Semi-Absentee, Manager-Run barbershop that is recession proof and ramps up quickly.
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Lance Hood: Hi, this is Lance Hood with ARCFranchising.com and today I want to introduce you to Diesel Barbershops. Diesel Barbershops is a semi absentee manage the manager model that is a modern day version of a vintage barbershop. Our guest speaker is David Hines of Diesel Barbershops. David, thanks for joining us.
David Hines: Thanks Lance. I'm, I'm happy to be here.
Lance Hood: So what brought you to working with Diesel Barbershops?
David Hines: So the company that I work for is called Rhino 7 and we are a franchise development company. Usually we look to partner with young emerging franchises that have a very solid model, so diesel barbershop, we actually got to talking with them over a year ago and we really liked what they brought to the table. It was kind of um, a different kind of feel for the, for the in the hair care industry, um, and it's more of a barbershop that mainly caters more to males, um, but it just has more of a masculine type atmosphere. So it's definitely something different. And we feel it offers a very niche type of model for this industry. And we decided that they had a very good business model, so we actually worked with them to develop the franchisee support system and just kind of build up the model a bit more to make it, um, to ensure that it was going to last for a long time. So we're definitely very excited to have the opportunity to partner with diesel barbershop.
Lance Hood: From your experience, why do most people go into franchising?
David Hines: So I think that part of it is, but there's not as much of a risk factor as there would be if they started their own business. With a franchise, it's a model that has been tried and proven. So someone has already gone through those risk and rewards and actually gone through the ups and downs and they've developed a model that other people can follow to be successful. So I think that a lot of it's just, there's not as much of a risk factor with joining a franchise than people would have trying to start their own business from scratch.
Lance Hood: Why should people consider the haircare industry?
David Hines: So the haircare industry is one that's been around for a very long time and there are a lot of, a lot of companies that have done very well. The haircare industry actually has an annual revenue of $26 billion and the barbershop industry has an annual revenue approaching $2 billion. So there's definitely a need for this industry. And barber shops right now are the fastest growing segment of the haircare industry. And there was a study that was actually published by modern salon that said that 81 percent of current salons failed to implement barbershop focused marketing. So this actually creates a huge opportunity in the industry for the barber shops.
Lance Hood: And you were telling me, you know, how cool the environment is. Can you tell me what does Diesel Barbershops do and just explain that environment for everybody.
David Hines: Yeah, sure. Um, so diesel barbershop, we are a full service shop. We do haircuts, shaves, beard trims, we can color gray hair. Um, we also do shoulder massages and eyebrow waxing. And it just has more of a masculine feel. Um, it's really a modern day version of a vintage barbershop. When someone walks in, they're actually offered a free beverage, which can be a soda, a water or even a beer. There's also going to be some arcade games that customers can play for free as much as they want to, just kind of gives them something to do while they're waiting. And on the walls there's going to be pictures of um, record album covers, also movie posters. So really this kind of has more of a, kind of a very cool atmosphere and more of a masculine setting.
Lance Hood: So that tends to make everything unique. Is there anything that stands out in the processes that's unique outside of the atmosphere?
David Hines: Yeah, I will say that. What makes it unique? Um, so as far as, I mean there is, it is going to be a, um, a semi absentee manage the manager model. Um, so that means that it's great for someone that wants to keep their job and actually, um, you know, be part or be involved semi absentee from day one because each barbershop will have two co-managers that run the day to day. Um, it really, I'll just say, yeah, just the whole, the whole atmosphere. Um, it just kind of putting them, putting their own twist on what a barbershop should be, I think is really what makes it unique.
Lance Hood: And obviously there's a big need for this. People aren't going to stop growing hair at least in the near future. So there's definitely repeat business for this. What type of person is ideal for this opportunity?
David Hines: Yeah. So the type of person that we're looking for is first and foremost, someone who wants to be semi-absentee and someone wants to, who wants to be part time and actually keep their job. Um, we also look for someone who has very good management skills and it helps if they have a pioneer or empire builder personality that wants to be part of a growing, modern and impressive looking franchise. And really what the, um, so the management skills, because really what needles are going to do is teach someone how to be a CEO of the organization. Um, it's also a grid, a good opportunity for someone who desires a business in a very stable recession resistant and technology proof industry. And we also, um, going back to the empire mentality, someone who wants to one day own multiple units and/or be an area representative or a master Franchisee,
Lance Hood: I think it's important to say that a lot of people that look at franchises for the first time, they come from my owner operator mentality, like they need to understand how to do the core functions of the company. And what I find with most franchise opportunities is they're really just looking for good managers. Not that you're going to be doing any of the day to day stuff or need to understand how to cut hair or anything like that. Is that true?
David Hines: Yeah, I'd say that's correct. Yeah. And especially with this one, since it's going to be those two co managers kind of having the experience in the industry. Um, and running the day to day, but yeah, the Franchisee, um, they do need to, you know, learn how to kind of function as a, as a pro forma or as CEO and really overseeing the company so they do need to know, um, all the systems that are in place and the support that's provided, um, and what they're going to be doing in addition to managing those co managers is running the budget, running the pro forma and really just overseeing the company as a whole.
Lance Hood: What are some of the typical questions potential franchisees have about Diesel?
David Hines: Yeah. So people would ask about Diesel being an emerging brand and what's the advantages, um, to, to joining an emerging brand. And what we would say is that being an emerging brand, they're actually going to be available across the US. So there's definitely going to be an opportunity for, um, for any big city. Um, it's usually where we want to go. And also just the fact that Rhino 7 has partnered with Diesel, Rhino 7 really focuses and they're, um, they're kind of bread and butter is helping to helping emerging franchise franchise is to actually grow and expand. Um, so really that's the big advantage. And then also just that the founder of Diesel Barbershop is very experienced and successful in owning barbershops. Um, he actually grew up in the industry, so it was able to kind of take what he learned and he applied that when he actually decided to start Diesel. So definitely have a lot of corporate experience and it's a very proven business model. So I'd say that that's um, that's kind of the way to address the, um, the emerging franchisor question.
Lance Hood: What are the ways that franchisees make money with this model?
David Hines: Yeah. So the main way that making money is actually the services that we provide. Um, so people can come in there for basic haircut, um, they might come in there for a haircut and a beard trim. So, so this basically something for everyone. If someone actually has a very big beard and kind of wants to get trimmed up and have it look, Kinda have a clean look and they can get that, um, we also do shaves as well and that, and we also do have the straight razor shaves. Um, so there's definitely a lot of different services and ways to make money with services, but then Diesel also does have products that are available as well. Um, so we do sell products as far as keeping up with their hair and kind of managing it and of course products to take care of their beard, um, of their hair. So we also do have products available.
Lance Hood: What's the ramp up time?
David Hines: Yeah. So the ramp up time, um, as far as to the positive cash flow, that's going to be very quick. It's only gonna take about six months for the business to get to positive cash flow, which is very good for a semi absentee retail model. Um, so yeah, I'll say this ramp up can be about six months. Now the break even might take a little bit longer than that. Um, might take a couple of years, however I'm going to be a quick ramp up. And the item 19 in the FDB actually shows that after the first full year of being open, the Franchisee can make a net income of $75,000. And then for a mature shop, the net income can be over $140,000.
Lance Hood: That's per shop as an absentee owner or semi absentee owner.
David Hines: Yes, that's correct. Yep. Those numbers are based on a single unit with a semi absentee owner.
Lance Hood: So if you had multiple units and you're thinking that somebody else is managing it, you're just managing the manager for potentially that kind of earnings per shop. And you know, people have multiple shops.
David Hines: That's correct. Yeah. So the average. Yeah. So right now, the average Franchisee is actually purchasing multiple shops, so yeah, once they get a couple of those open, they can start earning a very significant income and then going even further for anyone who has an empire type personality or how has a high net worth, we actually do have master territory's available. So there's even a bigger opportunity for those people because what they'll do is pay a franchise fee to actually own a master territory and then they're going to open at least one shop for themselves, but ideally we'd want them to open multiple shops because they can get those at a reduced rate and what they're doing as a master Franchisee is finding and supporting any franchisees that are in their territory. The incentive is that they're going to get half of the net franchise fee and 40 percent of the royalty for any unit that's in their territory. So definitely good for someone that wants to have an empire and kind of grow, grow into a big kind, a big territory over time. So that's definitely another good option that we have.
Lance Hood: Yeah. So now you're even less removed than manager, the manager.
David Hines: Yeah. Because usually those master Franchisees, they'll actually have a general manager to kind of come and um, and kind of oversee and help support all the, um, all the, the franchisees that are in their, in their territory.
Lance Hood: That's a great plan. Can you share some stories of people who have opened a diesel?
David Hines: Yeah. Yeah. So, so far. Um, yeah. So the franchisees that we brought on, a lot of them, you know, like they had in mind that they wanted to do franchising but they were just kind of looking for the right fit. So, um, we've had a couple people that realized they were interested in Diesel and once they got through the investigation they actually attended the discovery day and they came away very, very impressed by that. And just because they met, they met the corporate team and saw how, how structured and how followed that they were. Then they also kind of met the Rhino 7 team as well and realize that the partnership there was a very strong one. Um, so that definitely kind of fit what they're looking for. A lot of them, you know, one is something that was a little bit more of a niche market and Diesel definitely fits that mold where it is a more of a masculine Barbershop. So kind of a different take on the um, on the barbershop and it's less, less like a salon and a lot more like a barbershop. So it was really just a matter of people, people looking for something and they ultimately found that with Diesel.
Lance Hood: David, I really like this concept of franchise and I'd love the opportunity to talk to anybody who's considering it and I'd just like to say if you're listening right now and you're genuinely committed to getting a franchise, whether it's Diesel or you just want to look and see what's out there, let's make sure that you get the right one. There's no charge for my services because most franchises will compensate me for my time. So you can just reach out at 888-627-2776. Or you can schedule time to speak with us at speakwithlance.com.
David Hines: Yes. And now just like to add that I do highly recommend that you contact Lance with any additional questions you might have about Diesel Barbershop or any other franchise. Franchising can be a very profitable business, but you do need a guide to make the best decision and I would recommend for that. He's very professional and he will definitely get you the information that you need and steer you in the right direction.
Lance Hood: Thank you David. There are so many franchise opportunities out there that the odds are you've never heard of the one that's right for you, and I spend my time getting to know as many franchisors as possible. If we work together, once I find a group of companies that I think you'll enjoy and be successful in, I'll sift through their financial statements, see how well they're performing as a company and do the best job to help you make a great decision. David, thanks again for joining us.
David Hines: Thank you for having me, Lance.
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The first Diesel Barbershop opened in 2011 in San Antonio, TX. It’s the modern-day version of the vintage corner barbershop, and appeals to what today’s customers want in a haircut experience: part barbershop, part old-school record store, and part arcade.
In short, a barbershop with high quality haircuts, shaves, beard trims and shoulder massages. All done while having a beverage.
Description of the Business
Who is Diesel’s target audience? Diesel customers are male, 16 to 75 years old. Diesel also cuts boys hair.
Diesel customers are looking for a place where they can relax, maybe drink a beer, while getting their haircut & a shave. Free from the drama that sometimes comes with beauty salons or the cheap, quick cut hair-care chains. They are also looking for a more masculine atmosphere where they’re free to talk sports or whatever their interests are with their barber or other customers. In fact, customers sometimes will linger after their hair cut to finish their beer or try to set the high score on Donkey Kong.
Points of Interest
- Single and multi-shop franchise offerings; also Area Representative territories
- Area Representative helps find Franchisees, supports Franchisees and shares in Franchisee Fees and royalty
- Semi-absentee business model for the owner (part-time)
- Very recession resistant customer
- Average ticket is more than double of a value oriented haircut chain
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