Business Spotlight: Focused on Franchising

In just two years, Christine Huhs started a salon and spa, turned it into a franchise model and sold two franchise territory rights.

From the first day operating Latter Rain Salon & Spa in July 2009, Hush intended to create a franchise system, and in May 2010 she launched Le’Kesh LLC. Huhs runs the Nixa Latter Rain, and through Le’Kesh has sold franchises in Springfield and Ozark, where a salon opened last month.

Huhs, who has managed franchises such as Country Kitchen, Holiday Inn and Great Clips, says becoming a franchisor had its challenges, partly due to the detailed paperwork required.

With help from Springfield attorney Dwayne A. Fulk of Neale & Newman LLP, Huhs completed a franchise disclosure document, which is regulated by the Federal Trade Commission. The FDD, or another version called a uniform franchise offering circular, includes such disclosures as franchise terms and startup costs for franchisee prospects.
Ambika Oberoi, information manager at Arlington, Va.-based FranData, a Web site specializing in franchise information, says the cost to prepare and file an FDD differs by attorney and state.

Oberoi says franchisors in Missouri are required to complete an FDD, but they are not required to publicly disclose it.

After six months operating the salon in Nixa, Huhs says she started filling out paperwork and writing her own manuals. Fulk stepped in to research and secure a trademark for the Le’Kesh name and make sure there wasn’t another similar franchise.

Once he’s called in, Fulk says the length of time it takes businesses to become franchisors depends on how far along the company is in the process.

“First of all, they have to develop their trademarked name,” he says. “Then, they have to develop their written system of operations. It usually takes between a month and a year, and it kind of depends on those first two items and also the development of the separate franchising business.”

Huhs was developing her plan at a time when the national franchise industry was in a dip. Between 2008 and 2009, the sector lost 28,000 franchise business establishments, and it remained flat through 2010 at roughly 765,000 establishments in the United States, according to the International Franchise Association. But analysts forecast a return of the franchise in 2011, to levels on par with 2008. IFA projections set in January said franchise establishments and employment each would grow by 2.5 percent to 784,800 establishments employing 7.8 million workers this year. However, IFA officials throughout the year have cited a credit gap to small businesses due to federal regulations as possibly hindering such growth.

Michielle Monroe, who previously worked at Huhs’ Nixa salon, owns the Latter Rain Salon & Spa-Ozark, 328 S. Third St.

“I was so impressed with the way Latter Rain ran that I told her I wanted to open my own here in Ozark,” she says. “It took a while to open it, but we’ve been doing pretty well. We didn’t go into debt when we opened the store, and we intend to keep it that way.”

Huhs, who started out as a stylist 31 years ago, has leaned on former employees to open the franchises, which cost about $50,000 including franchise fees and startup expenses. The Springfield Latter Rain Salon & Spa, owned by former employee Ashley Clark, opened in July at 1460 E. Cherry St.

“Franchises are very hard to sell until you have about seven or eight of them,” Huhs says. “You have to make sure that you have a good system in place and that they are going to make money. There’s no one better than your employees. They know your system, they watch you, and they are excited to own a franchise.”

The personal services category is the second largest of franchise business lines behind quick-service restaurants, in terms of establishments, according to the IFA’s 2011 Franchise Business Economic Outlook. The $80 billion personal services franchise industry is expected to post the largest output gains next to the automotive, and commercial and residential services categories, in terms of percentage growth.

The Nixa salon recorded about $108,000 in 2010 revenues, and Huhs estimates sales of $150,000 this year. She declined to disclose revenues for Le’Kesh but says the company has avoided debt.

Latter Rain charges $8 per standard haircut, and Huhs is bent on keeping that consistent.

“I just built so fast,” she says. “Then, I thought, there isn’t any reason for me to raise my price, and every Latter Rain that we open needs to do that.”

The spa skin care and waxing services range from an $8 lip or chin waxing to $125 for the Rhonda Allison brand facial. The Springfield and Ozark locations are renovating their spaces before offering spa services.

Huhs emphasizes the salons are Christian-based. “I had always wanted to have a Christian salon,” she says. “All of the décor is Christian, we play only Christian music, and our magazines are Christian. The conversations in the salons are very different from what you would hear in most salons.”

Huhs says she developed the salon name from James 5:7, a Bible verse that speaks of a harvest in the “latter rain.” She says the salon is a way to share her faith.

Le’Kesh plans to open a Christian school of cosmetology in April, and Huhs is budgeting $60,000 for the school and seeking a site in Springfield.[[In-content Ad]]