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A static concept means a stagnant business, and there’s never been a better time for reinvention.

By Dan Kennedy

In my 35 years working with business owners, entrepreneurs and big corporate clients on marketing, I’ve seen many different definitions of marketing govern people’s approaches to it, and unfortunately, most versions are narrow, limiting and — well — wrong. Marketing shouldn’t just be a cog in the wheel or a link in the chain of moving prospects to buyers or products to market.

Of late, the entire U.S. economy has been weighed down by a massive over-supply of look-alike, do-alike, painfully ordinary businesses doing ordinary things in ordinary ways. About one-third are unnecessary duplicates. This column’s space prohibits full discussion of everything marketing is and isn’t, should and shouldn’t be. But one of the best functions of marketing has always been business reinvention, and there’s never been a better or more necessary time for that.

In No B.S. Ruthless Management of People and Profits, I tell the story of a Disney executive describing “the million dollar piece of gum” — how gum left on the ground might cost the company a million dollars. Walt originally included park cleanliness as a marketing function, not a cost of operations. He defined the core of good marketing as doing what you do so well and so uniquely that people can’t resist telling others about you. Disney reinvented the traditional amusement park. Initial reinventions included: single entry and exit rather than open design — forcing customers to exit through the main shopping area and all the souvenir stands, an innovation now replicated in the exit paths from individual rides and attractions within the parks; price per day vs. individual tickets for rides; and the aforementioned cleanliness.

Similarly, Howard Schultz reinvented the coffee shop as “the third place” — Starbucks — and is now trying to reinvent for the developing New Economy and “un-invent” some sins committed in his absence.

A radical approach to innovation and marketing isn’t restricted to big corporations — there are plenty of small businesses ahead of the curve. Let me tell you about a few of our Glazer-Kennedy Insider’s Circle™ members who have reinvented the concept of fractional ownership.

Diana Coutu of Diana’s Gourmet Pizzeria in Winnipeg doubled her business’ sales and size last year selling pizzas priced from $22 to $38, thanks to innovations not at all common to pizza places, including levels of membership with fees automatically charged to customers’ credit cards every month (stabilizing income and locking in use in advance, thus protecting customers from competitors’ seductions); multiple ways to take home the products–cooked and ready to eat, frozen and ready to heat, “from scratch” baking kits (for family fun nights), raw dough — and with comprehensive direct-to-customers marketing built around a newsletter and website.

Nigel Worral reinvented the business of renting out homes to Florida vacationers with different clubs, bundled excursion and adventure activities, and extraordinary marketing with an emphasis on the experience, not ‘X’ number of bedrooms plus a pool for ‘Y’ dollars a day, marketing — and his business is booming even as other Florida travel destinations cry about the recession.

Chris Hurn, CEO of Kennedy’s All-American Barber Club®, reinvented by combining a classic men’s barber shop that offers straight razor shaves with a men’s club atmosphere and different programs of membership — as opposed to cafeteria-style pricing.

In all these cases, marketing is not being used as a means of getting a customer or making a sale. Instead, it’s in the context of dynamically changing the business itself and delivering an entirely different customer experience. With this comprehensive approach, the businesses thrive.

The hierarchy of income:

Bottom is commodities.

Next — products and services discussed in terms of features and benefits, provided by vendors and salespeople.

Next — solutions to problems and fulfillment of unmet desires, provided by experts.

At the top, exceptional experiences provided by experts in “categories of one.”

Begin here: Question and be willing to throw out any and every industry norm, tradition, current belief, idea and practice now defining your business, as you advertise, market and operate it and as customers perceive it. Then search for opportunities to make your business something entirely different and more meaningful to the customer than just a provider of goods and services. Very, very, very few business owners are willing to engage in such radicalism. We have a term for them: multimillionaires.

Widely celebrated as “the millionaire maker,” Dan Kennedy has a long record of taking entrepreneurs to 7-figure incomes. A serial entrepreneur directly influencing over 1 million business owners as a business coach, he’s the author of the popular No B.S. series, including the forthcoming No B.S. Sales Success for The New Economy, accessible for free preview at www.NoBSBooks.com. More information about Dan can be found at FreeGiftFrom.com/entrepreneurpress.

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From: DMNews
October 12, 2009
By: Mary Elizabeth Hurn

American men will spend more than $9 billion on grooming products this year, including retail and online sales, according to Kline & Company, a market researcher. Men are a small but coveted demographic for direct marketers of personal care products and services, and direct marketing has proven a primary avenue to reach them.

“A few years ago, men were much more into touching, feeling and smelling the product,” says Lee Jacobs, president of Lescoja, makers of the Matte For Men skin care line. “Today they’re much more comfortable buying online based on the right proposition.” If the product meets a need and is easily explainable and demonstrated online, it makes a huge difference in sales, he explains.

Matte for Men does most of its online marketing through search and banner ads, which link back to the products’ home page, on targeted grooming sites. Jacobs believes its important for marketers to think outside of the box in ad copy, and Matte uses risqué messaging to stand out. For example, a face wash with microspheres has the tagline “Finally…a face wash with balls.” Jacobs explains that this type of language resonates with men and helps the messaging cut through the clutter.

E-commerce sites also play a huge role in sales. Peter Thomas Roth, a unisex line of body products, is sold on numerous e-commerce sites, including Sephora.com, Ulta.com, Beauty.com as well as PeterThomasRoth.com. Founder and CEO Peter Thomas Roth says that using these types of sites to sell products is a large part of his company’s distribution strategy.

“Especially for a product launch, we’ll sell a product exclusively through Sephora for three months before opening it up to other sites,” he says. “You have to draw a lot of attention to it at the onset or your product will get lost in the shuffle.”

Peter Thomas Roth products have been featured in the Sephora Insider e-newsletter. It also participates in a sampling program. With each purchase at Sephora.com, the consumer can choose three free samples to receive from a list of 12. One option is a Peter Thomas Roth product.

“This is a much more direct way to sample because you know the person isn’t going to just throw it in the garbage,” Roth says. “They’ve actively chosen to try your product.”

Michele Probst, founder and CEO of Menaji Skincare, which sells products ranging from shaving sets to bronzers and concealers for men, agrees the Web is an effective channel.

“Sales are continuously shifting from bricks to clicks,” she says. “Especially from a small business point of view, the online sector is cheaper because you don’t have to pay for in-store signage and other expenses associated with retail distribution.”

She adds that privacy is another advantage of the Web: “Men probably aren’t comfortable in a department store surrounded by women, asking a clerk about the right shade of concealer for their skin.”

The economy has also played a role in the sales of Menaji products, Probst continues.

“Now more than ever, these baby boomers are competing for jobs with these computer savvy college grads, so any edge they can get is really important,” she says. “Confidence is really important right now. Grooming is not new to men, but there are new tools.”

Other marketers, however, believe a more traditional approach is best. Tony Sosnick, founder and CEO of skincare line Anthony for Men, says training staff, sampling in stores and building relationships with sales teams is still very important.

“This is a people business,” he says. “You want to get the person that’s selling your product to understand, sample and like your brand.”

Sosnick says he plans to launch Twitter-only promotions in which users will be able to enter a promotional code available exclusively in the company’s Twitter feed to receive deals.

Direct mail is also an option to reach this audience, especially if the product or service is regional, says Chris Hurn, co-founder, chairman and CEO of Kennedy’s All-American Barber Club. The franchise has six locations in Florida, and 75% of its business comes from members who pay a monthly fee for unlimited haircuts and other services.

Hurn says the company shoots to send out 7,500 to 10,000 monthly direct mail pieces to consumers within a five-mile radius of each store. “With e-mail you get various deliverability rates,” he explains, “but that’s not the case with direct mail.”

The company uses list firms to find its target demographic and uses different selects for different campaign. For example, it targets wives for a Valentine’s Day postcard.

On most of the company’s direct mail pieces, Kennedy’s offers first time customers a free haircut and straight razor shave. Those customers will receive a handwritten thank you note within a few days. “It plays up nostalgia and our overall branding,” Hurn said. “People are shocked by it and it resonates with men.”

Perhaps the most important thing to remember when marketing to men is that they’re not like women, Probst says. “Unlike women, men aren’t typically out there constantly looking for the best new products,” she explains. “Men are very loyal, so once you get them, you’ve got them.”

Campaigns

When the Matte for Men line launched in January 2007, CEO Lee Jacobs made a decision to reach men through the online channel. Using a combination of ad networks and buys on targeted content sites like SlyBaldGuys.com, not to mention salacious copy, MatteforMen.com was able to garner more than 40% of its traffic from online banners. E-commerce sites, search engine optimization and paid search complemented the effort to drive clicks and sales.

Kennedy’s All-American Barber Club wanted to increase membership at its six locations in south Florida. The grooming company launched its “Member-Get-a-Member” contest earlier this year. The direct mail promotion urged members to recruit others to join Kennedy’s. Various prizes, such as golf clubs, gift cards and vacation packages, were offered based on how many members participants referred. Over the course of 10 weeks, Kennedy’s retained more than 130 new members.

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Give a man a beer and he’ll have a straight-razor shave and a haircut, but give him a membership and you’ll have him for the life of his contract.

At least that’s the premise behind Kennedy’s All-American Barber Club.

Chris Hurn, CEO and co-founder of Mercantile Capital Corporation, wasn’t content with just funding franchises, he wanted to own one — not as a franchisee, but as a franchisor. He had a long list of criteria for the right franchise: 15 points, actually. We’ll only hit on a few here:

The ideal concept had to be a proven, simple turnkey operation that didn’t compete with any of Mercantile’s customers; offer above-average profitability; be ideally niched for “mass-affluents”; have the potential for introducing a synergistic line of products; and have the potential to develop a social responsibility component.

He found that in Carrs, a barbershop he frequented. One day he was sitting in the barber chair hearing the franchisee complain about the franchisor, and the next day he was phoning the franchisor to see about a possible sale.

After purchasing the chain, Hurn, a master marketer, changed the name to Kennedy’s to better reflect the “affluents” he was going after as customers. “People aren’t spending less money, they’re looking to get more value for their dollars,” he contends.

Memberships to Kennedy’s range from $40 to $120. Services and frequency accelerate with the higher rates, but basically include unlimited haircuts and shaves with an old-fashioned straight razor. Since most men’s hair doesn’t grow at an alarming rate, that’s a fairly safe offer. And frequent customers become great brand ambassadors.

Putting on his lender hat, Hurn also gave some advice on finding loans. He suggested franchisors, as well as prospects, interview lenders. “Ask them to show you awards or testimonials that attest to their expertise with these loans,” he said. “Use experts, and ask, ‘How painless and fast will the process be?’”

Another question he hears a lot is, “How much do I need down?” – – noting that the least amount is the smartest move. “Notice I didn’t say, ‘What’s your rate?’” he said. “Most are right in line with each other. Price is not the only reason people buy — even when people are buying money.” They buy with their emotions and support their decision with facts.

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Message Mogul

Marketer gets word out on multiple concepts

By Jonathan Maze
As published in: Franchise Times – April 2009

Chris Hurn loves attention. Or at least he loves it when his businesses get attention, because attention frequently translates into sales.

So over the years, the marketing pieces he’s sent to prospective customers of his lending company, Mercantile Commercial Capital, have included prescription bottles, fake wallets, bank bags and even sealed popcorn bags. “All to basically get my message out,” Hurn said. “Whatever your message is, it doesn’t matter if it doesn’t get read.” The point: As outlandish as they can seem, attention-getting packages at least ensure that a message is read.

So it’s not entirely surprising that Hurn has brought this marketing sensibility to his franchise, Kennedy’s All-American Barber Club. Hurn and his partners have been aggressive in marketing the hair care membership concept despite an economy that would seemingly make any perceived luxury a difficult sell.

That marketing plan is highlighted by a big, black box that the company sends to all serious candidates. Inside the box is a straight razor – without the blade – a shaving brush, DVD of company information, a booklet, a copy of the company’s FDD and a plaque with the prospect’s name on it. “That’s our piece that competes against (most companies’) two-pocket folder that may or may not have a DVD in it,” Hurn said. “That’s the push-them-over-the-edge piece.”

Hurn has a simple, yet shrewd reason for what he calls his “shock-and-awe box,” which easily takes up a large chunk of space on whatever platform on which it is resting. “What usually happens if you don’t want to do the two-pocket folder franchise, you just throw that folder in the garbage,” Hurn said. “But that box is difficult to throw away. It’s a nice looking piece. It’s going to sit on your desk a while, staring back at you.

“It gives us a better chance to work with them. They might even give us another look because we went to that extent.”

Marketing is a vital component in a franchise’s growth prospects, but with so many franchises out there looking for owners it can be difficult to stand out. But whether flashy or eye-catching marketing strategies work has generally been a matter of debate.

Hurn, however, says that such promotional materials should be part of a broad marketing strategy that takes advantage of numerous mediums. When a company has a strong marketing plan, he said, it could often be difficult to measure the different components. “Sometimes it’s a cumulative effect,” he said. “You’re not sure what one thing tipped them over. If you’re creative, disciplined and send things regularly through different multimedia, it’s difficult to track the one thing that worked. And it’s probably not one thing, but the accumulation of all the things that you do.”

Despite that, Hurn said, marketing should be viewed as an investment. Perhaps the response rate may not seem good, but the item you’re selling is big enough that price paid for a marketing campaign would still have a strong return. Hurn added that, when something works, companies shouldn’t limit themselves to budget constraints.

“Say you budget 9 percent of revenue for marketing,” Hurn said. “But you’ve found something that really works and has a really strong return on investment. Are you going to say that once you hit your 9 percent of revenue, you’re done? Of course not. You’re going to keep doing it. That’s what a smart business person does.”

Hurn said that franchisors have generally been good at franchise sales, but not so much when it comes to marketing. “If you can’t make people walk in the door, you don’t have much of a business,” he said.
He spends 80 percent of his time at his businesses on marketing matters. “I guess I’m a banker,” he said, “but I tell people that I market our commercial lending services. That’s what I do.

“I could be the world’s greatest banker, but if I didn’t have the ability to tell people about my specialized knowledge and skills, it wouldn’t matter. There are plenty of broke geniuses out there who have no idea how to market their abilities and talents. The same thing applies in the business world.”

Marketing 101
Given the steady stream of interesting marketing ideas coming from the offices of Mercantile Commercial Capital, we figured that its CEO, Chris Hurn, would have some tips. He did. The bigger question is whether we have enough room in the magazine to fit them all.

What are they thinking about?
Some of the best marketing pieces take advantage of what people are thinking about at a given time. So a direct-mail piece from Mercantile late last fall – amid discussions about how to rescue banks – was designed to look like a wallet with a “note” that said, “In this wallet you’ll find your financial rescue plan.”

Tell people the benefits
Many marketing pieces focus on a business talking about how great it is, Hurn said. The message should be the other way around. “What do I care if 80 percent of the Fortune 500 are your clients?” Hurn said. “What’s in it for me? You’ve got to convert the message into how it’s a benefit for me.”

Personalize your marketing
Yes, a marketing piece with a lot of personality may turn some people off, but it’ll turn others on. “And the people you attract will be your rabid fans,” Hurn said.

More information, please
Remember: Not everybody does e-mail. And some people – gasp! – don’t even like the Internet. So include multiple methods of communication in an ad or marketing piece, including phone number, address, fax and, yes, the Web site.

Differentiate yourself
Many prospects look at multiple brands and get inundated with mailings, many of which look similar. And a lot of direct mail pieces are little more than a single-page letter in an envelope. Do something with that piece to stand above the clutter. “You can send four pages in an envelope with the same, 42-cent stamp,” Hurn said. “Use them.”

Be consistent
Marketing should be consistent and steady. But not everybody has the patience or wherewithal to do it. “If you arrive in someone’s mailbox every month like clockwork, pretty soon they’ll come to expect it,” Hurn said. Yes, it might take you time for the message to work, but in the end it’ll be worth it.

Variety helps
Don’t limit yourself to a single medium. Use ads, TV, radio, the Internet, e-mail, DVDs, publications. And don’t forget newsletters, which many businesses don’t do even though they are highly successful at getting a message across. And direct mail also works. “You can’t do just one thing and expect it to work,” Hurn said. “You’ve got to do lots of things.”

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Kennedy Wins:
Barber polls franchisees after name change
By Jonathan Maze; appeared in the Franchise Times November/December 2008 issue

This is the second part in our occasional series following the story of Carrs Barber Club. In this update, Carrs goes through a name change, and has to convince franchisees it’s a good idea. It’s a pivotal moment, because franchisees have the option to leave the system.

Years ago, Ed Magnay told a friend who had been a groomsman at his wedding about his plans to move from Britain to the United States and start his own company. The groomsman’s response was “You’re crazy.”

When Magnay got to this country and started his business, he named it after that friend: Carrs Barber Club.

As the new owner of Carrs, Chris Hurn was impressed with the British-style barber club and its business model, but not with the name, or its origin. So when he finalized his purchase of the business, he changed the name. “It’s hard to build a corporate philosophy and turn a corporate image around when you’re sticking your thumb in your buddy’s eye,” Hurn said.

Changing the name, and the branding provided a fresh start after the chain’s financial problems under its previous owner. And while they were at it, the new owners gave it a more American feel. Despite its Florida address, the chain had British owners and a distinctively British bent.

After considering options like the decidedly American Truman’s, Hurn and his partners ultimately decided on Kennedy’s All-American Barber Club. But lest you think it was deliberately named after the Massachusetts clan of Jack, Ted and Bobby fame, think again.

“Kennedy” means “the ultimate gentleman,” which fits with the company’s overall goal: to attract affluent men looking for high-end grooming. “With Kennedy’s, it’s more upscale, it’s more sophisticated,” Hurn said. “Brother Ted is not what immediately comes to mind. And the concept is a throwback to the JFK era, anyway.”

The concept will be largely the same. Men pay a monthly fee for a club membership that provides, among other things, shaves and haircuts. Yet it will be fully Americanized, down to the names of the membership levels – “Life,” “Liberty” and “Pursuit of Happiness.” It also includes a donation of 5 percent of company profits to veterans’ charities.

A name change might seem risky, especially for a young franchise system that spent its first few years establishing a strong brand in central Florida, where most of its units are located. But Nick Bibby, a franchise consultant, said it’s better to do it now.

“If they had 100 units spread around the country and now they need to change their name and they had a Kennedy’s and a Carrs within 50 miles of one another, that would be horrible,” Bibby said. “Doing it when you’ve got a half-dozen units, there’s no risk. And those half-dozen can support one another.”

Still, Hurn had to sell the franchisees on the branding change, plus the new ownership.

Hurn bought the business this summer from its original owners, Magnay and Geoff Robinson – who had taken control of the company from George Kalivretenos, who had owned the company since 2006. Hurn originally planned to buy the entire Carrs system, but entanglements made it easier for him to buy the intellectual property, then convince franchisees to come along.

With the sale, franchisees were released, with the option to go out on their own or go with the new system. After finalizing the purchase, Kennedy’s president Stuart Fenton talked with franchisees. Then company officials discussed the changes, and they held a franchise-wide conference call and more visits.

Not all decided to switch. One franchise in Altamonte, Florida, renamed its barber club Capps – its co-owner refused comment.

Most stayed, giving the company seven units and six franchisees. Sandra and Paul Norris are “99.9 percent sure” they’re going to go along with the change. “I think the guys are going to do well for us,” Sandra Norris said. “It’s in our best interest to go with the new gentlemen.”

The new name doesn’t bother the Norrises, who bought their first Carrs three years ago after relocating to Florida from England – they now have two, with more than 500 members. “From our point of view, we’re offering the same services,” Norris said. “At the end of the day, it’s just a name.”

The big question is whether a Kennedy’s can bring in customers and propel the franchise into nationwide growth.

That may be a challenge: Credit markets are tight. While some analysts say this isn’t the best time to get into franchising, Bibby said it’s fine, especially for a franchise that targets such a basic service need as hair care.

Perhaps the biggest question is whether customers will flock to the business. Kennedy’s is targeting men in the “mass affluent” category. The question is whether people will be willing to pay for high-end grooming.

Yet Hurn said his customers are still willing to pay that monthly fee, not only for haircuts, but also to have a club to which they can belong. Sandra Norris said the monthly membership tends to steady a unit’s ship in the midst of economic turmoil. “We have a very loyal clientele and people do need haircuts,” Norris said. “Businessmen like the idea of paying a membership.”

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What recession?
Hair biz’s cutting edge

By Matt Wetzel

As published in: Franchise Times – November-December 2008

When Mark Mansfield of Plano, Texas, heard about the imminent economic slump, he couldn’t help but be a little apprehensive, like any franchisee.

But to his surprise, his SportsClips hair salon franchise in Dallas continues to score.

“It’s going well. Our business is not being affected at all by the downturn of the economy,” he says.

“We’re seeing same-store sales growth of 8 percent (from August 2007 to August 2008),” he says. “Everybody’s got to get their hair cut. Very few people are willing to take the risk of cutting their own hair.”

He attributes his increased client counts to a shift in how people get their hair cut. “We think what’s happening is instead of the men going out for a $40 haircut, they look at SportsClips as the mid-tier,” he says.

Across the industry, the revenue of hair care brands that franchise has increased 80 percent, according to Peter Schwarzer, director of research for FRANdata, a franchise information provider, based in Arlington, Virginia. These figures do not cover the past six months, he cautions, when much of the recent economic instability has occurred. “The real drop in franchise unit numbers will probably only show in 2009-2010,” he says.

Nonetheless, people in the industry are not noticing a decline; in fact, they are noticing a slight increase. “Many (people) are making a decision to invest in personal services,” says Gordon Miller, executive director of the National Cosmetology Association in Chicago.

That’s certainly the case with Great Clips, a franchisor with more than 2,700 stores in the United States and Canada. “It’s kind of interesting,” says Charlie Simpson, chief operations officer and executive vice president for Great Clips. “People are visiting us for the first time because they don’t want to pay $40 for a haircut. During downturns, our business does quite well.”

And this provides an opportunity to take the business to a new level. “We’re experiencing some of the best times we’ve seen in years. We’re looking at this as a real opportunity. If we can offer a great haircut at a great value, we have an opportunity to connect with a lot more customers – people dropping down in categories and saying, ‘You know, this works very well,’” he says.

Great Clips targets families, though 60-70 percent of its market is men.

“We’re set for ‘Joe Six-pack’ to the executive business guy,” Simpson says.

Many of the same things are happening with Regis Corporation, says Mark Kartarik, president of the franchise division, which has more than 2,200 franchises in North America. Franchise brands include Supercuts, Cost Cutters, Sassoon Salon, Regis Salons, MasterCuts, Trade Secret, PureBeauty, Beauty First and Hair Club for Men and Women.

“People might decide to get their hair cut at Cost Cutters, saying, ‘You know what, I’ve got to try a value-priced shop.’ We’re maintaining a good piece of our base, whether it’s color or whatever,” he says, He added that some of their higher-end franchisees might experience some pressure.

“We used to say we were recession-proof. Now we say it’s recession-resistant. You’ve got to look good for job and work. I’m glad I’m in the hair business,” Kartarik says.

Scott Colabuono, CEO/president of Fantastic Sams, a franchisor of full-service hair-care shops that target primarily women (55 to 60 percent) is hearing the same thing. “Anybody who’s in the public eye and has hair has to get it done,” he says. “Our owners are saying they’re holding their own, and in many cases, sales are up.” Fantastic Sams, with more than 1,300 shops across the United States and Canada, is privately held and doesn’t release sales figures.

Colabuono recently returned from a franchisee meeting where the emotions were overwhelmingly jubilant. “Everybody was really upbeat about the opportunity,” he says.

Kartarik says times like these can demonstrate to the consumer the importance of a good hair stylist. “The thing we can create for the consumer is a non-replaceable value,” he says.

The good franchises will prosper, but the mediocre ones will not, he says. “The people who survive and thrive will know how to execute. The mediocre restaurant will go out of business. The poor hair salon will go out of business. Take the situation and make the best of it. We’re all in this difficult world and we’ll have to survive in it,” Kartarik says.

To ensure the clients keep coming in, Miller says, franchisees are fairly sophisticated when it comes to incentives, whether it’s lower prices during certain seasons, or free services after the client has reached a certain number of haircuts, or free travel-sized products.

There’s also a social aspect, although it’s not like it used to be. “Your hair stylist is in personal contact with you – and it doesn’t hurt (as it sometimes does with a doctor),” he says.

Miller believes one other possible change in behavior could be a longer wait between haircuts. People will tell themselves they’ll spend the same amount of money, just less often.

The kindest cut
Finding employees isn’t an issue, either. Simpson says it’s easier to staff franchises during economic downturns. An employee might have had an independent shop that failed, or worked at an independent shop. They still have a marketable skill, so they apply at Great Clips, he says.

Colabuono agreed. Many of the independent shops don’t have formal business plans, like that required for a franchise, so some employees leave.

And as far as the granting of franchises, that process is a little more deliberate, they agree. Simpson says franchises were being granted a little slower this year. “People’s ability to access home equity and 401(k)s has decreased dramatically. They don’t have the funding or the asset level they had in previous downturns,” he says.

That’s not an issue with Georgetown, Texas-based SportsClips, which has approximately 600 shops in the United States and targets men and boys. Mansfield, the Dallas franchisee, is also an area developer, and supervises 64 stores in the northern Texas area.

He was concerned franchisees would be harder to find because of the credit situation, but he and other company officials have met with their bankers, who remain committed.

Bankers like the industry, he says, and they like the brand, because new franchisees are “well-qualified.” Franchisees are encouraged to maintain their full-time jobs. “So if the store does have problems, at least the person has a second source of income,” he says.

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Evolution of a franchise

Can old-style barber club make the cut?

By Jonathan Maze
As published in: Franchise Times – September 2008

Chris Hurn believes he has found a franchise system with the potential to be a nationwide chain. In this first installment, we meet the founders, the new owner—plus, a glimpse at where the chain is headed.

Editor’s note: This is the first in an occasional series of stories following the purchase and re-emergence of the men’s hair care franchise Carrs, The Barber Club.

It was during his regular haircut and straight-razor shave at his barber club – an appointment he usually tried to sleep through – that Chris Hurn started to really listen as his barber Judy complained about the franchisor. Hurn’s antenna went up.

Hurn had spent his career working in finance, most recently as the chief executive of his own company, Mercantile Commercial Capital, but for the last few years he’d been itching to run his own franchise system. Judy’s complaints gave him a window into just the opportunity he’s been looking for.

Hurn loved Carrs, The Barber Club. He’d been a member for several months, and knew it was a franchise. What he didn’t know, until Judy told him, was that it was in trouble.

Carrs’ management team, from left: Nick Nanton, CMO; J.W. Dicks, corporate counsel; Tony Zara, president; Chris Hurn, CEO.

The company was started by a British citizen who lived in Celebration, Florida, Disney’s planned community outside of Orlando. Ed Magnay grew tired of not being able to get a good haircut, so he started his own barbershop. He worked with Disney, which oversees Celebration, and opened the shop in 2003.

This wasn’t a typical shop. It was an old-style English barber club. Members pay a monthly fee of $40 to $90 to get unlimited haircuts and straight-razor shaves – you know, those straight razors now seen only in Western movies or horror flicks. Their use is rare these days thanks to the popularity of disposable razors. The 900-square-foot shop had hardwood floors and leather chairs and barbers wore vests and ties and spent as much as an hour on a single customer. It had quickly earned a reputation in the Orlando area as the best barbershop.

Eventually, Geoff Robinson, another Brit, approached Magnay about equity and franchising. They sold units quickly, and at its peak in 2006, Carrs had 15 units, mostly in Florida.

Stuart Fitton – still another Brit – was one of the company’s first franchisees. Fitton’s children were grown and he and his wife decided to move to Florida, where they had vacationed over the years. A comparatively easy way to get into the country was to buy a business, so they looked for a franchise and settled on Carrs. Fitton opened the shop just before Christmas in 2005, within 15 months had 350. One of them was Hurn.

Carrs’ problems began shortly afterward.

Carrs is not a typical shop. It’s an old-fashioned English barber club.
Magnay had a reputation for supporting franchisees. “Ed told me, ‘There’s three things every franchise needs to be successful: happy franchisees, happy franchisees and happy franchisees,’” Fitton said. Then Magnay returned to Britain for personal reasons in 2006. The two owners decided to sell the franchise to a local property developer who was looking for an alternative form of investment amid signs of a housing market collapse.

They structured a seller-financing deal, where the developer paid a small amount up front for a piece of equity. He was to pay the bulk of the sale price monthly over a two-year period. Three months into the deal the buyer defaulted, according to Fitton.

The franchise ground to a halt. The new owner stopped providing franchisee support, angering many owners. Four franchises closed their doors. At least one creditor took the company to court over unpaid bills. And Fitton said the developer used money from the system to pay his other liabilities.

This is what Hurn heard from his barber that day in October.

To the rescue

Hurn, who looks like a slightly more buttoned-down version of the lead singer for the country band Rascal Flats, operates with a casual, irreverent attitude – at least judging from his finance company newsletter, where he’s appeared in photos dressed like Santa or posing in Mardi-Gras garb.

Hurn is a seasoned financier and business coach whose company, Mercantile, works with numerous franchises. Over the past couple of years, he has been increasingly drawn to the prospect of running a system himself. “If you can be the owner of a turnkey concept,” he said, “the marketplace values that substantially.”

Hurn believes that Carrs’ uniqueness will be a recipe for success in men’s hair care.
He is also confident in his ability to use the strategies he employed in building a fast-growing financial company in the franchise world. Yet he needed a concept and was constantly on the lookout for one – he once unsuccessfully tried to convince one of his favorite restaurants to franchise.

The prospect of buying Carrs piqued Hurn’s interest, so he talked to Fitton who put Hurn in touch with Magnay and Robinson about a rescue operation.

Hurn quickly saw possibilities. Despite its issues in the past couple of years and an almost complete lack of advertising, Carrs shops have been able to gain members thanks to strong word-of-mouth. The business is also recession proof, because hair doesn’t stop growing when the economy is in the tank, and its customers – typically affluent folks like doctors, lawyers and executives – aren’t as affected by the most severe aspects of the economic downturn.

He also understands that men are increasingly likely to spend more money on their looks than they once were. Sales of men’s grooming products and services increased nearly 70 percent between 2002 and 2005, according to AC Nielsen. And yet men’s piece of the $59 billion haircutting market remains small and largely fragmented.

“Guys don’t have to sit for 20 minutes in the waiting room listening to babies cry, breathing fresh perm chemicals and reading six-month-old Cosmos just so they can get their pick of which 19-year-old just out of cosmetology school they want to cut their hair,” Hurn said. “And they don’t have to go to a crusty old barber, worried that he’s going to cut your ear off because he’s getting up there in age and can’t cut straight anymore.”

Carrs is unique. “We are for all intents and purposes one of the first to ever franchise something like this,” Hurn said. The clubs have lower overhead and virtually no inventory. A typical store has the potential to earn $570,000 in revenue and finish with a net income of more than $135,000, according to the franchise’s projections.

Hurn worked through Stuart Fitton to buy the company. Fitton helped run the franchise after the previous buyer was declared in default. He also served as an intermediary in the U.S. for the two founders, both of whom had returned to Britain.

Hurn is buying the company’s intellectual property and is forming a new company to run the franchise. He and the other partners have raised the money to create a support system, and are about to release the company’s first franchise disclosure document under the new ownership.

His job now: Sell the franchise to prospective storeowners.

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EVOLUTION OF A FRANCHISE: Can old-style barber club make the cut?

By Jonathan Maze
September 2008

Chris Hurn believes he has found a franchise system with the potential to be a nationwide chain. In this first installment, we meet the founders, the new owners — plus, a glimpse at where the chain is headed.

Editor’s note: This is the first in an occasional series of stories following the purchase and re-emergence of the men’s hair care franchise Carrs, The Barber Club.
It was during his regular haircut and straight-razor shave at his barber club – an appointment he usually tried to sleep through – that Chris Hurn started to really listen as his barber Judy complained about the franchisor. Hurn’s antenna went up.

Hurn had spent his career working in finance, most recently as the chief executive of his own company, Mercantile Commercial Capital, but for the last few years he’d been itching to run his own franchise system. Judy’s complaints gave him a window into just the opportunity he’s been looking for.

Hurn loved Carrs, The Barber Club. He’d been a member for several months, and knew it was a franchise. What he didn’t know, until Judy told him, was that it was in trouble.

The company was started by a British citizen who lived in Celebration, Florida, Disney’s planned community outside of Orlando. Ed Magnay grew tired of not being able to get a good haircut, so he started his own barbershop. He worked with Disney, which oversees Celebration, and opened the shop in 2003.
This wasn’t a typical shop. It was an old-style English barber club. Members pay a monthly fee of $40 to $90 to get unlimited haircuts and straight-razor shaves – you know, those straight razors now seen only in Western movies or horror flicks. Their use is rare these days thanks to the popularity of disposable razors. The 900-square-foot shop had hardwood floors and leather chairs and barbers wore vests and ties and spent as much as an hour on a single customer. It had quickly earned a reputation in the Orlando area as the best barbershop.

Eventually, Geoff Robinson, another Brit, approached Magnay about equity and franchising. They sold units quickly, and at its peak in 2006, Carrs had 15 units, mostly in Florida.

Stuart Fitton – still another Brit – was one of the company’s first franchisees. Fitton’s children were grown and he and his wife decided to move to Florida, where they had vacationed over the years. A comparatively easy way to get into the country was to buy a business, so they looked for a franchise and settled on Carrs. Fitton opened the shop just before Christmas in 2005, within 15 months had 350. One of them was Hurn.

Carrs’ problems began shortly afterward.

Magnay had a reputation for supporting franchisees. “Ed told me, ‘There’s three things every franchise needs to be successful: happy franchisees, happy franchisees and happy franchisees,’” Fitton said. Then Magnay returned to Britain for personal reasons in 2006. The two owners decided to sell the franchise to a local property developer who was looking for an alternative form of investment amid signs of a housing market collapse.
They structured a seller-financing deal, where the developer paid a small amount up front for a piece of equity. He was to pay the bulk of the sale price monthly over a two-year period. Three months into the deal the buyer defaulted, according to Fitton.

The franchise ground to a halt. The new owner stopped providing franchisee support, angering many owners. Four franchises closed their doors. At least one creditor took the company to court over unpaid bills. And Fitton said the developer used money from the system to pay his other liabilities.

This is what Hurn heard from his barber that day in October.

To the rescue

Hurn, who looks like a slightly more buttoned-down version of the lead singer for the country band Rascal Flats, operates with a casual, irreverent attitude – at least judging from his finance company newsletter, where he’s appeared in photos dressed like Santa or posing in Mardi-Gras garb.

Hurn is a seasoned financier and business coach whose company, Mercantile, works with numerous franchises. Over the past couple of years, he has been increasingly drawn to the prospect of running a system himself. “If you can be the owner of a turnkey concept,” he said, “the marketplace values that substantially.”

He is also confident in his ability to use the strategies he employed in building a fast-growing financial company in the franchise world. Yet he needed a concept and was constantly on the lookout for one – he once unsuccessfully tried to convince one of his favorite restaurants to franchise.
The prospect of buying Carrs piqued Hurn’s interest, so he talked to Fitton who put Hurn in touch with Magnay and Robinson about a rescue operation.

Hurn quickly saw possibilities. Despite its issues in the past couple of years and an almost complete lack of advertising, Carrs shops have been able to gain members thanks to strong word-of-mouth. The business is also recession proof, because hair doesn’t stop growing when the economy is in the tank, and its customers – typically affluent folks like doctors, lawyers and executives – aren’t as affected by the most severe aspects of the economic downturn.

He also understands that men are increasingly likely to spend more money on their looks than they once were. Sales of men’s grooming products and services increased nearly 70 percent between 2002 and 2005, according to AC Nielsen. And yet men’s piece of the $59 billion haircutting market remains small and largely fragmented.

“Guys don’t have to sit for 20 minutes in the waiting room listening to babies cry, breathing fresh perm chemicals and reading six-month-old Cosmos just so they can get their pick of which 19-year-old just out of cosmetology school they want to cut their hair,” Hurn said. “And they don’t have to go to a crusty old barber, worried that he’s going to cut your ear off because he’s getting up there in age and can’t cut straight anymore.”

Carrs is unique. “We are for all intents and purposes one of the first to ever franchise something like this,” Hurn said. The clubs have lower overhead and virtually no inventory. A typical store has the potential to earn $570,000 in revenue and finish with a net income of more than $135,000, according to the franchise’s projections.

Hurn worked through Stuart Fitton to buy the company. Fitton helped run the franchise after the previous buyer was declared in default. He also served as an intermediary in the U.S. for the two founders, both of whom had returned to Britain.

Hurn is buying the company’s intellectual property and is forming a new company to run the franchise. He and the other partners have raised the money to create a support system, and are about to release the company’s first franchise disclosure document under the new ownership.

His job now: Sell the franchise to prospective storeowners.

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THE UPSIDE OF A DOWN ECONOMY: Seize Opportunity to Profit from Slowdown

Out of adversity comes opportunity – at least if you know where to look for it.
For instance, the current economic downturn is a perfect time to carve out a niche in your industry and pick up distressed commercial and residential properties at bargain-basement prices.

It also could be an opportunity to re-examine your business model, if experiencing trouble, because weaker firms likely will continue to falter. Further, survival may be pegged on marketing and promotion – an expense often slashed when sales are soft.

The bottom line, experts said, is to do your research and be brave enough to “pull the trigger” on any deal.

Key No. 1: Be ready to move
“You always have to be ready for something,” said Christopher Hurn, president and chief executive officer of Altamonte Springs-based Mercantile Commercial Capital.

Hurn has recent firsthand experience in doing just that: He’s part of an investment group that announced plans last month for a franchising entity for a men’s-only barber club at a time when most retailers are pulling back on extension plans and new launches.

Now is also a good time to pay close attention to commercial property value, some of which have fallen by nearly 50 percent in a trinkle-down effect from the residential market bust, said Jules Cohen, a shareholder who heads the bankruptcy group at law firm Akerman Senterfitt.

Smart investors know a turnaround in the residential real estate market eventually will drive interest in commercial property.

Meanwhile, those in development are using the down period in real estate to pursue entitlements for projects so they are ready when the market begins to move, even though many believe the market won’t bottom out for another year.

Key No. 2: Sell your way out
James R. Lumbra Sr., president of LRA Insurance has a slightly different take on surviving the slow economy. “The only way out of this is to sell your way out,” said Lumbra, who expects to record between $45 million and $50 million in revenue at his offices in Maitland, Merritt Island and Dade City.

Although Lumbra has renewed 93 percent of his clients, his premium totals fells by more than $1 million.

His answer was to offer $75,000 worth of bonuses to workers to hit higher sales targets, and to get outside sales representatives and office staff “sitting in the same boat grabbing the same oars.”

He also worked on finding ways for his workers to network to build more business, and is moving toward opening a forth location in South Florida. Those moves are paying off, with about $5 million in new premiums written in the first quarter. “When we get through this, we want the rest of the industry to say, “Who are they and where did they come from?”

Key No. 3: Make sure everybody knows your name
While it may be tempting to cut spending for marketing and promotion, when the economy is slow, don’t move too quickly in that direction, said Peter Yesawich, chairman and CEO of YPartnership.

The better option: Evaluate the wisdom of those expenses. That’s because “there is a direct relationship between market presence and market share,” said the head of the Orlando-based agency.

Business managers should use the current market conditions as a chance to “turn the counters back to zero” and test their marketing strategies to determine whether they are motivating people to act, he said.

Those firms that do spend dollars on marketing in a down economy will be “rewarded” with more presence in the marketplace, he said, and “applauded for their creativity.”

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LOCAL INVESTORS START KENNEDY’S AMERICAN BARBER CLUB CHAIN
OBJ Aug 22-28, 2008
BY ANJALI FLUKER

An investor group that includes Mercantile Commercial Capital LLC CEO and President Chris Hurn is launching a new men’s barbershop club.

Kennedy’s International Franchising LLC, the franchising entity for the new Kennedy’s American Barber Club, will file its paperwork with the state by the end of this month.

The franchising entity — which originally planned to buy Carrs Barbershoppe’s seven Orlando locations, as well as two in South Florida and two in the Midwest — now has invited existing Carrs franchisees to join the new chain.

And most of them likely will accept that offer, as Carrs will cease operations once Kennedy’s is up and running, said Stuart Fitton, president of the Carrs chain.

Carrs, and old English-style, men-only barber club founded in 2003 by British entrepreneur Ed Magnay, was bought in 2006 by businessman George Kalivretenos, former owner of the Lexington condo hotel in downtown Orlando. In February, Kalivretenos was removed as owner of the Carrs chain after the Lexington’s bankruptcy court filings said he transferred funds from deposits for condo-hotel units for personal use.

Magnay and Carrs business partner Geoff Robinson regained control of the business after Kalivretenos was ousted, but because both live in England, they appointed Fitton as president.

Once Kennedy’s paperwork is finalized, Carrs’ existing franchise locations no longer have the right to use Carrs name nor its operation methods, due to a noncompete agreement between the chains said J.W. Dicks, one of the Kennedy’s partners and a partner of Dicks & Nanton PA law firm in Altamonte Springs.

However, franchisees could stay in business as independent operators.

The new investor group started looking in November at buying Carrs, said Dicks, but problems “cropped up,” including bearing of $600,000 in debt incurred when Kalivretenos owned the chain.

As a result, the Kennedy’s team — including Hurn, Dicks, Mercantile Commercial Capital Vice President Tony Zara, and Dicks & Nanton partner Nick Nanton — decided to start a new chain with the same concept. “We’re not radically changing the concept,” said Hurn. “It’s difficult for a professional guy to find the straight-razor shave. It’s a dying art form in America.”

Carrs franchisees that convert into Kennedy’s locations will have to change only their signage. And barber club members could see additions, such as facials, free drinks and other services.

In fact, the investors expect to grow the Kennedy’s chain to about 100 locations nationwide within the next two years, with up to six employees at each site.

The Orlando market is a solid one for new franchisees, but franchise consultant Mike Murray said this may not be the best tine to start a men-only salon due to the weak economy.

“This is a great place to have a small business, and franchises are hot right now,” said Mike Murray, owner of the FranNet franchise consulting location in Altamonte Springs. But the barbershop club “is a real luxury item.”

Not to worry, said new franchisee Adam Wonus. He and business partner Shelly Rodgers took over a Winter Park Carrs in July and said the Park Avenue shop’s membership nearly doubled, from 52 members to 100.

Now, Wonus said they plan to convert to a Kennedy’s. “I get a lot of guys who just come to hang out on Saturdays. It’s a great place for guys who are upper-level execs to come meet others.”