Franchising in the manicure business

Although it can be a lucrative endeavor, opening a manicure salon has its share of difficulties. Choosing franchising is one approach to streamline the procedure. For prospective business owners in the beauty sector, franchising is a desirable alternative since it provides a tested business plan, strong brand awareness, and continuous support.

You can take advantage of an established brand’s success and lower the risks involved in starting your own business by investing in a manicure franchise. With this strategy, you can concentrate more on offering top-notch services and less on learning the fundamentals of running a business.

We’ll go over the advantages and possible drawbacks of franchising in the manicure industry in this post so you can decide if it’s the best course of action for you.

The concept of a franchise

The right to start a business using a marketed brand and its business model under ongoing supervision is known as a franchise or franchising. The seller of a franchise is known as the franchisor, and the buyer is referred to as the franchisee.

Following the payment of a one-time fee to use the franchise, the right is granted to the franchisee.

There is no legal framework that defines a franchise, franchising, or the parties involved. No Russian Federation legislative document contains a term like that. In this instance, Article 54 of the Civil Code governs all relationships.

Reverse franchising is the most popular business model among those in the manicure industry.

Reverse franchising is a type of business structure where trademark rights are transferred and all business operations are managed by the franchise seller.

The essence of franchising

1. The parties sign an agreement and the franchisee pays a lump sum;
2. Organizational issues are resolved – the buyer receives instructions, technologies, standards, as well as the design of the future studio or island. Agreements are signed for the supply of materials, equipment, personnel are selected;
3. The business is officially launched;
4. An advertising campaign is conducted to inform and attract customers.

The franchisee pays the franchisor a royalty on a monthly basis after starting a business and earning the first revenue; this royalty is essentially a fee for using the trademark, akin to a rental fee. The parties decide at the outset, when they sign the agreement, how much royalties will be paid and how often.

Franchising in the manicure industry lowers the risks associated with starting from scratch by providing aspirant entrepreneurs with access to an established brand and business model. Enrolling in a well-known franchise gives you access to resources like support, training, and a recognizable brand that can help you get clients faster and confidently navigate the cutthroat beauty industry.

Pros and cons of franchising

Advantages:

• help and support. The buyer receives comprehensive support from the seller – consultations, advice, tips. The franchisor is interested in business development, so he is ready to help;
• no need to invent anything. No need to develop a concept, come up with a direction, think through the details – the entire business model is ready, you just need to invest funds;
• reduction in marketing costs. Franchises are usually sold by those who are confident in popularity. Potential clients automatically trust the franchise nail studio;
• surety. The franchisor can act as a guarantor in the bank if the franchisee needs to borrow money to open and run a business. Not everyone practices this, but many sellers do;
• business plan. Franchisors calculate in advance all the risks, payback periods and profitability and profit for a point in a specific area. Thanks to this, you get a real picture and can determine whether it is worth it.

Cons:

• dependence on the franchisor. Here we are talking about the fate of the business as a whole. If the franchisor company ceases to exist. In this case, everything related to the brand ceases to exist, including your nail studio;
• control. Your hands, as the owner, will be tied. You will not be able to do basic things – change the style of clothing of the staff, add a new service or start working on other materials. All this is controlled by the franchisor;
• monthly and lump-sum payments. Additional expenses await you already at the start – you need to make a lump-sum payment, and then – every month deduct royalties for using the brand.

Although there are more benefits, the three drawbacks we have highlighted are noteworthy and occasionally even crucial. Remember that all of the listed benefits and drawbacks are typical, broad ones. Franchisers sometimes provide slightly different terms, so thoroughly review the offers and make your own decisions in each unique situation.

Important aspects of choosing a franchise

Choose the future business format at the outset before investing in a franchise. There might be two of those:

• nail bar or island. Advantages – small area, relatively low opening costs, high traffic. At the same time, the rent is high, and finding a place is not so easy;
• studio – a full-fledged nail salon with several types of nail services – manicure, pedicure, care procedures. The profit of such establishments is high, especially with a good location, but opening requires more investment than a nail bar;

There’s also a manicure room, though we could only locate the 4hands franchise for this. It seems that this is not a popular choice.

Selection criteria for nail salon franchises:

• cost. Don"t rush into franchises with a low lump-sum fee and royalties. The fact is that the low price can be due to the minimum set for the start – there will only be a business model with all its subtleties. All other costs will fall on you. While a high-priced franchise can include a maximum of both a business model and established contact with suppliers, staff training, design project, CRM, website. As a result, it may turn out that buying an expensive franchise is more profitable than a cheap one. Surprisingly, it happens;
• reviews. Look for entrepreneurs who have already bought a franchise and ask what difficulties they had to face. It is better to do this in another region and contact them via Skype or messengers. Do not interview partners in your city – competition will force them to remain silent and distort the real picture;
• study the history of the franchisor company. See how many franchisees have been operating, how long the studio has been operating, what has happened to the company during its existence. You can get a free extract from the Unified State Register of Legal Entities on the egrul.nalog.ru website. There is information about the opening date, changes in the composition and activities of the company, the names of the director and founders. Read about these people on the Internet. In general, make sure the franchise and its seller are transparent and honest;
• payback period. It should be adequate. If you have to invest a million rubles and the payback period is 2 months – most likely this is a strong exaggeration. The average payback period for a manicure business is from 5 to 24 months;
• vacations. Some franchisers give partners a vacation on paying royalties for 1-4 months while the business gets on its feet. This is very useful when the work at first goes to zero, or even into the minus;
• requirements. Look at the list of requirements for franchisees, it is usually quite extensive. Usually there are requirements for the location, area of ​​the premises, number of halls. Evaluate how adequate the requirements are and how feasible they are in your city;
• popularity. On the websites, franchise owners indicate the monthly turnover of one salon. Somewhere the figures are adequate – 100-200 thousand, and somewhere – reach several million. To check the veracity of the words, make calculations – divide the indicated turnover by the average cost of the service, and then by the number of days per month. For example, according to the franchisor, the salon brings in 2.5 million per month. rubles. Average cost of the service is 2500 rubles. To earn 2.5 million.

2500000 divided by 2500 equals 1000.

The salon needs to receive 1000 services a month. With six specialists in the salon, that means 168 services a month must be provided by each of them. A 2/2 schedule means that each specialist will work about 15 shifts.

168/15 is 11.2.

One manicurist must do eleven procedures a day. An employee should not have lunch or breaks during a procedure that takes longer than an hour. It is clear that the numbers in this instance are inflated. Perform these computations for the chosen franchise and observe the resultant figure. These will undoubtedly be average numbers, but they will aid in determining how reasonable the franchisor’s offer is.

• financial documents. If you"re lucky, you won"t have to make any calculations – some franchisors provide financial reports. At the negotiations, clarify whether you"ll be able to look at them.

Lifekah: try to register by giving the studio you’re purchasing the franchise from a call. The closest location won’t be offered to you tomorrow or even the day after tomorrow if the client flow is exceptionally strong.

It’s crucial to carefully consider the offer before making a purchase. Never sign a contract during your initial meeting; instead, bring it with you and request a few extra days. In this manner, you’ll have enough time to carefully go over each clause, preventing you from being taken aback later on when you wonder why he made you remove the red curtains and reorganize the gel polish bottles on the shelf.

The attachment contains a sample of a typical commercial concession agreement.

An example of a commercial concession contract

Take note of the following provisions in the contract:

3.1.1. It is crucial that the franchisor gives you the territory—a city, region, or district—as specified and that no one else is sold the franchise to operate in this territory. In the event that this occurs, there’s a significant chance of losing some clientele and failing to recover the business within the allotted time;

3.1.2. The franchisor’s provision of technical and consulting support needs to be made clear. When purchasing a franchise, this task is frequently not carried out properly, even when it is documented. At that point, you are entitled to demand that the contract’s conditions be followed and that the support that was promised be provided.

Section 4. The responsibilities of franchisees, which are always greater than those of the franchisor, are covered in Section 4 of the agreement. The standard contract contains broad definitions that are open to interpretation by the parties. Try to come to an agreement with a partner regarding the specifics of each task in order to prevent disagreements and issues down the road. "Coordinate the design of the entrance group, the administrator’s workspace, retail, and service premises," rather than "coordinate the external and internal design."

Section 5: Here is where royalties and the lump-sum fee details are entered. Any additional payments, such as commissions or fees for marketing or advertising, must be specified. It is unlawful to demand franchisee contributions that aren’t covered in this section;

It is advisable to have a lawyer review a franchise agreement before signing it. A specialist will assist franchisees in avoiding errors and spotting potential pitfalls.

Franchising in the manicure industry presents a worthwhile chance for business owners to launch a venture using a tested business plan. You can lessen the risks involved in starting from scratch by collaborating with an established brand.

But it’s crucial to do your homework and pick a franchise that fits your values and aspirations. It’s important to comprehend the terms and the support offered by the franchisor because the initial investment can be substantial.

In the end, franchising can be a terrific way to get a solid start in the manicure business, but it’s critical to balance the advantages against the expenses and obligations involved.

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