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Aug, 03 2015

​Spectacular salon biz yielding rich dividends

Are you new in franchise arena and have several questions regarding initial risks and challenges of this unique business model? Well, here we bring the answers to all our readers' franchising queries via this regular column of expert's advice.

Can I open a Naturals outlet at the same location where it is already present?

Rahul Sharma, Delhi

There are no disadvantages to opening a salon in the same locality. In fact, the advantages are numerous. If a client can spot two or three sign boards of the same brand in his or her vicinity, there is excellent visibility for the brand and there can be no better way to garner credibility as well. These two factors can only help business in your own salon. A salon can accommodate a maximum of 5000 clients, and several localities have populations numbering four to five times that number. A good example will be Anna Nagar in Chennai. The locality has five salons and all are doing well.

I want to convert my salon into a Franchisee unit of a big beauty salon brand. Kindly educate me on what legal action can be taken against the brand in case of breach of trust?

Jaya Jain, Ujjain

It is most advantageous for small beauty parlours to join big brands as Franchise Partners. Marketing campaigns, promotions, quality products from international brands, continuous training and manpower support, periodic introduction of new services, amazing visibility throughout the city and country – these are just a few of the numerous plus points which a single stand alone salon will not be able to access on its own. The projects team of well known brands can even help you negotiate with your landlord for better terms on a rental agreement. Regarding the second part of your question, everyone starts a new business with the idea of doing well, but research into the brand is a must. Check with other Franchise Partners of the brand if there has been need for legal action against the Franchisor at any time. In case you come across news of such situations in the past when you speak to other Franchise Partners, we would suggest it is wiser to stay away from that particular brand.

I am a Lawyer by profession, but now I want to take up a business of a beauty and wellness brand? Kindly enlighten me on the reasonable RoI in a franchise opportunity?

Shruti Bhargava, Amritsar

Normally, salons can expect an RoI in 24 to 48 months. However, there are varying factors to take into account while calculating an RoI, the most important ones being the location of the salon and the turnover. Before looking at RoI details, we would suggest you check if the business is a suitable one for you. If you have a passion for the particular business you are starting, the RoI is obtained faster. If you do not like the business and there is no proper involvement, the RoI will definitely be delayed. Make sure you look at the business from all angles and then look at financials.

I own a men's only hair cutting salon brand and have a handful of franchisees. But recently, I had a problem with one of my franchisees, who failed to pay the royalty fee. What should I do?

Poonam Bapat, Mumbai

Invariably a time will come when due to unavoidable circumstances; a franchise partner will default on his or her royalty payment. You need to understand the reason why the franchise partner is not paying the royalty that is due. If the salon is not making enough money, then as the franchisor you have to find a way to support the salon and bring in business. If it is an issue of attitude, and the franchise partner simply doesn’t want to pay royalty, then the way out will be to either collect post dated cheques or take the legal route.

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