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How Sport Clips Avoids Closures

The hair salon franchise sees far fewer unit closures than most franchises of its size

By Ben Warren1851 Franchise Managing Editor
SPONSORED 9:09AM 03/27/18

With nearly 2,000 locations across the U.S. and Canada, Sport Clips Haircuts is one of the largest haircare franchise systems in the country. For many franchises of that size, regular unit closures are a matter of course, but Sport Clips sees far fewer closures than most comparably sized franchises. In fact, over the past seven years, Sport Clips has avoided closure for 99 percent of its expansive franchise system.

Dave Wells, Sport Clips’ senior director of franchising, said the franchise’s primary defense against unit closures is a careful franchisee selection process.

“We thoroughly vet each candidate to make sure they are the right fit for the brand,” said Wells. “We’re not just looking at financial qualifications. We’re making sure they can operate our model and relate to stylists and employees in a way that is consistent with both our business model and our values.”

That same stringent vetting is applied to real estate selection as well. “We look very carefully at each new site,” Wells said. “It goes all the way up to our leadership team, who are careful to select only locations where the brand is primed to thrive.”

Sport Clips also is buoyed by a service model that is uniquely durable to changing market forces like the economy, technology and consumer tastes.

“Hair care is a recession-resistant industry,” said Earl Blood, Sport Clips’ senior director of operations. “People always need haircuts, regardless of economic conditions. And it’s not a profession that is going to be displaced by computers, so, the industry is safe. And Sport Clips is particularly resilient because we focus on men, who return for services more frequently than women do, so it’s a very reliable model for securing revenue.”

Even the small number of unit closures Sport Clips sees are studied carefully to make sure they do not represent a pattern. According to Blood, one of the first things Sport Clips looks at when a store closes is its age.

“The average age of a store that closes is six years old,” he said. “That’s an encouraging sign. That means that the store was able to get on its feet and was likely closed due to external factors.”

According to Wells, most of those external factors come down to real estate. “A new shopping center may take over the space or a landlord may decide they need to move the store,” he said. “Typically, that only occurs when an owner chooses a location against the advisement of our development team, but there is still an upside: those closures often come with a buyout.”

Closures that occur quickly after a store’s opening are the ones that raise alarm bells for Sport Clips, but Blood said even those have a silver lining.

“When a store closes quickly, that usually means the owner had the wrong ideology about franchising when they got in,” Blood said. “It’s not what they thought it would be, and they decide to get out. That’s why we are so careful about vetting owners, and as a result, we see very few of these closures. The upside to that scenario is that we’d rather have a closure than a store that doesn’t serve its customers well or poorly represents the brand.”

The six-year average for Sport Clips’ closures offers another reassurance. According to Wells, six years is a timeframe in which most Sport Clips owners are able to achieve substantial multi-unit growth, meaning one store closure is not the end of the owner’s business. In fact, Sport Clips requires all new owners to commit to a minimum of three units over a three-to-five-year period. By year six, most Sport Clips owners are able to absorb the loss of a single store and continue to grow with the brand.

Wells said Sport Clips’ prioritization of multi-unit growth and its uncommonly low closure rate are both reflective of the brand’s core commitment to franchise growth through owner growth.

“We are not interested in opening up as many stores as possible in as many locations as possible and then seeing which ones last,” Wells said. “We are dedicated to finding the best owners—the ones who understand our system and are eager to apply it—and setting them up in the best possible circumstances to succeed. That allows our owners to grow quickly and effectively, which in turn extends our brand to more customers. That’s how we’ve reached so many markets without suffering any damage to our brand.”

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.