Just Cuts kiosk highlights shrinking franchise operations

Prospective franchisees could be set for a rise in smaller retail units, after hairdressing franchise chain Just Cuts unveiled a kiosk concept at a Melbourne shopping centre.

Just Cuts, founded by Dennis McFadden, has unveiled a haircutting kiosk at a Westfield shopping centre in the Melbourne suburb of Doncaster, in a bid to attract time-poor consumers.

According to McFadden, the kiosk will complement existing Just Cuts salons already operating within shopping centres.

“This is about convenience for our clients,” McFadden said in a statement.

“The kiosk provides this by being easily accessible to those running a quick errand in the centre or grabbing a bite to eat in the [nearby] food court.”

Luke Manning, Just Cuts business development manager, says kiosks could provide an additional income for existing Just Cuts franchisees, or an entry point for new franchisees.

“The first one we built ourselves – it is a test site… It’s a company-owned salon, but we’re looking at someone taking it over in the future,” Manning says.

“We’re looking at getting a few up and running… We’re in quite a unique position in that a lot of our franchisees have second and third sites.”

“That’s why we’ve developed the kiosks – to have a look at our current franchisees getting a second site or putting it in a [separate] small site with, say, just a Woolworths.”

According to Manning, Just Cuts would love to establish 50 kiosks in the next two years, saying hairdressing services have been sheltered from the impact of the economic downturn.

“In bad times, hair still grows,” he says.

Manning says the outlay for a normal Just Cuts site – which is typically 30 to 40 square metres – is anywhere between $160,000 and $260,000.

For a kiosk site, he says a franchisee could be up and running for $100,000, so it could be an ideal option for new franchisees with less capital.

“Imagine building a $260,000 site and then it doesn’t work. That’s heartbreaking. We’ve only had it happen a handful of times,” he says.

“A lot of people are looking to have a business with less risk. The kiosk is transferrable – that’s the beauty of the kiosk.”

“[In addition to existing franchisees,] we would hope someone would open a kiosk where there’s not a Just Cuts already, and then maybe take on a salon.”

However, Manning says setting up a kiosk within a shopping centre is more difficult than opening a normal site.

“Because you’re in a high foot traffic area, it’s very regulated on what signage you can use, and what materials,” he says.

“We started with a different [look for the] kiosk – we’ve been through a few images… It hasn’t been cheap.”

This article first appeared on StartupSmart.