fered to a fran­chisee?

$160,000. The ini­tial fran­chise fee for a kiosk salon is $12,500, and $25,000 for a full salon.

The model has a fixed weekly fran­chise ser­vice fee, based on 12 units a week, with a “unit” be­ing the current price of a Style Cut. Re­gard­less of the num­ber of hair­cuts pro­vided each week, the fee stays con­stant.

ORANGETH­E­ORY FIT­NESS

Orangeth­e­ory Fit­ness is a gym con­cept that de­liv­ers in­di­vid­ual fit­ness within a group en­vi­ron­ment. For fit­ness ses­sions, mem­bers are split into two groups to main­tain heart rates along­side other rou­tines. The fit­ness classes change daily.

A part of the Col­lec­tive Well­ness Group, the model al­lows for a fran­chisee in­vestor. How­ever, when it comes to how much face-time is needed of the fran­chisee, this may vary de­pend­ing on the flex­i­bil­ity of the fran­chisee and their per­sonal cir­cum­stances, says CEO Arthur McColl.

“The first six to 12 months are a cru­cial time for the busi­ness, and for a fran­chisee to be seen, heard and felt as a ma­jor pos­i­tive in­flu­ence on em­ploy­ees as the stu­dio builds mem­ber­ships, as well as per­son­ally in­ter­act­ing with mem­bers. They need to lead by ex­am­ple and make sure sys­tems and pro­ce­dures are fol­lowed. Help­ing the team, from the stu­dio man­ager to coaches, and re­ally be­ing in­ter­ested and in­volved has a hugely pos­i­tive im­pact.

“This will set the tone for a healthy, wealthy and suc­cess­ful stu­dio as time goes on, which ul­ti­mately al­lows the fran­chisee to take a step back to fo­cus on open­ing an­other stu­dio or be­gin build­ing an Orangeth­e­ory Fit­ness port­fo­lio.”

While the fran­chisee in­vestor still should spend an amount of time within the busi­ness, at least in the early stages, the stu­dio man­ager has the abil­ity to care for the stu­dio.

An in­vestor should know the ins and outs of the busi­ness they are buy­ing into so they can make the most of the op­por­tu­nity. But can a fran­chisee ex­pect pas­sive in­come from this model?

“Ab­so­lutely, but of course within time, and es­pe­cially if the time ded­i­ca­tion and com­mit­ment was ev­i­dent from day one,” says McColl. “Pre-sales tar­gets should be pushed and the team sup­ported. This will only make things eas­ier and more prof­itable down the line.”

But run­ning a busi­ness is never easy, he warns. “Of course, hav­ing a back­ground or at the very least an in­ter­est in health and well­be­ing or busi­ness man­age­ment will only help a fran­chisee suc­ceed.”

In­vest­ment lev­els for an Orangeth­e­ory Fit­ness fran­chise usu­ally start at $600,000. Site se­lec­tion, sales sup­port and mar­ket­ing are in­cluded, as well as on­go­ing sup­port.

FRANCK PROVOST PARIS

French salon brand Franck Provost Paris is headed up in Aus­tralia by mas­ter fran­chisor Jean-Fran­cois Carre. A fran­chisee be­comes a hands-off in­vestor in stages.

“For the first two years, fran­chisees are in­volved full time (40 hours a week),” says Carre. “Af­ter that, it is pos­si­ble to go part-time and even­tu­ally even out of the busi­ness com­pletely (af­ter three years), es­pe­cially with the help of the man­age­ment op­tion pro­vided by the head of­fice.”

While a Franck Provost owner/ op­er­a­tor is re­spon­si­ble for the busi­ness, the ad­min­is­tra­tive tasks can be per­formed by a third party. Carre says this why some fran­chisees, who pre­fer to fo­cus on team and client man­age­ment, rely on the head of­fice to pro­vide sup­port with ac­count­ing, pay­roll, re­cruit­ment and mar­ket­ing tasks.

These fran­chisees can ex­pect a pas­sive in­come, gen­er­ally af­ter about three years, says Carre. “A hair salon takes a lit­tle time to set up, but when the clien­tele is built up and the team is sta­ble, this is to­tally pos­si­ble and an ob­jec­tive for most of the busi­ness own­ers.”

Fran­chisees can work mainly at the re­cep­tion desk, fo­cus­ing on clients and the salon team. Carre says good peo­ple skills and ded­i­ca­tion are must-haves.

De­pend­ing on the site, a Franck Provost fran­chise is about $291,000 in­clud­ing the rental bond, or about $272,000 ex­clud­ing the bond. Larger premises in pre­mium shop­ping cen­tres will in­cur higher es­tab­lish­ment costs, of course.

Fran­chisees are pro­vided weekly hair­dress­ing train­ing within salon and at the FPP Sydney academy. They are also given help with mar­ket­ing, salon set-up and choice of lo­ca­tion, plus le­gal help such as with em­ploy­ment con­tracts, as well as busi­ness ad­vice. This is cov­ered within roy­al­ties and mar­ket­ing fees.

Ex­tra busi­ness sup­port is avail­able for ad­di­tional subscription fees:

1. MAN­AGE­MENT OP­TION

Head of­fice looks af­ter ev­ery­thing so the fran­chisee can be rel­a­tively hands off. This is a par­tic­u­larly ap­peal­ing op­tion for in­vestors who are not hair­dressers. It in­cludes: book­keep­ing ac­count­ing and fi­nan­cial re­port­ing pay­roll mar­ket­ing re­cruit­ment busi­ness coach­ing man­ag­ing and coach­ing the floor man­ager

2. CEN­TRALISED CUS­TOMER SER­VICE

OP­TION

Head of­fice an­swers calls, emails, SMS and live chat, plus sup­ports the salon floor man­ager with ros­ter­ing, plan­ning and ca­sual staffing.

The first six to 12 months are a cru­cial time for the busi­ness, and for a fran­chisee to be seen, heard and felt as a ma­jor pos­i­tive in­flu­ence on em­ploy­ees.

Many of our fran­chisees spend less

than 30 hours each week work­ing on their

busi­ness.

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