Open/Close: Salon Suite Franchisees Forge Ahead
Shay Stevenson's four Sola Salon Studios in California had to shut back down earlier this month as COVID-19 cases spike in the state.
Obtaining a cosmetology license in California requires 1,600 hours of training, much of that dedicated to sanitation and safety protocols. That’s a fact Shay Stevenson wants officials in the state to recognize as they determine when and how businesses are allowed to reopen following the second wave of COVID-19 shutdowns earlier this month.
Stevenson, a franchisee of Sola Salon Studios with four locations in the Fresno and Southern Central Valley area, said he and other Sola operators, along with a coalition of salon suite concepts such as Salons by JC and Phenix Salon Suites have undertaken a “constant, collective push to get our voices heard.”
“They’re willing to listen,” said Stevenson of local officials, “but it’s hard to get that message up to the top.”
“We think our fight isn’t necessarily to be deemed essential, but to be separated from the other businesses we’ve been lumped in with,” he continued. California announced restrictions July 13 that shuttered salons, halted indoor dining and also closed bars, gyms, museums and a slew of other business.
“This is a fight for the entire salon industry. This is about unifying our California beauty professionals,” said Stevenson. The entire pandemic situation, he added, has been, in a word, “surreal. No one could have anticipated this.”
A Sola franchisee since 2016, Stevenson said the brand’s move in March to stop collecting rent from the beauty professionals who lease space at one of its 500 locations while they remained closed was the right decision, but nonetheless “it’s put us in a very difficult position financially.”
“As it stands, my business partners and I are taking a hit for this,” he said, which so far includes $125,000 in rent debt and about $100,000 per location in lost fees from stylists. Working with landlords has brought a range of results, from no help to some type of deferment.
The Paycheck Protection Program, meanwhile, which provided more than $517 billion in loans to businesses, was unavailable to Sola franchisees, another blow Stevenson said resulted from “arcane thinking about how Sola actually operates.”
Sola is one of 100-plus franchise brands excluded from the PPP because the Small Business Administration, which facilitates the program, views Sola as a passive business owned by developers or landlords and the brand isn’t listed on the SBA’s Franchise Directory.
“Sola used to be on the registry back in the day, but we got booted off it … because we don’t create W2 employees,” said Austin Campbell, a Sola franchisee since 2006 who now operates 15 locations in San Diego County.
At the corporate level, Sola and CEO Christina Russell have been lobbying federal legislators and working closely with the International Franchise Association to have the regulation changed so that franchisees are eligible to apply for loans. While the SBA “was intractable on PPP and refused to act without explicit guidance in the legislation,” Russell said they did get a win on another SBA offering, Economic Injury Disaster Loans.
“We learned a few weeks ago that despite the loan denials many of our franchisees received, our lobbying efforts had paid off and SBA had been given the green light to offer EIDL to our franchisees,” said Russell. “Our franchisees are now in the reapplication process, and despite the hassle, they are relieved to have access to these low-cost loans.”
‘Set up for a post-COVID world’
Campbell (pictured far right), who like Stevenson is grappling with a second round of shutdowns, said waiving rents for stylists, while difficult, is a way of saying, “we’ve got your back. It’s showed how much more we’ve been supportive … and we’ve been able to distance ourselves from our competitors.”
With 510 individual studios across his 15 Sola locations, Campbell said occupancy has never been higher as stylists and other beauty professionals seek a model where they can operate their independent business but have support through marketing resources, technology and ongoing education.
“I think we have eight open,” he said in reference to available studios. “I’ll reiterate how perfectly we’re set up for a post-COVID world. I think we’ll be able to pull more market share within the studio segment.” Campbell is also pushing forward with development after signing another franchise agreement for 12 units, two of which are built with a third lease signed.
The second shutdown, however, while logistically less hectic, was “equally deflating,” acknowledged Campbell, and he’s exchanging ideas with other franchisees as they try to come up with a workable plan for stylists that also helps subsidize their own losses.
“We can’t just give free rent forever,” he said. Sola and its franchisees are still in discussions about how they will approach the rent issue in this round of closures and any in the future.
Campbell’s own landlords, meanwhile, were “somewhere in the middle” when it came to negotiating new terms in the midst of the first closure orders. “Landlords, they’re used to sitting on their high hill and not really feeling what their tenants are feeling,” he said. “We had varying degrees of people willing to work with us, but in general we came to pretty fair compromises,” including deferment and waived rent.
This second shutdown, however, is another story. “We’re going to tell landlords to pound sand on rent,” said Campbell, a sentiment he added is shared by other franchisees. He noted California “is a very tenant-friendly, employee-friendly state,” should that stance lead to court proceedings.
“We’re telling them we’ll start paying rent immediately upon opening,” he said. “In normal times we’re killing it there, we’re not going to leave.”
Read other stories in Open/Close, a new franchisetimes.com series reporting how franchisees are navigating as business starts and stops amid the COVID-19 pandemic.