#191: Profit from Beauty: A Recession-Proof Franchise
LISTEN AND SUBSCRIBE
Apple Podcasts | Google Play | Stitcher | Spotify
Welcome back to another episode of The Richer Geek Podcast! Today, we dive into the world of salon suite franchises with beauty industry expert Karen Kaminski, founder of Allure Salon Suite Consulting. Karen shares her unique journey from starting in the beauty business to launching and scaling private salon suite facilities across the USA. Whether you're an investor or a beauty professional, Karen offers insights on how the salon suite model provides a profitable, semi-absentee income opportunity. Listen in as she discusses key business strategies, site selection tips, and the booming demand for salon suites in the post-pandemic era.
In this episode, we're discussing...
Recession-proof industry: Beauty services are essential and always in demand.
Salon suite franchises offer a semi-absentee business model with high-profit potential.
Karen Kaminski emphasizes the importance of selecting the right location and understanding local regulations for salon suite setups.
Investors from various industries (not just beauty) are finding success in this business model.
Salon suites cater to independent beauty professionals, helping them grow their businesses in a more flexible and profitable environment.
Karen shares her method of reducing upfront investment costs by negotiating tenant improvement (TI) money with landlords.
Resources from Karen
LinkedIn | Allure Salon Suite Consulting | Karen's Email
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Hey everybody, welcome back to another episode of The Richer Geek Podcast. Today we have Karen Kaminski. This is a little bit different for everyone. It's a franchise idea, but she is a beauty industry expert and the founder of Allure Salon Suite consulting. She helps groups and individuals establish, manage and scale private Salon Suite facilities across the USA. How are you doing, Karen?
Karen Kaminski
Hi, thank you so much. This is great. I was looking forward to this absolutely.
Mike Stohler
And I was too. First, I like going to the hair salon. I haven't been to a hair salon, of course, for a while. I tried one of those things where the hot towel and the whole thing, I fell asleep, and that was nice. And the straight razor thing. We'll talk about people who have beautiful hair, like yourself, and we'll talk about that. Tell us a little bit about your background. Everyone always wants to know how you got started. And then go into the aha moment where I need to do something different. I need to do this, not only for myself, but for other people out there.
Karen Kaminski
Got you. When I was in high school, I wanted to go to beauty school. My dad was like, "Absolutely, no way." He was like, "You're going to college. You're getting an education." And again, I thank God I did, because it really got me to where I am today, in the business part of it. So I opened my own salon. After I went to college, had my children, I opened a nail salon, or I bought a nail salon, and while I loved the whole salon and doing services and stuff, because I do have my nail tech license, I didn't like being stuck with the same clients. You know what I mean, there was no room for growth unless you hired people. So some of my OPI rep approached me and said, "Hey, listen. We have a sales rep job for you if you're interested." And she's like, "Why don't you meet with these people?" So this guy showed up like yourself. He had no hair, and he had a box of oil and a list of clients and a list of accounts. And I go, "What is this?" And he was like, "Just try it." And he's here, "Take it all with you. Here was Moroccan oil." And that's how I started my sales career. And I trained in Manhattan in these beautiful multilevel salons. And I ended up having the Pennsylvania area. It was Sabbath Beauty Supply, and they told me, "Hey, listen. Stay out of Philadelphia. You have the rest of the state." So I was like, "Oh, great." So I would hand out little bottles of rock and oil fast forward. CosmoProf actually took over the contract for distribution at the time. So a job was posted, and I was like, "Okay, I took my chances, put in my resume, and I got hired by Linda Fellows, and I started with CosmoProf." And that was like my dream job. I got to go into all of these salons. I got to play with products. I got to try products. And it was like it was perfect. But what I realized is, I love the business part of it, like I could walk into a salon, help these individuals, these salon owners, make sure their inventory was done, but also try to help them create more business. And like how to do promotions and really like some of their business struggles, because, again, beauty professionals are not taught business skills in beauty school.
They're taught how to pass deep boards, and then when they get into a salon, they're taught how to be an employee, but nobody teaches them how to do business. But yet, when you talk to a beauty professional, everybody wants to have their own business. So fast forward. I trained with CosmoProf, and she took me into a salon suite, and I walked in as a new rep, and I was like, "Oh, my God, there's 60 people in here!" And she was like, "We don't come in here." And I said, "What do you mean?" I said, "There's 60 accounts. I thought we had to get accounts." She goes, "They don't buy from us." And she's, "Don't you have them in Pennsylvania?" I'm like, "No, I don't think so. No, we definitely don't." Next thing, one of the franchises opened up in Pittsburgh, two of them, and again, I was a sales rep, so it blew up Pennsylvania, because they were like, "Oh, it's booth renting." And nobody could understand how this business model worked in Pennsylvania.
So next thing, two more opened. And when I realized they were opening because salon space have been in the US for probably about 30 years, and they're in every part of the country, except for New Jersey and Pennsylvania at the time, and we're talking like back in 2011 so fast forward and thinking, I'm like, "I'm never going to retire as a sales rep if these take hold in Pennsylvania." So I went on my search to try to find a space to do my own and I called some consultants, and they didn't have the beauty industry experience. How do you set up the space, like, what kind of plugs you need for the blow dryers? And so I decided to go it alone, get all my details down. I went to 17 landlords here in Pennsylvania, and they all thought I was crazy. And everybody would be like, "Do you know how much plumbing you have to do? Do you know how much it is like electricity?" So, yeah, they all have to be little individual salons. And finally, I met up with Joe Amato, who had commercial properties. I love this concept. I live half of the year down in West Palm Beach. He goes there, all over Florida, because Florida, Texas, California and Atlanta have the highest concentration. He goes, I'll help you. So that's how I opened my location. And here in Pennsylvania, you have to go by state boards. So there was a certain space requirement. And then again, that's what kept them out of the state, because the franchise model is only 110 square feet, where you have a state like Pennsylvania, it was 180 square feet, and it had to be a minimum of 10 feet wide. And then the same was with New Jersey, but New Jersey was 350 and a bathroom. So what had happened is the franchises pushed their way in and petitioned state boards, and next thing you know, they came flooding in, and during Covid was the real big AHA moment, because while everybody was home dealing with all that, franchise models were blowing up in PA and when we opened up on June 19, all of these salon owners that reopened, they opened to, like, their salons being decimated because everybody bailed, because it was, like the perfect concept at that time, where you take one person, it's a private suite, and it came into Pennsylvania backwards. Do you know what I mean, whereas in all the other places, it took hold quickly, and during that time, I was in the process of opening two of them, and currently I have five locations, and we manage about 115 studios. And it's a great concept. It's a great income, semi-absentee income, for people to get into.
Mike Stohler
So walk me through this. You've discussed the background of it. I'm an investor.
Karen Kaminski
Yes.
Mike Stohler
I come to you and say, "I want to buy a salon." Or I have this small strip mall space, okay? And I like to own something myself, instead of this smoke shop or something like that is going to be there for two months, then leave because they're not paying. What is the process? So I'm thinking about this because here's the thing is, I think everybody on this planet, especially in the United States, knows or has some relative that is a stylist, whatever you they they're called now. Barber back in the day, that's how old I am. So I think you're right. Like a lot of people say, "You know what? They want you to work for someone that isn't out there crazy." I come to you and I say, "Hey, Mike wants to own or turn part of my strip mall into this concept." Walk me through it. What happens?
Karen Kaminski
First thing I do is I vet the sites. And how I vet the site says I see what's around. So I didn't first start with professional beauty stores, because these individuals go to the beauty stores to get their products. They don't really use the rep, hence why I started my own company. The other thing is, we look around to see if there is any competition in the area from other franchise models, and then we look for salons and spas and get, like, a good idea of the business that's in the area. I do not use heat maps.
And the number one reason, and a lot of the franchises do, the number one reason why I don't use a heat map is a lot of times people go to beauty school because they didn't know what to do after high school, and or they transition out of being a beauty professional into another career, and they keep their salon like their beauty license, because they want cheap shampoo, so used. So they're not really accurate. So once site vet the property, then we run a pro forma, and then what we do is we break down the spaces here in Pennsylvania, again, I was doing 180 they did change that back in January of 2023 they dropped it down to 120 so what I do is I take a pencil drawing and I maximize the space to see how many studios we can get into that. And then based on the competition in the area and kind of the state you're in, we actually see what the going rate is.
So here in Pennsylvania, for a single studio, which is 180 square feet, in my business model, we charge anywhere from $299, to $450 a week. What we do is we go through the pro forma, make sure that your expenses are covered, because these facilities are very energy efficient. They don't cost much to run. They cost a little bit to get them built, and they run very efficiently. And then what happens is we see what the income typically is. Now for my spaces, we like to be in that $45,000 to $50,000 range as far as our monthly income. And then when we take away our monthly expenses, including utilities, rents, insurances, we like to be in that $25,000 to $20,000 a month in profit. So they're very profitable and semi absentee ownership, once you have them filled and you have happy tenants that are successful in their businesses.
Mike Stohler
Now, what do you say with someone that says, I'm just going to go buy a great clips franchise or. Something like that, and then you have your concept. Now you have someone who's paying for the marketing, advertising, franchise fees. You have the name, but what do you say with people? So do I do the Allure Salon Groups concept, or do I just go buy a standalone?
Karen Kaminski
So let me clarify that. So great clubs are really like a chain haircutting place. It's actually a salon business. Some of those models that we're talking about in a salon suite are Sola, Phenix, My Salon, IMAGE Studio 360. So those are some of the franchises in what I do. And what happens is, in those business models, just like any franchise, the franchisor makes the money on the franchisee, the franchise makes the money on their tenants. So what happens in my business model is a lot of that markup on cost and build out, and especially royalties, are cut out by using a consultant. And that's what I did. Like when I looked at this, I went through the franchise model. I wanted to see what it was about, and there were a lot of markups, so I was able to in a typical build out for these franchise models. You're talking about $190 till 220, a square foot when I do them. And mine are just as beautiful custom cabinets. In fact, I'm in one of mine right now. They're closer to 110 on my allure groups because I run my own projects. But if you have to hire a GC, you're talking about $125-$135 max. So you're saving all that money. And then when you get them up and running, and because you're only marketing to that small group, it's not like a national company where you're trying to bring in people, hairstylists don't move very far. They try to stay depending on the population. If it's like a densely populated area like some of our Philadelphia suburb locations, they only move like five to 10 miles. But up here in the Scranton-Wilkes-Barre area, a stylist and clients will follow them like maybe 10 to 20 miles, so you're not marketing to that whole entire state or something like that.
So you're able to open them up to make sure you're competitive. And what we started to do is recognize that the beauty professionals really don't have much business skills, so really showing them we've become like a business incubator for beauty pros and developed a course so that instead of having a beauty business, they have a business that does beauty services. And it really has helped us keep our tenants happy and keep their businesses successful, and they stay with us for years, like we have one girl who's been with us. She was a salon owner. She was sick of the employees' overhead, because the salon business is not very profitable. The average owner only makes about 5% to 7% off of any person that's working in their salon because of the overhead. So she was done with it. So she's been with us for about six years, and she's, I love it. I get one payment. I buy my own products. I come and go as I please. So for the beauty pros, this is huge. They go from a commission to a 40-50% commission to making like 80-70% to 80% depending on what product lines they use.
Mike Stohler
Wow. It's amazing. And I'm glad you clarified that. Sadly, as everyone can see, I'm in the beauty industry. I'm just trying to survive. I'm as ugly as ugly does, and I'm okay with it. So I'm glad you clarified, because when you said franchises, I'm thinking, "Oh, on the sports I see great clips during the football games and things like that. So maybe that's what she's talking about." So I'm glad you clarified with this, that it's a whole other level of salon suite type thing. Most of your investors are in the industry, or they are just people on the outside saying, hey, you know what? I'm going to diversify my assets with this concept.
Karen Kaminski
Absolutely none of my current clients, or typically, the people who buy into this franchisement is from the beauty industry. You're all like, I have one person who had a home health care franchise and he wanted to do something else where it collected rent. And again, each one of these facilities, they house anywhere from my smallest one is like 4,800 square feet, and I have 15 studios all the way up to, like our biggest one has 30 units in it. But the franchise models actually have 40 to probably 80, depending on how big the spaces are. So it does generate a really good income, especially when you go private, because you don't have that overhead.
Mike Stohler
And does, so I have 15 spaces. Are the stylists renting each booth? Is that how the concept works, and then they're just...
Karen Kaminski
Correct, when I go in. And I'm working with clients currently, I have since all over the US and Canada, and I'm starting to see people. It's starting to take effect in other parts of the world, like the UK, Australia, but here in the US and Canada, what I typically do is go into state. Boards to see what the requirements are, and they're usually renting weekly. You know, some states allow booth rental, which is a different format. Some people require a salon license, like here in PA like each studio has to have its own salon license, own business license with the state. So it depends on the state and what they require, as far as the salon business model. So that's some of the homework I do for my investors. I go in like, if it's Florida, I have clients in Canada, I have clients in Boston, we have a client in Ohio, and we go in research all their state boards, even what they're the state requires for a business, and make sure we give them a business finder that our tenants and then they're paying rent weekly, and their rent includes everything their utilities. We have our own app that we use that our tenants are able to get their credit card processing, their online appointment book if they don't have them. So we're like a one stop all inclusive mini salon for these individuals.
Mike Stohler
Yeah, and that's fantastic for the owner. What do you think is the hardest thing who's managing individuals? I'm just thinking, so no man, I don't want to sit there and have to interview all these stylists and then how flaky are they? Are they just going to show up when they want and I'm thinking, I don't want to deal with people.
Karen Kaminski
So I did that. I was the one who was driving all the way down to the land still area, which is about an hour and 50 minutes, and people wouldn't show up for their appointments. So a lot of the things that I help my investors with are things that were tried and true to my own business. So we do discovery calls and we vet them before they come in, because we want people who are there to do a business like, this is their career, this is their bread and butter, this is their income, instead of people who are just looking for a space to, like, do some services. So, like, we vet them, then we do a tour, and then we go through a little bit of a process. So we get people who are serious, and we're not getting the people who I know this is going to be hard to believe, but like the drama, we try not to get the drama people. But once set up like that, what we've developed was we call them FAS, which are facility assistants, and they're typically somebody who's actually has a business in our facility, and we pay them a monthly fee, and they're there to do the tours for me, because obviously, with five locations, I would constantly be running around, which I did, and they're there, there are boots on the ground. And if our tenants need anything, like ASAP, like immediately, they'll be able to go to them. She reaches out to us, but you don't mean and just lets us know what's going on. So we developed so that even my investors, I tell them, that's how you want to set it up, so that you're stopping in there. You're always the go to but you have somebody there to help you out.
Mike Stohler
Yeah, so let's say that I'm interested. I go to the website, okay, which is?
Karen Kaminski
alluresalonsuiteconsulting.com.
Mike Stohler
Okay. And it's A-L-L-U-R-E, everyone, so I click on it, where do I go? What do I do? What is the process?
Karen Kaminski
So go to the contact page and just fill out your information, and that email goes directly to me. Or you can email me at Karen@alluresalonsuiteconsulting.com, or I actually have my phone number on there. Also 570-877-7150, and just, we have a conversation, and I just get to know who you are, get to know what your background is, because although this is a less expensive route, you still have to have the funds to be able to invest in the upfront. But what I'm really good at is acquiring ti money for my investors that their out of pocket expense is way lower than you would if you were going into a franchise model.
So even with ours like the studio I'm in now, we negotiated a deal and we got $90 a square foot, and it cost us about $115 to build this particular location. So if you're getting $90 a square foot from the landlord and ti money, and in cost, my out of pocket was much lower, but the trade off is a longer lease, and landlords, let me tell you this. Landlords love this because they're able to fill their spaces, because each one of these tenants that come into these spaces, and you want to do about anywhere from 20 to 30 each one of these tenants have a client list that are driving traffic to their facility. So take if you have X amount, you're talking 1000s of people that are coming in and out in a six week turnaround. Even for property owners who have commercial properties, you could be like the landlord and the tenant, and you're able to fill this out. And we actually have a property management company that we started called allure suite life, that we would actually manage the properties for you. And that was another thing that we started getting a lot of people saying, Listen, we don't want to run these anymore. Could you help us out?
Mike Stohler
Yes. And before I let you go your services, is it a percentage base? Is it a flat fee up front? When people get involved with you and say, "Okay, do you have different packages?" What does your concept look like as far as...
Karen Kaminski
So, I do have two packages. I do have the DIY, and that's for somebody who has the franchise kind of model insight where I would give them the whole program with all of my handouts, my Excel sheets business, and then they get, like, maybe five hours of consulting time with me to help me go through it. I have very few people do that method, because every single project, as much as I could tell you exactly how to do a salon suite, but every property, every landlord, every state, is different. So I have a flat fee that I ask for, and people pay it so that I implement it, and I've made all the mistakes. So it's two payments, one upfront, when they sign an agreement, and then one, when they open their door so they know I'm invested in their property and they're invested with me.
Mike Stohler
Yeah, and that's a good concept. Let's have now, half later and or whatever it is, that way we're I was just wanting to know how this type of concept works. Karen, it's been a pleasure speaking with you on this concept. It's a little bit different for our listeners, but it is a business model that people get into. So I love diversifying with bringing people on. Is there anything that you would like to tell our listeners that I may not have hit on before we leave?
Karen Kaminski
Absolutely. So the two things that are recession proof are beauty. And this is a great concept, because people are always getting their hair done and beauty services except you, and then they're able to the beauty industry is so individualized, and more and more people are looking to be entrepreneurs in the beauty industry because of just all of the things that they can do, whether it's express themselves creatively, or for the single moms that need more flexible. So this business model is huge. So when you're thinking about investing, look at think of all the people who get services done in the beauty industry, whether it's barber and it's for everybody, it's not just hair, it's barbers, it's tattoo artists, it's permanent makeup, massage therapists, Reiki masters, nail techs, massage therapists. It's a whole, we like to call it a beauty complex.
Mike Stohler
There you go.
Karen Kaminski
Yeah, it's a one-stop-shop for consumers, which is another great aspect of it.
Mike Stohler
Yeah and for those ladies and gentlemen that are listening, that are just in that nine to five grind, and they're just like, What in the world can I do anything? Just give me anything? So I don't have a quota, I don't have all these things. I don't have to be at the office, the cubicle farms. Maybe ladies and gentlemen, Allure Salon Suite Consulting might be your answer to just a little bit of relaxation, sanity.
Karen, thank you so much for coming on the podcast. It's a great concept. I wish you all the luck. And ladies and gentlemen, if you're interested, Allure Salon Group, Allure Salon Suite Consulting with Karen Kaminski, thank you so much for coming on.
Karen Kaminski
Thank you. Bye.
The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice. For our full disclosure, click here.
ABOUT KAREN KAMINSKI
"If you’re a property owner that’s not offering some sort of value to your brand and tenants, the only thing you have to compete with is price, and that leaves you in a race to the bottom," shares Karen, who has previously been featured in Gettin' To Know The 570 and Authority Magazine.
Karen Kaminski is a beauty industry expert and the founder of Allure Salon Suite Consulting. She specializes in helping groups and individuals establish, manage, and scale successful private salon suite facilities across the United States.
Karen's innovative approach to the private salon suite model offers a more cost-effective and supportive alternative to traditional franchise models. By reducing upfront fees, ongoing expenses, and construction costs, her model provides a lucrative investment opportunity for real estate investors and beauty professionals alike.