Health & Beauty..

Lookin' good

Customers look to spas for stress relief

By Matt Wetzel
As published in: Franchise Times - January 2009

Spas are places where people can recuperate, recharge and relieve stress. In stressful times like now, that means more business for franchises that get creative.

Face it: Stress happens. And for the personal care industry that's good news.

"Our goal is not only to take care of the skin, but to relieve stress," said Sherryl Ford, founder and chief executive officer of Facelogic, a spa franchisor based in suburban San Diego that specializes in skin care.

When discretionary income becomes scarce, people start cutting back on things they deem luxuries. The challenge for personal-care franchises is to find ways to convince customers facials, massages, regular haircuts and tanning are necessities that should be part of their budgeted expenses.

So far, the industry appears to be holding its own. According to an October survey conducted by the International Spa Association (ISPA), 40 percent of spas reported visits increased in 2008, while 48 percent said revenue had increased and 47 replied profits were up from the previous year.

Men's grooming franchise Knockouts proves guys like massages, too.

Todd Beckman, founder of The Tan Company, based in St. Louis, says his company's franchisees are reporting good sales. "Our same-store sales with The Tan Club units have really been holding their own. We're pretty happy with them," he said.

Beckman opened a second concept last year, MassageLuxe, to compliment his 80-unit tanning chain. Its first franchisee opened in St. Louis and there are approximately 100 in development.

Michele Merhib, founder and a franchisee of Elements Therapeutic Massage, believes consumers will still pay for what she calls those "small, affordable luxuries."

"I've seen kind of a change of attitude toward massage. They see it as a pro-active way to stay healthy. It's part of their wellness routine," she said. Business at Merhib's three franchises in Colorado increased 7 percent in October after a 10-percent drop in the third quarter.

Massage not only has health benefits, Merhib said, it's also a de-stresser.

Companies like Facelogic don’t just take care of skin. They help customers relieve stress.

"It allows them to block a section of time out for themselves. No e-mail, no phones ringing, just getting their minds more relaxed. They're more focused on taking care of themselves once a month," Merhib said.

Beckman doesn't believe massage therapy is discretionary spending anymore, either. "It's something they don't want to do without. It makes them feel so much better," he said.

Ford anticipates sales at Facelogic will remain strong. Even during the Great Depression, "women would not give up their red lipstick. Women are vain and want to be well groomed," she said. "I'm 50 but I want to look my best 50. That's part of taking care of yourself. You can't stop aging, but you can slow it down. No one wants to look older."

There is also a practical consideration. Women who have lost their job need to look good for job interviews. And if they have jobs, they need to look good to keep them, she said.

That's the case with men, also. "Men are required to do more grooming now because of employment reasons," said Tom Friday, who co-founded the male grooming chain Knockouts with his wife, Karin. And that includes coloring grey hair, facials and waxing.

Knockouts caters to the stressed out male - or perhaps it's just the male who likes to spend weekends lounging in a leather chair, drinking a cold beer and watching sports on flat-screen TVs. And if that's the case he might as well do it while getting his hair cut, colored or waxed.

"We've had an incredible year," Tom Friday said. "Things are going well on several frontiers."

The owners of The Tan Club opened MassageLuxe last year.

The Fridays point to the steady stream of customers at their 300-unit chain as confirmation of their business model. Most men like the atmosphere, which in addition to a cold beer, includes cosmetologists wearing tight shorts. Ropes and a ring post draped with boxing gloves surround each station to make customer feel they're in the middle of a fight club.

"We're always looking at client retention," said Karin Friday,. "Every little step has to be right. We really focus on the total experience."

Karin Friday said it's their diversity of services that attracts consumers to Knockouts, which has more than 300 franchises around the country. "They can get a good haircut at a lot of places," she said, but at Knockouts they can get the haircut, plus a manicure, pedicure and facial. And sometimes clients believe they deserve the chance to relax, destress and be pampered. Oh, and did we mention the cosmetologists are pretty, young women wearing short shorts?

Franchise sales

While sales may be steady or increasing at the nation's personal- care industry, franchise sales is mixed, thanks largely to the tight credit markets. "It's been a little tough, trying to get financing," Beckman said.

A common avenue in the past has been the Small Business Administration, but that source has apparently dried up for them for now, so they have focused on the local banks, which has generated more interest.

Ford has had the same experience. "I think a lot of it is emotionally driven," she said. Afraid to make a drastic financial move, prospects sit tight. "People are putting everything on hold," she said. And franchisors will have to be content to sit and wait, too, and focus on their current franchisees.

But Ford believes the situation will eventually loosen up. "They (prospective franchisees) don't want to go into real estate and they don't want to go into the stock market, and they have money to invest," she said.

Things are different at Knockouts, where vice president of franchise development Omar Borrego said they don't have any problems getting financing for new franchisees. Their business model has not saturated the market. The initial investment ranges from $120,000 and $150,000, including the franchise fee, and the franchisee can be an absentee owner. Most of their franchisees have come up with their own money, rather than go to a bank.

They do have relationships with several banks if franchisees need to go there, he said. "We try to tee it up and work on providing them the best footing for getting the loan," Borrego said.

---

Franchise Times - January 2009