Franchise buyers with a penchant for the hair and beauty sector might like to consider a franchised chain as an investment. Here we look how French brand Franck Provost is finding its place in the market.
The IbisWorld industry report on hairdressing and barber franchises (November 2015) outlines the challenges and current successes of the marketplace.
As the report highlights, "As consumers grow older they are often keen to keep signs of maturity at bay, and may opt for colouring grey hair. This boosts demand for hair colouring services, driving industry performance."
Also contributing to revenue growth is the expanding market of increasingly image-conscious male consumers.
So there’s a market for franchised hair chains to cater for, but there are also some challenges.
According to Job Outlook, an Australian Government initiative, research in 2014 indicated that just over half of qualified hairdressers were working full time (54.8 percent).
The outlook for the years to 2019 is positive, with the number of job openings for hairdressers (that includes both new jobs and turnover).
Franchisee challenges
However staff retention can be a big challenge for franchisees.
Jean-Francois Carr, master franchisor for the French-based chain, explains that to counter the high staff turnover indicative of the hairdressing industry, it’s important to have a brand, training, artistic awards and conventions.
“We work hard to attract and keep them. It’s not an easy industry. It can be difficult and tiring.
“Management is an option,” says Carr. “We offer other layers.
“There’s a centralised call service because it’s hard for hairdressers to take enquiries and make bookings, and it’s not good for a quality service. The whole point of a franchise is support. There are lots of tools, an operations manual. We can do marketing, do the books.
“We provide franchisees with business aspects to make sure they are profitable.”
At the Franck Provost chain, franchisees don’t need to be hairdressers. There’s a mixed background of franchisees in the network, with some of those not trained in haircutting finding their hands-on role working in the salon reception. There are hands-off investors too, but Carr says this works best in shopping centres where the approach is more commercial rather than community focused.
“Once you have the brand, the concept, it relies on location, team and management.”
At the end of the day, it all comes back to the customer.
“As a franchisee, you need to work on your team, make them feel as good as possible, then they will look after your clients.”
There is no doubt that for franchisees in this sector the costs of employing staff are significant, accounting for about one quarter of revenue.
This is a labour intensive industry so a considerable portion of hairdressers and barbers are employed as part-time or casual employees, which lowers the average wage.
However, with penalty rates required for Sunday and public holiday work, very common among chains dependent on shopping centre traffic, the Franck Provost business is considering options such as closing on public holidays or introducing surcharges.
Growing a franchise brand
Franck Provost Paris has expanded from France around the world, clocking up a spread of 3000 salons worldwide.
So how does a brand with a global reputation but very little awareness or market share in Australia extend its footprint?
Carr highlights four essentials in the business: point of difference, relevance, awareness and reputation and image – but he puts differentiation and reputation as the top two contenders.
“Hairdressing is all about trust, particularly at the high end. Franck Provost is an international brand, it has the legitimacy of a Parisian brand, and that definitely helps,” Carr says.
Of course customers have expectations from a high end brand.
“There’s a promise to the client that you will deliver – that comes through training,” he says.
“We are very proud of our service and customer satisfaction is our highest priority. The lowest score on review websites for our salons is 4.3 out of 5.”
Carr cites Toni & Guy as its main competition. “It’s more expensive and edgy. Franck Provost is a commercial cut – the French are known for timeless beauty and glamour. Franck Provost is accessible luxury – it’s not cheap because it’s high quality.
“Hair colour at a premium salon is core business – for us it’s our main expertise.”