Thank you so much for joining us in this interview series. Before we dive into our discussion about succession, our readers would love to “get to know you” a bit better. Can you share with us the backstory about what brought you to your specific career path?
I was working in the Price Waterhouse Consulting Group in Houston and read about a new haircare franchise in the Wall Street Journal one day. I became a franchisee of Command Performance in 1978, opened my first salon in Austin in 1979, bought the franchise in 1991, sold it a few years later to focus on a new concept we had developed to focus on men and boys, Sport Clips.
Can you share the most interesting story that happened to you since you started your career?
A few months after I opened my first salon, the franchisor filed for Chapter 11. I served on the Creditors’ Committee and worked with a leading franchise attorney to renegotiate our agreement which resulted in our franchisees owning 50% of the surviving entity. I was elected by the franchisees to represent them on the Board of Directors, giving me an insight from “the other side of the table.” I learned a lot about how NOT to run a franchise from that experience!
Can you please give us your favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life?
I’m a big fan of Zig Ziglar, and one of his wise sayings was “You can have anything you want in life if you help others get what they want.” That has served me well as a franchisor, in that if our franchisees achieve their goals and objectives, we are able to achieve ours. Based on this and my experience as a franchisee, we have from day one made the success of our franchisees our #1 goal.
Another Life Lesson comes from Coach Lou Holtz. When he was Head Coach at Notre Dame, he made a video series called “Do Right” detailing how he took a bunch of kids from all over the country, all walks of life, and molded them into National Champions. It all starts with his values, which we have adopted: “Do the right thing, do your best, and treat people the way they want to be treated.” This is the foundation of how we operate Sport Clips, the way we treat our employees and franchisees, how we expect them to treat their employees, and how their employees treat our customers. It has served us well over the years.
What do you think makes your company stand out? Can you share a story?
We make every effort to “walk the talk” related to our values, which is not always the case in business or any other endeavor. Complimentary to our values, there are three questions each of our Team Members should be able to answer in the affirmative: Do you care about me? Can I trust you? Are you dedicated to excellence? Years ago, in the weeks before one of our national conventions several of our franchisees (Team Leaders) and franchise employees (Team Members) died unexpectedly. When funds were raised via Go Fund Me and other solicitations, we decided we could do better. As part of the answer to the three questions, one way we show that we care about our Team Members we established a Relief Fund to help those who suffer unexpected tragedies (like floods, fires, serious illness, car accidents, etc.). Over the past 11 years, we have awarded $6M to help those Team Members through some tough times.
We also have available to all our 13,000+ Team Members mental health counseling services at no cost to them. This can help with stress, family situations, or personal mental health issues. Another way of demonstrating that we care and our Team Members can trust us.
Ok, thank you for that. Let’s now jump to the primary focus of our interview. What factors did you consider when selecting your franchise, and how did you determine it was the right fit for you?
My first franchise was frankly a shot in the dark, compounded by the fact that there were no disclosure documents required in 1978, so I knew little about the company I joined. Later, my wife (who was a Stylist) had been in the hair care industry for 10+ years when we became franchisors of a full-service salon concept in 1991. We took over an ailing system and made significant improvements. Then we decided that there was more opportunity in the men’s and boys’ market to which no one was paying attention in the early 1990s, so we sold the full-service concept to focus on Sport Clips. There was some market research done to validate our gut feeling, but we knew our customers and our industry well enough to have confidence that it was the right move for us. We had a cadre of talented people from our first concept, and with a very small team we developed the systems, procedures, policies, etc. for Sport Clips, opening our first location in 1993 and starting to franchise in November 1995.
Can you share a significant challenge you faced while establishing your franchise? How did you overcome this obstacle, and what did this experience teach you about running a successful franchise?
Our first idea was to award a “six pack” of licenses and manage them directly for a management fee. Within a month we welcomed our first franchisee and thought we had solved the puzzle! Eighteen months later when no one else came on board, we shifted the entire model to pretty much what it is today, a more traditional franchise with a minimum of three licenses to make it easier for corporate employees to transition into full-time and easier for us to manage. Within the next 3 years we had 50 locations up and operating, then we entered an extended period of rapid growth. You must be flexible and be willing to adapt when starting a new enterprise, you seldom get it right the first time!
Looking back to when you first started your franchise, what was one aspect that completely took you by surprise?
This could be related to the franchising process, customer interactions, or day-to-day management that you hadn’t anticipated.
Around 2001 I got a phone call from an area developer for MBE (now UPS Stores) inquiring about our area developer program. My response was, “What’s an area developer?” Long story short, we saw the benefits of the MBE program and patterned our area developer program very closely along the same lines. We were able to attract a number of very talented area developers (some refer to our arrangement as area representatives) who put our growth into overdrive! They were (and still are) responsible for recruiting new franchises (with our support) and supporting those franchises for a share of the franchise fee and royalties. At one time we had 25 area developers, then about ten years ago we started buying those back and now have seven very talented and successful remaining. During this process, we retained control of approving every new franchisee (candidates required to attend Discovery Day here in Georgetown so we can meet them face-to-face); we approve all real estate locations; we control the Advertising Fund; and we control store design which is done centrally. This has enabled us to maintain a very high degree of consistency in all of these areas, and by being selective about who we admit into our system, we have an outstanding group of franchises.
In hindsight, what advice would you give to potential franchisees about selecting a franchise that aligns with their personal and professional goals?
Culture fit is number one. It has to be a viable, profitable business, but you have to be comfortable in the company culture and be comfortable with the people you’re going to be in business with for many years. You should ask the three questions: Does the franchisor care about my success, can I trust them, and are they dedicated to excellence? Do they have a strong value system, do they “walk the talk”? Read the Franchise Disclosure Document carefully and speak to as many current franchisees (and perhaps some former ones) as you can, especially those in your geographical area and similar demographics. Ask tough questions (politely!) and you will usually find that existing franchisees are very open with their information. FranData developed a metric a few years ago, the Continuity Rate. How many units were open 5 years ago, how many have opened since then, and how many are in operation today? The ones in operation today are your numerator, the total that should be open is your denominator. Higher is better, those are the odds that you will still be in business after five years.
How do you balance adhering to the established systems of your franchise with the need to innovate and adapt to your local market? Can you provide an example of a successful adaptation or innovation you implemented in your franchise?
Consistency is critical to the success of any franchised business, therefore adherence to brand standards is non-negotiable. Customers expect the same experience in Texas as New York or California. We have found that there is less uniqueness about our customer base from state to state as many think there might be. The psychographic profile of our clients is amazingly consistent around the country. That being said, there are definitely differences in Canada, and we have adapted some of our décor to recognize that, and the use of our advertising dollars match Canadian tastes. In the states, we do encourage our franchisees to customize the sports posters and memorabilia on display to reflect the locale. One of our early franchisees was a huge Oklahoma fan; when I told him (jokingly) that his store in Norman, OK had to have a Longhorn banner hanging in the front, he complied. When I walked into his store, there it was…. upside down! Sacrilege in Austin but hit the spot in Norman!
What are your “Five Things I Wish I Knew Before Opening a Franchise”?
1. My franchisor wasn’t required to have a disclosure document in 1978, and had I seen their financial statements I might never have signed on! Carefully reading the Franchise Disclosure Document is essential to understanding your responsibilities and the responsibilities of the franchisor, and to evaluate the health of the system you are considering joining.
2. Since there wasn’t a disclosure document, the only franchisee references I was given were for a few successful franchisees who may have received some compensation for their recommendations, something that is prohibited today. Talk to as many existing franchisees as possible before you sign your agreement.
3. It is important for a new franchisee to be realistic about how much time they will have to devote to the business. No business is truly an “absentee owner” venture if you want to be successful. In our system we don’t expect or want our franchisees to be in the store all day every day. We put a lot of emphasis on developing the Manager, and that is one of the key roles of our franchisees: Teaching them how to set goals, develop action plans, coach and counsel, build a solid team. Our manager training program is very detailed to assist the franchisee in this process, some of which we can assist with if the franchisee requests it. The manager is the franchisee’s employee, so we have to be respectful of that relationship.
4. Make sure your financial projections are conservative. You may get lucky, and everything goes smoothly, but make allowance for having something happen that you may not expect. We are very conservative in our estimates of costs to launch stores, and we are very careful to ensure that the candidates we invite to join our team have the financial strength to succeed. Contingency plans are a prudent precaution.
5. Remember that ours is a people business and maintaining a solid culture of support and encouragement with your team will be critical to your success. Given the resources and training, it’s amazing to see these (mostly) young people grow and flourish within our system. We have many examples of young stylists growing into management roles, then area manager, sometimes educators and even franchisees.
As your franchise has grown, what have been the key drivers of its success? Looking forward, what strategies do you plan to implement to ensure continued growth and sustainability in an ever-evolving market?
The foundation of our success is:
Our concept meets a need in the marketplace that others were not serving. Once others woke up to that, we had an insurmountable lead in our niche.
We based our company on a strong value system, and we walked the talk.
We knew our industry and were experienced with franchising both as a franchisee and a franchisor.
We had a core group of dedicated people on our team who did what it took to succeed, with the attitude that failure was not an option.
We didn’t over-extend ourselves. We had disciplined growth consistent with the capability to support our franchisees as we grew. We have always put a strong emphasis on franchisee support, with the understanding that we are only successful when our franchisees are successful.
Today we have a very strong leadership team in place, and we are striving to be the standard in meeting the needs of our clients. We have a strong technology team and a solid platform that is constantly improving, consistent with our philosophy of “kaizen,” continual increment improvements. We have members of our leadership team who have been with us a long time and a healthy mix of new blood to keep us fresh. We understand that our business is a simple one that keys on operational excellence, a strong training program and innovative marketing.
Off-topic, but I’m curious. As someone steering the ship, what thoughts or concerns often keep you awake at night? How do those thoughts influence your daily decision-making process?
I sleep well. But we are always looking ahead and trying to anticipate potential challenges so we can be prepared for those challenges or avoid them entirely by proactive engagement. It’s always better to anticipate a challenge than wait until it happens and react. We stay aware of developments in our industry and in franchising, including regulatory changes that may impact us. We very engaged in industry issues, working to lower barriers to entry into our industry; to improve mobility of stylists who move and have to be licensed in a different state; facilitate the entry of recent beauty and barber school graduates into our industry by streamlining licensure; and, encouraging high schools to implement cosmetology and barber programs so graduates can enter the workforce immediately upon graduation.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
We are heavily engaged in our industry trade associations: Our son Edward is our CEO now, and president of ISBN which represents over 15,000 salons nationwide; I am president of FBIC, a coalition of leading companies in our industry working on legislative issues as mentioned above. The changes we have been able to make in multiple states have made the lives of thousands of young people better by lowering barriers to entry and improving mobility for all stylists.
We also take our responsibility to our communities very seriously. Our work with the VFW Foundation has resulted in helping almost 3,000 veterans transitioning from military to civilian careers. We have raised almost $3,000,000 for the St Baldrick’s Foundation for childhood cancer research. We support many other charitable organizations both nationally and locally.
How can our readers further follow you online?
I am on LinkedIn, and people can stay current with Sport Clips at SportClips.com.
Thank you for the time you spent sharing these fantastic insights. We wish you only continued success in your great work!