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Leisure Management - The impact of franchising

Everyone's talking about...

The impact of franchising


Spa franchises are growing worldwide but have rapidly expanded in the US. We take a look how they’re shaping the nation’s market – from drawing in new customers to exacerbating staff shortages

Catherine Larner
What’s happening in the US could be an indication of what to expect in other countries

Getting a massage used to be a luxury. But with a recent USA Today article citing that seven out of 10 Americans suffer physical symptoms of stress overload, it’s clear there’s a huge need and a vast market if the price is right.

“Massage therapy is important for healthy living, but needs to be much more affordable,” says Allie T Mallad, founder of the Massage Green Spa franchise. “I believed that if I could lower the price point without lowering the quality, more people would incorporate it into their daily lives.”

The first Massage Green Spa opened in 2008. Today there are 45 locations in six states, with more than 500 units under development. They offer a one-hour full-body massage at the introductory rate of US$29.95 and a no-strings-attached membership at US$39.95 a month.

Mallad and other franchisors have turned the complex spa model into a much simpler offer, concentrating on fewer elements and making it much more accessible in terms of location, price and image. Other brands include Hand and Stone, Woodhouse Day Spa, Massage Luxe and Massage and Facial Spa. But with 960 day spas operating in 49 states and another 100 on the way – Massage Envy Spa is the sector leader by miles.

“When Massage Envy Spa launched [in 2002], we created a completely new category by designing an innovative pathway to professional, convenient and affordable spa services,” says COO Joe Luongo, adding that the company provides around 1.5 million treatments a month and reached US$1bn in sales last year.

However, with these numbers come other demands. The Massage Envy Spa network alone employs an estimated 21,000 therapists and 3,000 aestheticians. With recruitment in spas becoming an increasing issue, particularly in management posts, should the expansion of franchises be cause for concern in finding adequate numbers of experienced personnel?

It’s worth noting here that what’s happening in the US – by far the biggest market for spa franchising globally so far could be an indication of what to expect in other countries around the world. Some US massage chains are now considering international growth, while there are already spa franchise brands growing their portfolios in Brazil (Buddha Spa), Malaysia (Skin Essentials Spas), India (Four Fountains Spas), China (Dragonfly Therapeutic Retreats) and Australia (Endota).

In the US, the sheer scale of the franchises means the quality of provision reflects on the industry as a whole. Commentators of other businesses highlight problems when franchisees cut corners to make savings and when brand standards slip. Franchisors obviously want to maintain quality because, if done well, this complex and complicated business reaps great financial rewards. But just what are they doing to monitor and protect their brand values in order to retain the integrity of their business?



Susie Hammer VP operations WTS International

 

Susie Hammer
 

Franchises shouldn’t be seen as a threat to our industry when they’re growing the market and encouraging the development of best practice through heightened competition.

Their lower price point attracts more consumers and these are people who see massage or skincare as a necessary part of their lifestyle rather than a luxury splurge. In other words, they will get a massage on a weekly basis and have a facial every month.

So as long as franchisees follow the brand’s established standards and are inspected at regular intervals, I don’t think there’s any more risk of customers having a bad experience in these types of spas than in any other facility.

Staffing will become an issue as more spas open and need more qualified therapists and managers. Franchises tend to pull service providers straight out of school and not pay at the top of the wage scale. This means that operators will have to develop better training programmes. Advanced education is necessary to ensure a quality guest experience in both the franchise setting as well as a resort setting.

Smaller day spas and those who set up their own shop are threatened by the rapid growth of this sector. But for others, the response should be to focus on creating that ‘wow’ experience for guests, making them feel special and convincing them that they don’t want to go to a franchise.

For nearly 40 years, WTS has worked with both large (more than 30,000sq ft) and small (3,000-8,000sq ft) spas, in hotels and resorts, golf courses, luxury residential properties and day spas throughout the US and abroad. We think that, in theory, franchises should lead service delivery consistency and raise standards across the whole of our industry.

Hammer has worked at WTS, a leading leisure consulting, design and management firm, since 1996.

Details: www.wtsinternational.com


"I don’t think there’s any more risk of customers having a bad experience in these types of spas than in any other facility"



Peggy Wynne Borgman President, Wynne Business

 

Peggy Wynne Borgman
 

The spa industry is entering its mature phase. Attendance is up and more people self-identify as spagoers, but they’re dispersed over a larger number – and greater variety – of facilities. Just like restaurants, it’s now possible to experience a fast casual spa as well as a fine dining one and everything in between.

Instead of using the typical industry terms such as ‘luxury’ and ‘indulgence’, franchises like Massage Envy offer ‘pain relief’ and ‘healthy skin’. These terms are gender-neutral and the facilities are accessible and unpretentious. Franchises have enabled more consumers to make massage a part of their lives, a democratisation of a once exclusive industry.

The explosion of spa facilities, though, has exacerbated an already-severe shortage of qualified labour. Despite the fact that schools are pumping out new graduates at record rates, many of these individuals are ill-prepared to work in the industry. I hear over and over again that good employees are difficult to find and that most spa directors hire less-experienced workers in hopes of developing them.

The other crucial shortage – not helped by the growing number of franchises – is that of qualified spa directors: those who are able to interpret a profit and loss statement and run a business. It’s not a well-known career option and both degree and certificate programmes for aspiring spa directors are in short supply.

Having said that, it’s not all bad news. One benefit of the franchise model is that the companies can serve as a staffing 'farm system’ for more upmarket spas. We frequently advise under-qualified candidates to spend a year in a franchise spa position, where they will get comfortable with the tempo of a busy schedule and develop some fundamental skills.

In fact, franchises themselves may hold the key to easing the talent shortage. As these companies mature and their need for talent becomes acute, they’ll build educational programmes of their own, providing a valuable resource for the entire spa industry.

As well as heading up spa consultancy Wynne Business, Wynne Borgman is the founder of the Preston Wynne day spa in Saratoga, California.

Details: www.wynnebusiness.com


One benefit of the franchise model is that the companies can serve as a staffing ‘farm system’ for more upmarket spas



Allan Share President Day Spa Association (USA)

 

Allan Share
 

The franchise spa is a win for our industry with very little downside. Millions of Americans are now experiencing massage and spa who might otherwise not have done so because of the lower price points offered by these franchises. As the brands continue to grow, they’re raising awareness of going to a facility for better health. The franchise model has allowed the public to sample, and to test, our industry.

A result of this rapid growth, as with any industry, is the risk that customers may have a bad experience which will reflect on the sector as a whole. But I’m a veteran of going to spas across the globe and I still have bad experiences. It’s for each facility to monitor their staff, survey their clientele and make changes to ensure the outcome is a world-class experience every time.

When I entered the industry 23 years ago, the mantra was ‘training, training, training’. I don’t think that’s changed. A facility that delivers the best treatments, backed up with strong operational management, will be successful and grow.

Yes these new businesses need staff, but this isn’t a problem yet. Therapy schools in the US are busy putting many people out into the industry. The bigger problem is paying therapists enough to keep them in our sector. We need to provide great benefits and show them what wonderful opportunities there are for their own personal development in our business.

While some spa operators feel threatened by the rise of franchises – there can be a ‘Chicken Little, the sky is falling’ feeling, if you let it – many others embrace a new facility moving into their neighbourhood because it enables them to differentiate themselves.

We may lose some independent operators who’ve been in business for years and have been involved in their communities and local events. However, franchise organisations have the ability to bring a larger presence to the communities they operate in. All in all, it’s a great trend and one that’s here to stay!

Share has been president of the US Day Spa Association since 2010, having worked as a supplier to the industry for more than 23 years.

Details: www.dayspaassociation.com


"Millions of Americans are now experiencing massage and spa who might otherwise not have done so because of the lower price points offered by franchises"



Allie T Mallad Founder, president and CEO, Massage Green Spa

 

Allie T Mallad
 

Social media reviews provide consumers with a powerful forum to write both positive and negative comments. Positive reviews – whether for a franchise spa or independently owned spa far outweigh the negative ones and are fuelling growth in the industry as a whole.

Based on my 30 years as both a franchisee and a franchisor, I’d say the biggest mistake we can make is choosing the wrong franchisees and employees to represent our company and our brand.

At Massage Green Spa all of our training programmes, policies and procedures ensure an exceptional client experience. This is based on driving customer loyalty and creating word of mouth referrals.

In addition, we seek to recruit people who have a strong talent for leading, exceptional customer service skills, a great attitude and a passion for our vision and our business. The five members of our human resources and development team and our 51 managers are always on the lookout for great talent and we have a model that ensures a constant stream of qualified candidates. We also look to partner with educational facilities in communities where we’re located.

There shouldn’t be a concern about the spa industry expanding through franchising because the massage therapy educational sector is stepping up to support this growth. More people are studying to become therapists because there’s now a much larger need for them.

According to the Bureau of Labor Statistics, employment of massage therapists is projected to grow by 23 per cent from 2012 to 2022. Schools and therapists’ programmes are responding in direct correlation to the spa industry’s rapid growth.

Massage Green Spa is committed to supporting the ongoing training and education of our 1,000 massage therapists and strive to create career paths that provide them with opportunities to move up our management chain. We’re also attractive to those therapists who would like to embrace the American Dream of owning their own business.

Mallad founded Massage Green Spa in 2008 and plans to expand to 1,000 spas within five years.

Details: www.massagegreenspa.com


"There shouldn’t be a concern about expanding through franchising because the massage therapy educational sector is stepping up to support this growth"



Catherine Larner is a leisure
sector writer and editor
Email: [email protected]
Twitter: @CatherineLarner


Originally published in Spa Business 2014 issue 2
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