CHRISTINA RUSSELL - CEO Sola Salon Studios

Segment: Health & fitness Units: 505 Locations: U.S., Canada, Brazil

HOW HAS COVID-19 AFFECTED YOUR BRAND?

This pandemic has had an impact on every company, and ours is no exception. Our goal was to provide calm leadership in the face of this storm across 505 locations, 150 franchise owners and their teams, and the 15,000 independent beauty professionals who make Sola their home. We saw impacts starting March 9 when the media began reporting on the first fatalities in Seattle. By the end of March, 501 of our locations had closed.

When news of the outbreak hit, our first focus was on safety. We immediately implemented enhanced cleaning and protection measures based on CDC guidance. Our goal was to ensure safety so we could stay open for our stylists. As independent beauty professionals, this is their sole livelihood, so this decision was critical to their financial survival. As the virus spread nationwide, we understood that closure was imminent, and we prepared to do our part to flatten the curve. When the closure mandates rolled in, we were able to keep step with the needs and systematically shut down.

The biggest anxieties have been financial. Our business is founded on putting our stylists first, and our franchisees made it clear from the beginning that they would not charge rent during the closure period. That’s a tough decision because our franchisees rely on that rent for their income, and they still owe rent to their landlords and have many other expenses beyond that. We have the added challenge that salon suites as a category is excluded from the SBA Franchise Directory, which makes it unlikely that our franchisees will qualify for any support under the CARES Act. Even if we did have PPP support, our franchisees are facing a huge rent debt at the back end. This is true for all location-based businesses. Business interruption insurance is declining claims, and landlords are expecting these business tenants to pay back the rent from this zero-revenue time frame. Franchisees often have personal guarantees on these leases, and they will be saddled with tens of thousands of dollars in debt, which scales up quickly for larger multi-unit owners. This has a significant impact on every small business, Sola included.

At the corporate level, we’re working to help organizations like the IFA influence policymakers to solve these issues. The CARES Act is a good start, but more needs to be done. We’ll do everything we can to promote a positive outcome.

WHAT ARE YOU DOING TO HELP YOUR FRANCHISEES THROUGH THIS?

Starting March 9, our entire team shifted focus to Covid-19. We put together a task force that continues to meet daily, and we focused on strong leadership, communication, guidance, and support. Our goal was to be the calm in this storm for the people we serve. We started virtual meetings and daily communications with our franchisees to quickly learn best practices and share guidance. We provided resources on CDC cleanliness standards, supporting stylists, and managing cash flow, including guidance and scripts for talking with landlords and other vendors about payment abatement and deferral. We also worked with the banks who lend to our franchisees to facilitate deferral options to help them retain cash. We also put a deferral program in place for March royalties and ad fees, and we’ll collect no royalties or ad fees for April and beyond until owners are back in business. We continue to assess and meet the needs as the crisis evolves.

We’re using this quarantine time to help franchisees deepen their connection with their stylists. We’re working together to provide support and community during this time of isolation, and our social media engagement has never been higher. We set up a Covid-19 Resource Center to help both Sola and non-Sola stylists navigate governmental financial support and grant programs. We’ve also put out webinars, blogs, and other content to keep them informed and inspired. Through our beauty industry partners, we’ve brought in big names in the beauty sector to host virtual education events to get everyone ready to come back.

More recently, our focus has shifted toward reopening strong and working with the IFA to solve the shortfalls in the government assistance. We continue to post daily updates and host webinars at least weekly to keep everyone connected with the latest developments. Our goal is to uplift our franchisees during this time and for them to know they are supported. We’re confident that Sola franchisees are well-positioned to weather the storm, and we expect they’ll open their doors at full capacity when mandates are lifted.

HOW ARE YOU SUPPORTING YOUR CORPORATE EMPLOYEES?

We have been fortunate to retain our entire staff, and they have been critical to the support we’re providing for our franchisees. Our home team is an important part of our Sola community, and they’ve been heavily engaged in tackling the issues presented in these unprecedented times. Their safety has been a priority as well. In keeping with social distancing guidelines, we shut down our home office on March 17, and our corporate employees have been working from home. At the time of this writing in mid-April, we anticipate this will continue through at least April 30, when the stay-at-home order is expected to be lifted here in Denver. [Editor: It was lifted May 9, with restrictions.] We connect with our team daily through Slack and handle most of our calls over video chat on either Slack or Zoom. It’s worked well, but everyone is eager for real human connection.

HOW ARE YOUR FRANCHISEES SUPPORTING THEIR EMPLOYEES?

Most of our franchisees have retained their teams as well. The teams are working from home and engaging with stylists on an almost daily basis to keep them connected. Where they are able, some franchisees are focusing teams on refreshing their locations so stylists return to fresh paint and décor. We have also heard reports of high leasing activity in some markets, and franchisees are retaining staff to take these calls. We’re happy for the business, but it’s actually a sad sign of the devastation this crisis is causing for many independent salons, who are announcing permanent closure in the face of this crisis. Their stylists are looking for a home and reaching out.

WHAT ARE YOUR FRANCHISEES DOING FOR THEIR CUSTOMERS?

In our business, our customers are the hair stylists, estheticians, nail technicians, and massage therapists who rent out space in our locations. With each of our locations featuring a collective of 20 to 40 boutique, move-in-ready salon studios, our franchisees have 30 customers on average. This is an attribute of our business model that we love and that still works during a time like this because our franchisees are able to connect with their stylists on the same level; they mutually understand what it’s like to run a small business.

We pride ourselves on helping thousands of individuals pursue their entrepreneurial dreams and live their best lives. Our hearts go out to the 15,000 independent beauty professionals we support whose livelihoods have been affected by not being able to provide their services. We truly feel that we are in this together with them and have worked tirelessly to implement other avenues meant to guide and support them during this time of uncertainty. First and foremost, for any locations that have been mandated to close, we’ve waived or deferred all rent fees. It’s our hope to alleviate any additional financial burden stylists may be experiencing while they are unable to work.

The entire Sola team – from franchisees to corporate employees – is doing everything in our power to ensure the well-being of our beauty professional community. Since we began learning about Covid-19 and its predicted impact, we’ve been continuously sharing tips with stylists on how to manage through the uncertainty and ways to remain connected with their clients during separation. As noted, we launched a Covid-19 Resource Center that includes blogs, webinar recordings, a virtual education calendar, financial resources, downloadable social media content, inspiration, and more, meant to serve as an all-in-one place for them to go to and reference as needed. As part of this, we’re providing ongoing virtual education opportunities – both artistic and business-focused – to keep them engaged, and the beauty industry has partnered with us in many ways to help support our community. For example, we recently hosted a Facebook Live with a well-known industry educator, Daniel Mason-Jones, to discuss how our community of stylists can go live on social media and engage with their clients even while they’re out of the salon. We also hosted a Sola webinar with more than 650 stylists registered.

We recently launched our own podcast, Sola Stories, where we’re sharing stylist stories, business and marketing tips, and best practices to help keep our community inspired. The first episode featured our Chief Marketing Officer Jennie Wolff and Culture Ambassador Kim Bennett, who discussed how the Covid-19 crisis is affecting our independent salon owners and the greater beauty industry. On an ongoing basis, we’ll continue to provide our stylist community with inspiration, feel-good stories, business tips, and more – not only to get their minds off Covid-19, but also to brighten their day. While our franchisees maintain the strongest relationships with their customers, we have provided them with simple email and text templates so they can feel confident communicating about the new programs and tools launched for our collective customers.

HOW DO YOU SEE THE FUTURE OF YOUR BRAND, OPERATIONS, MARKET, ETC. POST–COVID-19?

We are fortunate to have a strong brand, and a strong, engaged community at every level. We were inspired to see how everyone pulled together during this unprecedented time. Across the board, we remain optimistic that we will reopen full as soon as the mandates are lifted.

Our stylists have developed long-lasting relationships with their clients, and people will be eager to get back into the salon. Many of our stylists report that they’re already booking appointments assuming they’ll be open on the dates their local mandates lift. We also believe our 1-on-1 environment lends itself to safety, and we’re preparing to roll out enhanced and well-communicated cleanliness protocols. Each stylist operates in her own closed studio, so that’s an added benefit that will make clients feel secure.

Finally, we don’t believe we’ll experience any unit closures, but a slowdown in development is possible. We’re still teed up to open more than 70 units this year, but many of them are in jeopardy given the cash flow issues and the greater concern about managing the burden of deferred rent. We’re going to continue pressing for government support to address this issue on behalf of our franchisees and small business as a whole.