On September 14th, California Governor Jerry Brown signed into law the Professional Salon Products Labeling Act (AB 2775). Previously, ingredient labels were not required on professional salon products, leaving workers and consumers in the dark about harmful ingredients. Thanks to AB 2775, companies that sell professional nail, hair, and beauty salon products in California are now required to list ingredients on product labels. As companies move to comply with this new labeling law, the impact will be felt across the country. About time everyone!
At first blush, the beauty industry could be thought to cater only to the glamorous, or perhaps the vain, or maybe just those in the spotlight. And it does – along with everyone else! The industry is built on the product and services that help us look our best – whatever that best may be. It’s more diverse than you think and it’s certainly not just the makeup, hair color and perfume – it’s also the deodorant, toothpaste and even the ear hair clippers. It’s not just the salons – it’s the barber shops, waxing franchises, massage franchises and a whole lot more. It is every product and service dedicated to helping us look – and smell – the way we want, or the way we believe we should for professional reasons. And our definition of beauty is malleable and ever changing – providing never ending opportunities for the industry to innovate.
Historically trends were driven by celebrity taste-makers through their personal choices or professional endorsements. Those days are gone, or nearly so. 82% of women now believe that social media drives these trends. It’s a constant flow of information and opinion from not just trendsetters or celebrities, but from friends and friends of friends and an entire universe of strangers. But however they are set, there is a large industry ready, willing and able to cater to them. It is resistant to economic downturns and poised for even more growth. For the entrepreneur there are plentiful representative sales opportunities within companies like Avon or Arbonne and many more traditional franchising opportunities providing a slew of services.
As it turns out, it takes a lot of effort to keep us looking and smelling our best – an absolute army of products and services, in fact. Cosmetics, skin care, hair styling, hair coloring, hair removal, nail salons, tanning salons, massage parlors and luxury spas, shower and shaving product, perfumes, colognes…and a whole lot more. And that’s where it starts to get interesting – within each of these segments are products for every different skin tone or texture, allergy, age, hair type or color, sex – even the time of day! It is a level of diversity and nuance that may go unnoticed to the casual observer. Some of us, in fact, are overwhelmed by all those rows of shaving cream. But increasingly we are the minority – most consumers care, are discerning, and will try a number of different products before finding something that works. Once they find it, however, brand loyalty – whether for a shampoo or a particular salon – is extremely strong.
Producers differentiate themselves through their target demographic markets, price point and with different manufacturing processes. Products that promise no animal testing or that are all natural, for example, have loyal, niche markets and can often charge a premium.
Service providers compete primarily through price, location as well as their target demographic markets. Types of service and the related products that are offered are vital to profitability. Hair salons and barber shops, for example, rely on 5-15% of their revenue from hair care product sales. The beauty industry is known to be resistant to economic downturns – even faring well during the Great Recession of 2008. Though consumers tend to be more price conscious during those times, they do not stop spending. So in today’s environment of rising per capita incomes the beauty business is booming. In 2015 the industry generated $56.2 billion in the United States. Hair care is the largest segment with 86,000 locations. Skin care is a close second and growing fast, expected to have revenue of almost $11 billion by 2018. This growth is being driven in part by a generally increasing awareness of the importance of skin care, but also specifically due to an increase in the market for men.
According to the Bureau of Labor Statistics, there are nearly one million people employed in the primary service segments of the market, and there are strong growth expectations. Clearly this is an industry on the rise:
As mentioned above, it’s important to remember that many beauty franchises derive up to 15% of their revenue from product sales; putting the right product on the shelves can make or break a business. Some manufacturers have a franchising distribution system of their own and even offer training programs, or partner with a particular service provider. With strong and growing demand, employment estimates through the roof to meet that demand and a strong history of being a steady business even in turbulent times, the beauty industry continues to provide fantastic opportunities.
About frigging time, say goodbye bye to free labor. People deserve to be paid. Especially for sitting there waiting for a customer. Time is money. The ol trick of hiring a professional and giving them a chair and telling them they have to build up there clientele when they answer a advertisement for employment will be gone. That old trick is history, and should teach salon owners labor is not free. Good for the industry this should keep the owners honest. The industry was built on free labor. Pay back time. How can a professional come to work worrying about rent, food, electric, transportation etc if they work on commission. Salon owners will say I can’t do that, then you shouldn’t have opened a salon. Now I will wait for all the know it all’s to reply. Please do I love debate. I have watch professionals I have worked with in my 33 years of this industry, ripped offed, taken advantaged of, and done so much wrong to they have gotten out of the profession. Its interesting how salon owners can come up and blame the professionals. And assume that with your words that all are alike. “Have to pay people to sit in the break room, on their cellphones, bitching about how they are not busy.” Well not everyone in this industry does what you say. I’m glad to see this, it should have happened along time ago. I love it! Boo Hoo for the salon owners, good for the employees. The employees are what make you. About time this happened, I love all the new ways and new roads the industry is changing. Be your own Boss everyone Don’t live other peoples dreams. You will have nothing in the end. Especially in the Beauty Industry!, Hah!
Note: Although CA employment attorneys were consulted when researching this article, we highly recommend that you contact a legal representative to discuss your rights and responsibilities on this topic. Strategies is not a legal counsel and the contents of this article should not be considered as such. We will be updating this post as more information is presented to us.
Commission salons and spas in California were just given the ultimate “Bad Hair Day”.
With the passage of California Bill 1513 “piece-rate legislation”, the rules have completely changed on how salon and spa owners can compensate their stylists and massage therapists.
For all intents and purposes, the traditional commission model is no longer compliant in California. Strict new laws now require salons and spas to drastically alter they way they compensate their commissioned employees.
And unfortunately, the potential financial impact of Bill 1513 on many salons and spas could be catastrophic. See the full bill here.
Piece-rate vs. commission compensation:
As per the Labor Code, compensation for salon/spa services is technically labeled as “piece-rate” work, and not commission. Confused? Let’s look at the Labor Code’s definition of each classification:
Because stylists and massage therapist are rendering services and not just selling them, their work is considered “piece-rate.” Why does this labeling matter? Because Bill 1513 only applies to piece-rate work and not commission work. But again, the Labor Code’s definition of commission is not the same as the salon/spa industry’s.
Big game changer #1…
Effective January 2016, all “piece-rate” California salons and spas must track, report and pay their stylists or massage therapists for “non-productive” and “rest/recovery” time.
“Non-productive time” is defined as the time employees are required to be at work, but are not actively servicing clients. This includes time…
“Rest/recovery times” is defined as time…
In other words, every minute that services providers are in the salon/spa and are not either servicing a client or on break, needs to be tracked, reported and compensated for.
The “non-productive” and “rest/recovery” pay rates must be at least the California minimum wage.
Big game changer #2…
And it’s a biggie…
The law states compensation for “non-productive” and “rest/recovery” time must be a separate pay rate from the rate paid for when services are being produced.
This means you are no longer allowed to average the total dollars paid by the total hours worked and let that cover both “productive” and “non-productive/rest” hours.
Previously, as long as the averaged hourly rate equaled or surpassed minimum wage, all was good.
This is no longer the case.
Big game changer #3…
In addition to aforementioned restrictions, Bill 1513 also contains one final crippling blow for California-based commission salons and spas:
Now let’s do some math…
How this scenario would look under Bill 1513…
Salon Sacramento’s back wages due on all “non-productive” hours since July 1, 2012
So where do commission-based California salons and spas go from here? One thing is clear, the days of easily calculating 50% for them and 50% for the house are gone.
Here are four employee-based compensation structures for California salons and spas moving forward:
As counter-intuitive and debilitating Bill 1513 is to the California salon/spa landscape, it is not something not to be taken lightly. If you are not pro-active in making the necessary changes now, you could be facing state fines, employee lawsuits for back wages or both.
Your first step should be to talk to a legal representative to learn what your legal rights and responsibilities are with Bill 1513. They will also have a very firm understanding of the bill as more details and cases are presented.
Your next step should be to restructure your pay structure to meet all compliance standards. If you would like one-on-one help from our team of Certified Strategies Coaches to quickly execute the restructuring of your compensation system to Team-Based Pay, click the link below. Not only will we ensure you meet all Bill 1513 guidelines, we will help you implement a pay program that can increases sales and profits, motivate your staff to grow the business, and provide world-class customer service.
Note: We highly recommend that you contact a legal representative to discuss your rights and responsibilities on this topic. Strategies is not a legal counsel and the contents of this article should not be considered as such. We will be updating this post as more information is presented to us.
Comprised of a diverse yet interrelated set of business lines, the beauty industry helps us look and smell our best. Before we leave the house each day, we have likely undergone our personalized beautification ritual. Included in this ritual is the daily shower and shave, the weekly nail trim, and the monthly haircut. And increasingly we are taking a more holistic view of our health, and our beautification ritual may now include a periodic massage and trip to the spa. But our concern with our appearance is hardly anything new; indeed the beauty industry has been expanding and growing for all of recorded history. For the interested entrepreneur this continuing growth and evolution offers a diverse menu of opportunity.
The beauty industry today encompasses far more than cosmetics and skin care products, though they are still a significant portion of the sector. A wide range of services and products are available to help us put our best face forward, and the beauty industry now also encompasses hair styling and hair removal, nail and tanning salons,massage parlors, shower and shaving products, perfumes, colognes and more. Many people now treat their beauty ritual as an escape from the hustle of the information age, whether its a few minutes spoiling oneself with a high-end product or a full day at a luxury spa.
Lotions, Treatments and Baths. Oh my!
Beauty industry opportunities can be broadly separated between products and services, though many providers offer both. Within both products and services, however, exist a wide range of business models based on target market, production processes and location.
From exfoliating soaps and volumizing shampoos to anti-wrinkle creams, the beauty industry provides us with choices galore to keep us looking younger and healthier. Cosmetics exist for every style and taste, as well as every skin tone, texture and even allergy. Rows of toothpaste stretch off into the distance at the local retail outlet, and it is no longer a choice only of brand, but between whitening, tartar protection, flavor, packaging styles and more! And a similar story is told in the aisles for perfume, deodorant and hair coloring. Certain businesses also distinguish themselves through manufacturing processes such as using all natural ingredients or a refusal to use animal testing on products.
While the diversity among service providers is not quite as extensive, there is considerable differentiation between offerings based on price, location and target markets. Some businesses target the inexpensive, fast hair cut market while others focus on providing a luxury spa experience. Franchise opportunities exist for hair salons, skin treatments, nail care, and tanning. Niche providers offer products and services focused on children, weddings, and fashion, among others.
Different Beauty Franchise Opportunities
Beauty Industry Trends
Such diversity and innovation exists because we demand it. The beauty industry continues to expand globally, with some projections claiming 8.5% growth by 2014; revenue growth in 2010 is estimated at 3.3%. Several trends support this expansion and promise continued profitability into the future.Globally, rising per capita incomes and greater access to international markets are increasing spending on discretionary items such as perfumes and cosmetics. Though the recent economic turmoil had decreased spending on some discretionary products in the United States, purchasing of beauty products has remained strong. Consumers did tend to be more price-conscious however, with over 70% of survey respondents claiming to give mass market products more consideration over high-end products during the downturn.
Perhaps not as surprising as it once was, one of the fastest growing segments of the beauty industry is products and services aimed at men. Traditionally focused on female consumers, men today are gaining increasing attention from the beauty industry. Of course most of us have been using deodorant and toothpaste for several months already, but increasingly men are being targeted for body sprays, specialty hair products, lotions and even nail care. Salons offer a menu of pampering services for men, including cuts and shaves, facials, massages and manicures.
Consumers of beauty industry products tend to be brand loyal, and share what works for them with their friends. 58% of those surveyed claimed that personal recommendations weigh more heavily than celebrity marketing, and only 44% bought a particular product for its claim of specific product attributes. Like many things, beauty products gain a level of familiarity and comfort for the consumer, and switching to a new product often takes some extra incentive. Popular and successful marketing campaigns in the beauty industry often include a free sample and discounts for referrals to lure new customers in, and loyalty programs to keep them.
Beauty Industry Franchise Opportunities
From product innovation, organic industry growth and continued growth into the male half of the population, the beauty industry continues to offer a diverse set of profitable franchising opportunities. Beauty franchises exist across the space with dozens of strategies reaching all types of consumer.
Retail opportunities include brick-and-mortar store locations as well as home-based businesses, and span across cosmetics, skin care, hair care, tanning and more. Frequently producers of beauty industry products will have a franchising distribution system, or even have training locations for service providers. Cosmetic and skin care entrepreneurs offer specialized services such as nail care and tanning, a complete menu designed for the full day experience and everything in between. Some salons offer an exclusive membership experience and others specialize on walk-in business.
Hair care opportunities exist for barbers and stylists alike, with a range of different franchises available based on cost, location, and gender. Many male-focused franchises offering everything from the basic barbershop to “the ultimate relaxed grooming experience” have been springing up to complement the traditionally female-focused salon offerings. Franchise chains devoted to children offer a more entertaining environment for kids. There are also businesses focused on hair removal and coloring. Eco-friendly salons such as the Splish franchise offer hair care in an environmentally conscious environment.
As we can see, the beauty industry encompasses a wide range of products and services, and franchising plays a major part in bringing them to the consumer. As the industry continues to grow and evolve, profitable opportunities will abound…the hard part is choosing which one!
Injuries from cosmetic products can come in a wide variety of forms — from allergic reactions to infections and other complications. There are two main legal theories that a person injured by a cosmetic product (the plaintiff) could sue under: product liability and breach of warranty. This article discusses what a plaintiff in a cosmetic injury suit must prove under either theory, cases specifically related to allergic reactions, and the possibility of class action lawsuits.
The most likely theory to be used in a lawsuit involving cosmetic product injuries is product liability. An injured plaintiff can sue both the manufacturer and/or the seller (the defendant) of the cosmetic product if his or her injury was caused by a defect, a defective design or improper labeling. Most states follow what is called the “strict product liability” rule, although a few still use traditional negligence rules.
A plaintiff suing under a strict liability theory simply needs to prove:
This kind of theory is called “strict liability” because many of the requirements in a standard negligence case, like proof of a specific duty of care owed to the plaintiff, are not included. Most states adopted strict liability for mass-marketed consumer products because, among other things, the manufacturers needed to be financially responsible for their products, and not be allowed to escape liability simply because of the difficulty plaintiffs faced trying to prove negligence claims.
In a negligence case (in those few states that still use this theory for consumer products), the plaintiff will need to prove:
A cosmetic product injury case based on a breach of warranty theory will be the same as other standard breach of warranty cases.
An injured plaintiff could sue for breach of an express warranty if the seller or manufacturer made specific guarantees that a product would have specific effects that the product did not have (note that this theory might not fit with most cases involving an actual injury).
The plaintiff could also sue for breach of an implied warranty that the cosmetic product was fit for normal use, i.e. the implied guarantee that no normal cosmetic product would cause an injury if used properly.
Finally, the plaintiff could sue for breach of an implied warranty that the product was fit for a specific purpose, i.e. that the defendant knew the plaintiff wanted to use the product for a specific purpose, but the product caused an injury when the plaintiff tried use it.
There are many state and federal laws controlling breach of warranty claims. Some breach of warranty claims may not be appropriate when the plaintiff is suing for physical injuries, if the law only allows compensation for the money lost on the product (what is called “economic damages”).
Some warranty laws, however, do allow a plaintiff to sue for physical injuries. Perhaps more importantly, proving a breach of warranty can help prove a strict liability or negligence claim. A plaintiff is not limited to suing under one theory, so including a breach of warranty claim in a cosmetic injury lawsuit will generally help a plaintiff’s case overall.
If a manufacturer knows, or should know, that a product might cause an allergic reaction in some people, injured plaintiffs could potentially sue the manufacturer for failing to warn about the allergic reaction under a strict liability or negligence theory. A breach of warranty theory might also be possible if the allergic reaction is not extremely rare, i.e. the product was not fit for cosmetic use because some percentage of the population was allergic.
If a cosmetic product causes many or all of its users the same kind of injury, then a class action may be possible. In a class action case, multiple plaintiffs with the same kind of injury from the same source sue the defendant in one lawsuit.
If someone is injured by a cosmetic product, they or their attorney should research whether there is already a class action case or a settlement fund for people injured by the product. Often, even though the case has settled, there will be a fund to pay those who were not a part of the original case.