Much has changed in the hair styling industry since Salons by JC opened its first location in Dallas in 1998.
Through shifts in capital sourcing and talent, Salons by JC has weathered uncertainty to become a $30 million-a-year company with nearly 100 locations and 3,200 salon suite owners across 26 states and Canada. Company President Steve Griffey spoke to the Business Journal Tuesday about some of the challenges the business has faced over the last two decades and what’s next for it.
When the business was started in the late 1990s by Cecil Miller and Griffey’s father, Jack, the concept of hair specialists renting and operating spaces within salons was very uncommon. Today, the company operates salons that typically measure 8,000 square feet and divides them into a few dozen smaller spaces — generally 110 square feet each — to rent to independent operators, generating a majority of Salons by JC’s revenue.
The company owned 10 locations across Texas, including seven in San Antonio, one in Waco and two in Dallas-Forth Worth before it began selling franchises in 2008. Today, the company has sold nearly 350 franchise agreements, Griffey said, but has only opened 98 salons to date.
That is due to changes by the U.S. Small Business Administration regarding SBA loans, which many small businesses and Salons by JC franchisees depended on for financing, Griffey said. In 2014, the SBA changed its language on so-called passive businesses to include salon suites, making them ineligible for SBA loans and halting further expansion by Salons by JC overnight. The company lobbied lawmakers in Washington, D.C., to no avail. Griffey said the company has only recently been able to start sourcing good private capital for franchisees and that the company’s lull in development is over. In the next year, Griffey hopes to begin delivering 25 to 30 new franchised salons across the country before doubling that amount the following year. Despite the slowdown in opening new salons, company revenue has continued to increase over the last half decade, from $9 million in 2013 to nearly $30 million in 2017. Griffey expects revenue to rise by $1.5 million to $2.5 million per year as new salons come online.
Though Griffey would like to add a few more corporate-owned stores, a majority of the new salons will be franchised locations. Current franchise fees are $50,000 plus 5.5 percent royalties and 0.5 percent for the brand fund, which goes toward the company’s marketing efforts that are now done in-house. Along with marketing assistance, Salons by JC has initiated training to show salon suite owners how to better operate their businesses. Despite greater difficulty in finding capital to start salon suites, Griffey said the business has become much more competitive, and salon suite owners who once averaged 10 to 12 years of experience in the industry are now averaging two to three years of experience, creating greater need for business training.
Among the markets where Salons by JC is likely to grow in the next few years, Griffey mentioned Chicago and Los Angeles as prime territories for expansion.
Story appeared in the San Antonio Business Journal – August 1, 2018
About Salons by JC: In 1997, Jack Griffey and Cecil Miller began their journey to transform the beauty industry one salon suite at a time. Like most young entrepreneurs, they started out with a big idea but had to learn how to start and run a business from scratch. After much perseverance and hard work, one year later, they opened Salons by JC in Dallas, TX in 1998, welcoming beauty and wellness specialists who were ready to break free from the traditional salon model. The company has since moved its headquarters from Dallas to San Antonio, where it continues to grow through franchising. Today, Salons by JC has over 87 locations in 24 states and Canada. For more information, visit salonsbyjc.com or salonsbyjc.com/franchise
