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Posted by on Nov 6, 2017 in Startups | 0 comments

All you need to know about Salon franchising Business Model

The rise and rise of salons and spas

Salons and Spas are found everywhere these days and all of us like to have a good haircut, a nice shave, a mesmerizing facial or a pampering massage, isn’t it? Though the services come at a very high cost, we don’t mind too much about it and happily avail them. Let us take a look at the salon franchising business model in detail today.

In India, there are several salons and spas across various tier 1 and tier 2 cities. Some of the big brands in this space are Naturals, Javed Habib, Green Trends, Toni & Guy etc. Working professionals especially from the IT industry frequent to these places to rejuvenate themselves from their tiring week long work.

My aim of this post is to take a look at this salon industry from a business perspective. I am planning to cover things like how much investment is needed to setup a salon cum spa, operating costs, risks and earning potential. I have gathered this information from various sources when I visited these places for availing their services.

First and foremost, these premium salons and spas operate on a franchising model which means that you will have to be bound under the franchising agreement. Now, let us do some math and see how much it takes to start the franchise of a successfully operating salon chain.

Fixed Costs

1. Franchise Fee – 3 lakhs
2. Infrastructure including interiors, chairs, AC’s etc – 15 to 20 lakhs
3. Advance for a 1200 sqft space in a posh area – 15 to 25 lakhs
4. Marketing cost – 2 to 4 lakhs

Total upfront investment cost : 40 to 50 lakhs approx

Now, let us take a look at the month on month operating cost

1. Salary for 6 to 7 professionals (20,000 Rs each)
2. Rent – 50 to 60 thousand rupees
3. Electricity charges – 5,000 Rs
4. Maintanence – 5,000 Rs
5. Misc – 10,000 Rs

Total : 2 to 3 lakhs per month

Note : In some cases, monthly revenue sharing may have to be done with the franchiser and that needs to be added.

Let us see how much money can be made through this salon. But before that, let us take a look at some of the major services offered by them

1. Hair cut – 200 to 300 rs
2. Shave – 100 to 150 rs
3. Hair dying – 300 rs
4. Hair treatments – 500 to 2000 rs
5. Facials – 600 to 4000 rs
6. Massage – 1000 to 4000
7. Bride and Bridegroom packages – 5000 to 15000 rs

According to the sources that I spoke, per day revenue during weekends is around 45,000 to 50,000 in normal areas and touches 1 lakh and above in posh areas. On a week day, it could be anywhere between 10,000 to 20,000 Rs.

So, doing a rough math, the per month revenue could be around 5 to 10 lakhs.

Now, assuming a net profit of 30%, it works out to 2 to 5 lakhs approx.

Risks

1. Lot of competition these days as number of salons and spas are on the rise
2. Labour management – Very difficult to manage and retain the professionals

Disclaimer : This estimation is not a guarantee that things would work out the same way it is explained.There could be other unforeseen risks and challenges too that may come your way. But, as an entrepreneur, it is your smartness and presence of mind that should help you to overcome the challenges.

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