Great Clips: Ethical Business Practices Pay Dividends

Despite the recession, hair care franchise company Great Clips is growing at, well, a great clip.

According to Vice President of Franchise Development Rob Goggins:

  • Great Clips has posted same-store sales increases for 22 straight quarters.
  • Great Clips is on target to recruit more than 100 new franchisees this year.
  • Great Clips is track to sign close to 200 leases.

Yet not only are they awarding new franchises at an impressive rate, Great Clips is also receiving awards… the latest being for business ethics.

Great Clips Receives 2010 Minnesota Business Ethics Award (MBEA)

Wednesday, May 19, 2010, Great Clips was presented with the 2010 Minnesota Business Ethics Award (MBEA) for “ethical excellence.”

The MBEA was established in 1999 by the Twin Cities Chapter of the Society of Financial Service Professionals and the Center for Ethical Business Cultures at the University of St. Thomas.  The purpose of the award is to raise the standards for business ethics in Minnesota and to honor companies that exhibit the highest standards of ethical performance.  In 2009 the Minnesota Society of Certified Public Accountants joined as an award sponsor.

MBEA recipients are selected based on company size.  Certes Financial Pros received the small-company award.  Edina-based Great Clips Inc. received the midsize-company award.  Imation Corp. received the large-company award.

Congratulations, Great Clips

In tough times, maintaining a reputation for ethics and honesty is more important than ever.  Obviously, the commitment Great Clips has made in building a reputation for fair-dealing and good business practices is playing a key role in their success.

Congratulations to Great Clips and its franchise owners for the MBEA award and for setting a winning example.

Are you familiar with Great Clips? Share a comment below.


What to Look For in a Franchise

In the long run, there are many criteria to consider when evaluating a franchise opportunity. But initially there are just three main questions I ask in order to determine whether a given opportunity warrants further investigation. In attending a Discovery Day, I want to know:

Is this the right market to get into?

It doesn’t matter if a franchise has the greatest products or services in the world if consumers aren’t ready, willing and able to buy. Are industry sales growing? If so, do credible sources predict that growth will continue? This was one of my main concerns about the Hand & Stone Massage concept: Isn’t massage one of those luxury items that gets cut in recessionary times?

Is this the right concept to meet the market need?

If you determine that there is a market need, then ask: Is this concept designed to meet the needs of both the consumer and you – the operator? The best franchise concepts are streamlined for both operational efficiency and profitability. They are designed to provide value and a superior experience for your customer, and growth through multiple revenue streams for you.

Is this the right management and support team to guide my growth… now and in the future?

This is a critical consideration for several reasons. When you purchase a franchise you are agreeing to follow the systems and policies set forth by the franchisor for the duration of your franchise contract. For that reason, it’s critically important that you are confident that the leadership team has both the experience and judgement to make the right strategic decisions, and that they are truly committed to franchisee success. Additionally, you should consider the franchise fees and royalties you will pay as fees for services rendered and evaluate them on that basis. Does this management team have the experience and expertise to provide value to your business not only in the start-up phase, but on an ongoing basis? Can they provide benefit in excess of the monetary contributions you will make?

NEXT: Part 2: The Booming Market for Massage & Facials

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How the Hand & Stone Franchise Meets the Market Need

Meeting the market need for affordable massage & facials.

So how does Hand & Stone Massage & Facial Spa meet the growing demand for massage, spa and skin care services?

According to presenter and VP Bob McQuillan, the strategy is based on a simple premise: provide a wide range of top quality spa services – therapeutic massage, facials & waxing – at affordable prices and unmatched convenience.

Previous: Part 2: The Booming Market for Massage & Facials

Hand & Stone Massage & Facial Spa locations provide a varied menu of quality massage options, from Sports to Swedish to Pre-natal massage. The signature hot stone massage is Hand & Stone’s ultimate massage experience. In a hot stone massage, heated river stones are skillfully used with massage strokes to add a unique and effective enhancement to the overall massage experience.

Facials and skin care are relatively new additions to the service offering. At Hand & Stone Massage & Facial Spas, certified aestheticians evaluate the condition of clients’ skin and customize treatments for optimal results. Clients can experience a dramatic difference in the quality and texture of their skin after just one visit, and can return for a variety of facials to accommodate needs ranging from basic skin maintenance to acne, rosacea, sun damage, scarring or aging.

The pricing and scheduling system for the Hand & Stone Massage & Facial Spa is designed to provide convenience and value to the spa members and operational simplicity and recurring, predictable revenue flow for franchise owners.

Once new clients experience Hand & Stone through an attractive, introductory offer, they are encouraged to join the membership program, allowing clients to enjoy a 35% savings on spa service packages each month.

While scheduling in advance is recommended, members are welcome to visit on a walk-in basis to better accommodate their busy schedules and to increase their visit frequency. During the Discovery Day presentation, it was clear that there are many strategies and elements built into the system that simultaneously enhanced the health of Hand & Stone Spa members and the financial health of each individual franchise.

In addition, the marketing team has done a great job developing the Hand & Stone gift card program and using industry exclusive promotions like Hand and Stone’s new Spa Party concept to drive new customer traffic.

Next: Part 4: The Powerhouse Team Behind Hand & Stone Massage


The Booming Market for Massage & Facials

The market for massage & spa services is surprisingly huge… and growing.

You may be surprised (as I was) that despite these tough economic times the demand is booming… and strong, continued growth is projected. No longer considered a luxury reserved for the affluent or the splurging vacationer, massage and related spa services have gone mainstream.

Previous: Part 1: What to Look For in a Franchise

According to industry statistics provided in Discovery Day (and which I independently verified), massage is now a $12 billion industry, and has experienced a 15% compound annual growth rate over the past three years. An estimated 24% of all US adults had a massage in the past year. 32 million active spa-goers made 138 million spa visits last year alone

Fueling industry growth is the use of massage for health and wellness reasons, in addition to enjoyment alone. According to industry sources, 85% of consumers believe massage is beneficial to health and wellness. Of the people who had at least one massage in the last five years, 31 percent report they did so for health conditions such as pain management, injury rehabilitation, migraine control, or overall wellness.

According to a recent survey, 13% of adult Americans reported discussing massage therapy with their doctors or healthcare providers. Of those 13%, more than half (57%) said their doctor strongly recommended or encouraged it. More than half of massage therapists (69%) receive referrals from healthcare professionals. Almost one-fourth of adult Americans say they’ve used massage therapy at least one time for pain relief.

According to statistics cited at Hand & Stone’s Discovery Day presentation, as long as your physician prescribes it, 74% of HMOs are now reimbursing their members for massages.

The market for Hand & Stone Massage & Facial Spa also includes skin care, which has an even more compelling story. The skin care industry achieved $18.7 billion in revenue in 2007 and is projected to grow 40% by 2012.

Sources: American Spa Industry Insider, August 2009; Massage Magazine Buyer’s Guide 2009 – AMTA Study; Spa Finder Survey 2009; 2009 U.S. ISPA Industry Update

Next: Part 3: How Hand & Stone Meets the Market Need


Franchise Discovery Day at Hand & Stone Massage

What is a “Discovery Day”?

Previous: Part 4: The Powerhouse Team Behind Hand & Stone Massage

“Discovery Day” is a franchise industry term used to describe the presentation most franchisors conduct for groups of prospective franchise owners. Discovery Day presentations vary by franchisor. Some are very slick sales events with scripted presentations made to large groups. Others are less formal and more personal, consisting of smaller groups with lots of interaction, dialogue and time for questions.

I was pleased to find that Hand & Stone Massage Discovery Day falls into the latter category, a experiencing presentations that were informative (rather than salesy) and personal, with a friendly and relaxed tone.

In total, there were 3-4 groups in attendance, and Hand & Stone VP of Franchise Development Bob McQuillan laid out the agenda: an “icebreaker” & attendee self-introductions over coffee and bagels, short presentations and Q&A’s by the training, operations & marketing department heads, a working lunch with senior executives, and an on-site tour of a nearby Hand & Stone Massage & Facial Spa. After a brief wrap-up and final Q&A, attendees would have the opportunity to experience a hot stone massage firsthand.

What I discovered at Hand & Stone Spa Discovery Day

I came away from the Hand & Stone Massage & Facial Spa impressed on a number of levels.

I was impressed with the Discovery Day experience itself. The people were friendly, open and helpful. It was not a dog and pony show or sales pitch, but an exchange of information from both sides to help determine whether the franchise was a good fit for the attendee’s business goals and skill sets. If you are seriously exploring business start-up options of this type, you will find the investment of time and travel expenses well worth it.

I was impressed by the industry growth statistics, which I verified independently after the presentation.

I was impressed by the simplicity and the operational efficiency of the concept itself, as well as the customer experience and reactions I witnessed.

I was impressed by the care that was exhibited in not making any earnings claims or representations outside of the Financial Performance disclosure provided in the Franchise Disclosure Document (FDD).

Most of all, I was impressed by the knowledgeable, experienced and dedicated team in place to support and guide franchisees from day one.

Listening to the presentations of this highly experienced management team, I had to keep reminding myself that this is a young franchise chain with less than 50 units.

Most of these professionals have experience supporting many times the number of franchise locations they currently serve, and I was impressed by the fact that John Marco and Todd Leff are willing to invest in establishing a solid foundation and infrastructure prior to embarking on the energetic growth that is almost a certainty in the next few years.

Hand & Stone Massage & Facial Spa is poised and ready for growth.

Hand & Stone Massage & Facial Spa appears to be poised and ready for growth.

Does that mean that the Hand & Stone Massage & Facial Spa is the right franchise opportunity for your personal and business goals? Is it the perfect match for your particular market?

Those are decisions that only you can make. All I can say is that the Hand & Stone franchise is definitely worth consideration… whether it’s the right opportunity is for you to discover.

Read all: Hand & Stone Massage Franchise: Discover the Potential