Smartstyle Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$182,440 - $324,140
Franchise Fee
$10,000
Min Cash Required
$15,000
Total US Locations
1,078
Business Summary
Smartstyle businesses provide value-priced hair care services for men, women, and children. They also sell a complete line of hair care products and merchandise. Smartstyle salons are typically located inside Walmart stores and Supercenters, offering high-quality services and products to a family-oriented, cost-conscious clientele.
Corporate History
The Barbers, Hairstyling for Men & Women, Inc., the franchisor of Smartstyle, was established in October 1968 as a Minnesota corporation. It began selling franchises for hairstyling businesses in 1970. Regis Corporation, a publicly-held parent company, acquired The Barbers through a merger in May 1999. In 2016, The Barbers began offering Smartstyle franchises, specifically for salons located inside Wal-Mart stores in the United States.
Financial Overview
Investment Range
$182,440 - $324,140
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$39,500
Minimum Cash Required
$15,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$90,000
Equipment Costs (High)
$170,000
Working Capital
$30,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The FDD highlights a special risk regarding Smartstyle's financial condition, stating that it 'calls into question the Franchisor's financial ability to provide services and support to you.' Historically, the parent company, Regis Corporation, reported net losses in 2022 and 2023, and a negative shareholders' equity in 2023. However, in fiscal year 2024, Regis Corporation reported a significant net income of $91,060 thousand, a positive shareholders' equity of $56,787 thousand, and a reduction in long-term debt. This improvement was substantially influenced by a $94.6 million gain on the extinguishment of long-term debt, which was part of a troubled debt restructuring. The company also utilized federal and state net operating losses to offset taxable income generated from this debt extinguishment.
Financing Details
Smartstyle does not offer direct or indirect financing to its franchisees, nor does it guarantee their notes, leases, or other obligations. However, for Smartstyle salons located in Walmart stores, franchisees are required to sublease their premises directly from Smartstyle's affiliate, Regis Corp. This sublease arrangement is not considered a financing offer, but rather an operational requirement. Franchisees are responsible for arranging their own financing through third-party sources.
Performance Metrics
Total US Locations
1,078
Franchised Units
1,077
Corporate Units
1
Avg Square Footage
825
Franchising Since
2016
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
16
Litigation Summary
Smartstyle's franchisor, The Barbers, Hairstyling for Men & Women, Inc., and its parent company, Regis Corporation, have been involved in 16 litigation cases. One case is currently ongoing; it is a collections matter against a franchisee who asserted counterclaims for franchise law violations and fraud, with a settlement agreement in process. The 15 concluded matters include: five collections matters against franchisees, all settled with payments made to the franchisees, or a collection in process; one case where a Smartstyle franchisee alleged material misrepresentations and omissions to induce agreement, resulting in a $210,000 settlement payment from Regis Entities; one case where a Supercuts franchisee alleged franchise law violations and fraud, leading to an arbitrator's award of over $1 million to the franchisee; one case involving a dispute with a point-of-sale system supplier regarding intellectual property misappropriation, which was settled with Regis paying for transition services; a group of six related cases from Pro-Cuts Sports franchisees alleging franchise law violations, fraud, and misrepresentation, all settled with payments to franchisees and assumption of lease liabilities; one case with a Supercuts franchisee alleging franchise act violations, fraud, and breach of contract, settled with a $25,000 refund and agreement rescission; and a class action lawsuit against Supercuts regarding alleged improper display of credit card numbers on receipts, which was settled for $285,000 paid by the third-party insurance carrier.
Bankruptcy History
Smartstyle has no bankruptcy information to disclose in this item.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Smartstyle franchisees must provide written notice at least 180 days before their current agreement expires. They must satisfy all material requirements of their current franchise agreement, pay all amounts due to Smartstyle, and modernize their Smartstyle Salon. Franchisees also need to be able to occupy their salon for at least five additional years and sign Smartstyle's then-current standard Franchise Agreement, which may have different terms. If located in a Walmart, franchisees must also meet Walmart's then-current gross sales requirements.
Training & Support Program
Franchisor Assistance
Smartstyle provides pre-opening and ongoing assistance to its franchisees. Before opening, Smartstyle helps with accepting or disapproving proposed salon sites and reviewing lease or sublease terms. It provides template architectural plans, initial training for the managing owner and other managerial employees, and identifies minimum standards and specifications for operating assets, inventory, and supplies. Smartstyle also grants development rights for multiple salons. Ongoing assistance includes advice and recommendations on salon operations, optional additional training at the franchisee's request and expense, continued access to the Operations Manual (including updates), and requirements to comply with Brand Standards, which may necessitate further capital investment. Smartstyle licenses its trademarks and provides advertising and marketing assistance through an Advertising Fund and by reviewing franchisee-developed materials. Franchisees must also participate in promotional, loyalty, and gift card programs established by Smartstyle.
Initial Training Hours
22
Training Location
Online or virtual learning, Smartstyle Corporate Office in Minneapolis, MN
Ongoing Support
Smartstyle provides ongoing assistance to its franchisees through advice and recommendations on salon operations, covering standards, operating procedures, purchasing, and accounting. Franchisees continue to have access to the Operations Manual and its updates. The franchisor may modify Brand Standards, requiring franchisees to adapt and potentially incur additional costs. Smartstyle also provides a trademark license and assists with advertising and marketing through an Advertising Fund and by reviewing promotional materials. Franchisees are required to participate in gift card and customer loyalty programs. Additionally, optional online technical training is available for customer service, haircutting, color, textured hair services, styling, back bar services, waxing, and retail. Franchisees are also required to attend an annual system-wide convention.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
non-exclusive
Territory Size Requirements
Smartstyle franchisees who acquire the right to develop just one salon receive no exclusive territorial rights and operate their Smartstyle Salon only at the approved location within a Walmart store. They may not sell products or services from any other location or online. Smartstyle reserves the right to open and operate, and grant other franchisees the right to open, Smartstyle businesses anywhere and offer similar services or products over the internet. For franchisees who wish to develop more than one salon, Smartstyle may grant a non-exclusive territory, typically defined as a city, cities, counties, or specific zip codes. The size of this development territory is primarily based on the number of Smartstyle Salons the franchisee agrees to develop, demographics, competitive businesses, and site availability. Even within this defined development territory, the franchisee does not receive exclusive rights, and Smartstyle or its affiliates may operate or franchise other businesses that could compete.
Staffing Notes
Smartstyle requires franchisees to ensure adequate staffing levels to operate the salon in compliance with Brand Standards, which may also cover the appearance of salon personnel and customer service. Franchisees are solely responsible for their labor relations and employment practices, including employee selection, promotion, termination, and pay. For multi-unit owners, a District Manager, approved by Smartstyle, certified, and trained, is required for every six Smartstyle stores. This District Manager must oversee the operation and supervision of these salons, as well as the salon managers and assistant managers. Each salon must have at least one on-site manager, who could be the franchisee or another manager. All salon employees must acknowledge that the franchisee is their sole employer.