Hair Cuttery, the Vienna-based chain of no-frills, no-appointment-necessary hair salons, is planning a large, national expansion by franchising its outlets in new locations, beginning with New York.
The privately held company, which owns nearly 1,000 salons clustered on the East Coast and around Chicago, has signed a franchise agreement with HCFUSA, a group of investors headed by New York entrepreneur Stuart Katzoff. The group has agreed to open 40 Hair Cuttery salons on Long Island, beginning with two in Carle Place and Oceanside by the end of October, Hair Cuttery executives said.
"New York is a fantastic market," said Tom Fihe, the company's vice president of franchising. "We knew we'd get a lot of attention in New York."
Dennis Ratner and his former wife Ann Ratner started what is now the Hair Cuttery chain with a salon in Springfield in 1974. The Ratner family has been shearing Washingtonians for generations. Dennis Ratner's father started the Louis Creative Hairdressers chain in 1936, and according to his 1995 obituary in The Washington Post, Louis Ratner introduced the "$5 permanent wave" in his salons, earning him the nickname "$5 Louis."
His son's company has a reputation not only for $14 unisex cuts but for keeping corporate strategy close to the vest. The franchise announcement is a new direction for the 31-year-old company, which is owned by Creative Hairdressers Inc.
Industry observers said that franchising might signal an aggressive move to capture more of the market. Coiffure competitor Supercuts, a division of the Regis Corp., has been franchising since 1979 and has more than 2,000 salons across the United States.
"Franchising is certainly a quicker, easier, and more cost efficient way of finding employees to work for your branded business," said Richard Rennick, chairman of the International Franchise Association, which counts both Regis and Hair Cuttery as members.
Company executives said franchise groups must agree to open at least five stores in a geographic area. The fee for the first franchise is $25,000, and the second to fifth is $20,000, continuing on a sliding scale.
Hair Cuttery will continue to own stores in already established areas, but will franchise in new regions. "The franchise strategy allows us to grow at a more rapid pace and to grow into geographic regions where we are not already in," Fihe said.
Fihe said another franchisee will open salons in the Phoenix area.
The company has 102 stores in the Washington area. Hair Cuttery reported $331.6 million in revenue in fiscal 2004, and individual salons average $408,000 in revenue per year, the company said.