Episode Transcript
[00:00:00] Speaker A: Welcome to Create wealth through Franchising. I'm your host, Kim Daly.
Whether you're a CEO, a military vet, a real estate investor, or simply in career transition and ready to take ownership of your future, with each episode, you're going to learn valuable insights and hear inspiring stories from within the franchise industry.
On that note, my guest stories are their own. And as a franchise consultant, I do not make personal brand endorsements or earnings claims, but I do educate, motivate, and inspire dreams.
Now onto the show.
[00:00:44] Speaker B: Welcome back to Create Wealth Through Franchising podcast and Kim Daily TV in the house. Today, a very special friend. His name is Patrick Elgin. He is a multi unit franchisee in the Twin cities of Minneapolis. Patrick, welcome to the studio of Kim Daly tv.
[00:01:03] Speaker C: Hey, thanks for having me.
[00:01:05] Speaker B: I am so excited for you to be here today. So listeners out there, you know that Kim Daly is a little bit obsessed with the salon suite model. I know that you people out there think franchising is Chick Fil a and Jersey Mike's. And then you come to the Daily Coach and she's like, we're not talk about food. We're going to talk about better opportunities. Opportunities where you can make more money than you can in food, work less, have fewer moving parts. Well, Patrick is going to share his experience of building a mini empire with the salon suite model in the Twin cities of Minneapolis. So, Patrick, start us at the beginning. You own 14 solar salons, but you didn't start with 14, you started with one. So take us back to the beginning and then let's talk about this journey that you've been on.
[00:01:57] Speaker C: Yeah, thanks so much for having me, Kim. So I got involved with Solar Salons in 2012. Got involved actually, while I was deployed in Kuwait with the army and signed my franchise paperwork and everything. When I came back to Minnesota, we started working on our first couple locations. And you know, that was over 10 years ago and we've been opening up location ever since. About one a year. Yeah. Just keeping it going while it's working.
[00:02:28] Speaker B: It's really amazing. So wait, so you were doing due diligence on a franchise overseas? You were that guy in somebody's pipeline?
[00:02:37] Speaker C: Yeah. And what's even crazier about it is, you know, we're doing this on Zoom and everybody's very familiar with Zoom. Now. Zoom didn't exist. I don't think FaceTime existed. We were doing Skype, if you remember Skype. I do. I think I might have been like one of the first ones that ever did their due diligence. Via video call, which is kind of cool, given where the world has gone.
[00:03:03] Speaker B: It really is cool. We're not. Listen, if you're, like offended like that guy, what does that mean? Kim Daly? Look, when people reach out to me and they're overseas and they're like, I'm trying to set up the life that I'm going to come back to, the majority of those conversations don't go anywhere. Right. Because so many things have to happen. And it's really, really hard to conduct due diligence on a business when you're not in the market and you're not like, local. So it's those reasons. But obviously sometimes it does work out okay. So I'm very curious. I mean, I love salon suites, but what do you love about salon suites such that you now have built? You own 14 locations?
[00:03:47] Speaker C: Yeah. Didn't know a ton of it going in, but probably in 2012, salon suites were still very new. Not a ton of information out there, but some very respected names were getting into it. Don DeBolt, Eric Van Horn, and some other folks were all jumping in at the same time that we were. And then as I got into it and I opened up those first couple locations really helped me understand and we built a rhythm. And when something's working, you just keep doubling down on that. And that's what we've been doing. That's how it's gotten to 14. What's great about salon suites is very low employee model. There are not a ton of moving parts. When you compare it to, say, a fast food franchise, which has got to be 100 times more complicated than what we're doing with the salon suite business. Not to say that the blocking and tackling isn't really important and you don't have to pour your heart and soul into it. You definitely need to do that. But it's an easier business to execute well on than some of these more traditional franchise models.
[00:05:00] Speaker B: When you were exploring opportunities, were you solely focused on Sola or did you compare and contrast to other types of opportunities? Did you use a franchise consultant? For those of you who don't understand why I'm asking that, Patrick Elgin is the son of the CEO of FranChoice, the company that I have been a part of for 22 years. Jeff Elgin is the founder of Franchoice. And of course, we are a company. The franchise consultants that go out and help people explore franchises.
[00:05:30] Speaker C: Exactly right. Anyone watching this podcast, I would absolutely endorse going out there and working with a franchise consultant. That's the absolutely the best Way to do it.
[00:05:39] Speaker B: Okay, so you. So you're in Kuwait. And thank you for your service, by the way. And are you retired 100% or are you in the reserves?
[00:05:48] Speaker C: So when I got back from Kuwait, I did stay in the guard for several years after that. I am out now. And actually I've taken up firefighting, volunteer firefighting, to kind of fill that void in my life.
[00:06:00] Speaker B: Wow. How noble of you. That's amazing. And I know you have a few children. I've heard about the grandchildren. Yes, that's the apple of the eye. So when you were thinking about salon suites, going back to my original question, did you just kind of dial in? It seems the answer was probably yes. Did you only explore Sola or did you compare and contrast to other brands? And knowing what you know now, like, would you do that again, or is that an unfair question just because of your connection to the inside of the industry?
[00:06:32] Speaker C: Yeah, you know, in 2012, there was no question Sola Salons was the company to go with. Everything else was not even off the ground yet in a material way. There could be no doubt who you were going to sign with. And Sola had a lot of white space. I would still say there's not really a question in my mind that Sola Salons is the preferred salon suite to go with. But there might be some white space issues with Sola just because in 14 years, we've gotten a lot bigger, a lot of markets are sold out. But I would always be checking with Sola first. There's just advantages in terms of technology and operations and processes that go along with that size. And then also, I think Sola has just recruited a very strong batch of franchisees that you would be peers with. And so much of a franchise is based upon that peer group and the way that they're willing to support you and contribute to your success.
[00:07:34] Speaker B: So in with 14 salon suites today, tell us a little bit about, like, the structure, because you didn't start there. You started with a couple, and then you said you've been growing at the clip of about one per year. I'm sure you've learned a lot of lessons, which we're going to come back to. But this is typically a model with like zero to one employees. Right. So as you've scaled this up, have you maintained, like a small leadership team? Do you have a manager? And how much time, as the owner of this, like, mini empire, do you actually put into your business on a weekly basis, let's say?
[00:08:09] Speaker C: Yeah. So we have 12 actual employees for 14 locations. And so you're right, it's a little less than one employee per location. And naturally if you only had one or two locations, then that employee would be kind of a general list. At our scale, it's a little bit more specialized. We have sales staff and operational staff and then a couple office and administrative type positions as well. And then I do work full time in the business and I'm kind of in the realm of expansion, adding new locations and then also the finance aspects of the business.
[00:08:52] Speaker B: This is always the model that I pitch to people when they're like, I want to keep my full time job and be tethered, you know, for maybe it's for options or healthcare or just not ready to leave my W2. But I really love the idea of building something that I can own and control and. But I guess it's at the scale that you're at today, you find that, you know, being full time is beneficial for your success.
[00:09:16] Speaker C: Yeah, I think if you had one location then 10 hours or 15 hours a week would likely do the trick. And two locations, maybe it's 20 or 25 hours a week and then certainly you could hire that out. But I've got a lot into this at this point. I also feel like I have a little bit to offer as well. And so keeping my finger on the pulse is good strategy.
[00:09:41] Speaker B: Let me back up because for those who don't follow my podcast and this is the first episode you're listening to and you're like, what the heck is a salon suite? Kim Daily this is a rental unit, right? So this is where you go out and you build out on average say 25 individual suites. And then you're bringing in licensed beauty professionals who rent space from you and so they operate their business inside, paying you weekly rent. So it's a beautiful and simple model. During COVID it was one of the most amazing businesses to watch because you have that one to one client, you know, beauty professional like ratio in a suite typically didn't really experience like and maybe you can speak to that a little bit. But compared to other businesses, it didn't really experience the hardships or the downsizes. And then as Patrick said back in 2012, you know what, Solo was the only salon suite that we had here at Branch Royce. And today we have options in our inventory. Sola it really is the McDonald's or the 800 pound gorilla. But as Patrick said most of the time when I'm territory checking it, it's completely sold out. And so it's like we're playing with other options that have different unique advantages or, you know, just things that are different. Right. Like McDonald's and Burger King both sell a burger, but they do a little bit different. And then you throw in Wendy's and then you throw in five guys and the same thing. In the salon suite world, everybody has a little bit of a different spin on how they come at the market and supporting their franchisees. So how did I do with that summary?
[00:11:10] Speaker C: It's great. I describe it as kind of imagine a miniature shopping mall. And every store in the shopping mall is some sort of a beauty service, typically hair, but also massage and nails and skin care. And you walk into this facility and you have all these different storefronts of independent professionals, often women, often minorities, getting a chance to own a business for the first time.
[00:11:37] Speaker A: Hey, Daily Coach fans, if you're loving this episode, please do me a quick favor and leave me a five star rating and a short review. Your feedback fuels my growth and rankings and shows others that this podcast is valuable. Now back to the show.
[00:11:55] Speaker B: It sounds like it's a girl's dream place to Visit.
[00:11:59] Speaker C: Okay.
[00:11:59] Speaker B: Across 14 units, how many beauty professionals run their businesses out of your salon suites?
[00:12:05] Speaker C: About 650.
[00:12:07] Speaker B: Oh, my gosh.
650 small business owners have an opportunity because you own 14 salon suites. That's amazing. Do you ever, like, sit back and, like, feel, like, so much pride and satisfaction for that?
[00:12:24] Speaker C: It's a great business. There's lots of businesses that you can feel really good about doing sleep well at night, and this has certainly given people a chance to make their dreams come true.
[00:12:34] Speaker B: I've been a franchise consultant for 22 years. If you look at my placements and you multiply that times 22 years, it's nearly 1,000 small business owners that I've created over the past two decades of my life. Like, amazing. Like, when you have a business that literally changes people's lives or gives other people an opportunity, it's so awesome. Good for you. It's just like, oh, that's why we do it. Right. And to the extent that you can serve more people, then you can earn more money.
[00:13:01] Speaker C: Absolutely.
[00:13:02] Speaker B: Okay, so going back there, you started out just building the business, and then you told me before we hit record that you now own a certain number of buildings. So talk about some of the lessons that you've learned, because I think this is a very simple model that on the outside, sometimes a candidate would say, well, why would I need a franchisor to do that?
[00:13:24] Speaker C: Yeah, I think kind of Twofold. The first is the number of mistakes that you're going to make the first time out the gate. They're going to save you a thousand hours on that first location. But then there's just a lot of scaled costs that your royalty and your marketing fund go to pay for. And you're getting that brand name and the website convention and the support network and it's a pretty small price to pay to buy into a system. And that's the same for any sort of franchise concept. It's a lot easier to be part of a team than to be a lone wolf.
[00:14:01] Speaker B: Yeah, it really is. Like no matter what the business is, somebody could say, well, you know, back in the day, why do I need Subway to open a deli? So you know, why do you? Along the way the brand wakes up and the brand equity even has its own value minus the systems and processes and buying power and all the things that Patrick has stated along with that community of franchisees that you get to be in relationship with and call your colleague and call upon when you have a problem or you're stuck in one area of your business. And maybe there are people who've already worked through that. And so versus your own learning curve, you can go and you can call, make a couple of calls and either solve the problem together or even ride somebody else's learning curve because they've already been there, done that. So that's going to be the nature of franchising in general. And the statistics of success in franchising speak to that over the statistics of pure entrepreneurship so we don't have to make that case. But in case you're out there wondering, I did have to ask that question. So you make a case for why the salon suite in a franchise. Talk a little bit about some of the growing pains or I'm sure when you started, did you think you would own 14 one day? What are some of those like growing pains you had to grow through and figure out in terms of solving to get to where you are today?
[00:15:20] Speaker C: Yeah, I think the biggest growing pain is just not doing everything myself. And I don't know 650 people anymore. But for a long time I did. For a long time I knew every single person. I know some of the people at all of our locations, but there's a lot of people that I don't kind of accepting that loss of control and learning to trust and learning to delegate would be my biggest growing pain. I really like to know everything that's happening and so you have to be okay. With that, when you get to a certain scale, not knowing everything.
[00:15:56] Speaker B: Do you like this model for the cash flow, for the equity, for the exit strategy? What's your primary motivation for salon suites and growth here?
[00:16:07] Speaker C: I do think salon suites are mostly a buy and hold kind of business. And so it is the cash flow that's most compelling from a business perspective. And just the nature of the capital cost involved with salon suites doesn't lend itself to a buy and flip kind of model.
[00:16:28] Speaker B: Although we have had Mr. Eric Van Horn on the show who talked about selling his 12 solar salons back to solar corporate, actually. Right, so. Or their private equity company. So that was an interesting episode. If you haven't tuned into that, you can find it by scrolling and you'll find that episode. So, Patrick, what advice do you have for somebody who's sitting on the sideline just thinking about, is franchising the thing? For me?
[00:16:54] Speaker C: Yeah. Do you want to have more control over your own life? Sit down and make a list of goals and whether that's work, life balance or a certain income goal or maybe just work hours, then kind of see if salaried position is something that can accomplish that for you. And if it can't, then at least investigating whether there's a franchise out there that fits those life goals that you're trying to accomplish is definitely worth a look. The key with franchising is need to be able to work hard. You got to be willing to put in the work and you have to be willing to follow the system. People went out there and they figured out how to make a certain business work, and that's your franchisor. They have multiple pilot locations and they have a system that works. And you need to be able to go work hard and follow instructions. And typically that system will replicate really well as long as you do those.
[00:17:52] Speaker B: Two things, as long as you do them. And people out there think, well, wait a minute, what does he mean, people buy a franchise and then don't do what the franchisor says? That's exactly what he means. Now then you're going to say, well, why would they do that? I know why from my side. But why don't you answer that question? Why do you think people buy a franchise and then they try to reinvent the wheel?
[00:18:12] Speaker C: Yeah, I think shortcuts a lot of times is what it boils down to. And then probably the second thing is I know better. I think being really humble for that first location will serve you really well. I'm going to put my nose to the grindstone I'm going to work really hard, I'm going to learn every job and I'm going to follow the system. And then when that first location is making a lot of money for you, then maybe you can get cute. But before then, definitely don't.
[00:18:39] Speaker B: Listening to you is like listening to Mr. Jeff Elgin. It's so great. So let me ask you this question. Growing up in a household where your father is like the king in the franchise industry, I have two questions. Was going and being employed for somebody else even like an option that was ever discussed for your future? That's the question, number one. And then number two, if you were to be a business owner, was it ever that you would not be in a franchise?
[00:19:06] Speaker C: Yeah, you know, it's worked out really well. And I'm sure that you're familiar, my family has a long history with great clips as well, all through the 90s. So even the industry that I'm in has aligned really well. I have a great background in franchising generally and in the beauty industry specifically. A lot of dinner table conversations growing up on both those topics, that has certainly helped a lot with what I'm doing now.
[00:19:38] Speaker B: I know your children are small, but do you plan to pass that on to your own children as they grow up? Like, you know, this is the path?
[00:19:45] Speaker C: Yeah. You know, they can certainly do whatever they want to do, but I've got them selling studios from time to time, making little marketing videos for us, highlighting studios or highlighting specific things that we're doing. They can certainly take any path that they choose. But if they want to be in franchising, I'll help them do that.
[00:20:06] Speaker B: I get it. But actually, as a parent, you want to tell your kids kind of what the opposite of what you want them to do, because in my experience, they never want to do what you want to do. They want to do the opposite. If you follow me, you know that both of my teenage boys are ready to be entrepreneurs, franchisepreneurs. They wanna work with mom for mom in franchising because they see what this lifestyle has afforded them, and so that's what they wanna create for their own lives. So it truly is an industry that can change your life if you give it the opportunity to. So on that note, Patrick, thank you so much for sharing your experiences and your wisdom with your salon suites. And we wish you the best of luck as you continue to build your empire. Thank you for being our guest here today.
[00:20:49] Speaker C: Thanks for having me.
[00:20:50] Speaker B: For those who are ready to begin your own journey to find your own empire, well, you know that I want to be your franchise consultant and your daily coach. So please follow the link in the description right now. Don't delay. Don't talk yourself into it and out of it. Just go there. I don't bite. As soon as you reach out, I will follow up with you so we can begin your discovery process. And until next time, don't forget that my name is Kim Daly and I want to be your daily coach.
[00:21:22] Speaker A: You can find more content just like this on my YouTube channel at KimDaily TV. And if you're inspired to take the next step to explore franchises matched to you, please email me right now at InquireimDaily TV. That's InquireimDaily TV.
