With New Investors, Sola Looks to Dominate Suite Space
Sola Salon Studios has grown to 400-plus locations in 42 states.
In its quest to “remain the leader and widen the gap” between it and its competitors in the salon suite franchise space, Sola Salon Studios attracted funding from a trio of firms that now have a majority stake in the brand and, CEO Randall Clark said, will accelerate growth.
The consortium of investment groups—MPK Equity Partners, AHR Growth Partners and PNC Riverarch Capital—acquired a majority interest in Denver, Colorado-based Sola Salon Studios in a deal Clark called a “true milestone” for the business because it’s validation for a concept whose franchisees lease (on average) 6,000-square-foot buildings and, in turn, rent the space to hair stylists, massage therapists, nail techs, skincare professionals and makeup artists.
“Everything pointed to the need for more capital,” said Clark when reached earlier this week during the brand’s annual franchisee conference in Cancun, Mexico, where partners from each investment group also joined him to share details of the deal with franchisees. “We’re going to expand our footprint and also own more of our own locations, opening 125 to 150 of our own to help us become a best-in-class operator.”
Since its launch in 2004 by founders Stratton Smith and Matt Briger, Sola has grown to 400-plus locations through its system of 152 franchisees in 42 states. In opening additional corporate locations the company wants to develop more resources for its franchisees but also grow its own balance sheet, said Clark, who noted Sola’s unit economics are “really compelling” in that regard.
“We know for a fact that, industry wide, our unit economics put us in the top 5 percent performance category across all brands, QSRs or otherwise,” he said.
Without revealing specific sales data, which the brand’s Item 19 in its franchise disclosure document also doesn’t disclose, Clark said Sola is able to attract well-known franchisees from other industries who see the salon suites category for the growing segment that it is.
“We are Amazon-insulated, we’re internet-insulated—you’re not going to get your hair cut and colored online,” he said.
Doug Kennealey, a managing partner at MPK Equity Partners, said from an investment standpoint, he’s “betting on a force in the salon studio space.”
“It’s a clear choice, they’re the market leader,” continued Kennealey, who along with Andrew Wiechkoske of PNC Riverarch Capital and John Bahr of AHR Growth Partners will join Sola’s board of directors. The current management team, led by Clark, will remain in place.
That team, said Wiechkoske, brings an “operator’s mentality and it’s translated into exceptional results.” He was also impressed by a stat: that 70 percent of the units opened last year were developed by existing franchisees. “That’s just about the strongest validation you can have for a franchise system,” he said.
While he acknowledged there’s always some trepidation and fear on the part of franchisees when investors take a majority interest, Clark said there’s been a “resoundingly positive reaction” from ‘zees, who were also reassured by the founders remaining as shareholders. And, he pointed out, the investor groups aren’t in a hurry to exit or immediately monetize.
“Frankly,” said Clark, “we’re all in it to dominate the space.”