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Ari Yakobson, CEO of Head Co. Inc., Toronto-base franchisor of Blo Blow Dry Bar (ANYA CHIBIS/FOR THE GLOBE AND MAIL)
Ari Yakobson, CEO of Head Co. Inc., Toronto-base franchisor of Blo Blow Dry Bar (ANYA CHIBIS/FOR THE GLOBE AND MAIL)

REPORT ON SMALL BUSINESS MAGAZINE

Blow-dry bar concept heats up Add to ...

Dance music is reverberating in this tiny box of a hair salon in Vancouver’s prime singleton neighbourhood, Yaletown.

So is the colour magenta. Countertops, a large lampshade, hair-menu books and message buttons all emanate hot hot pink, with the word “blo” featuring prominently . But in spite of the club-like atmosphere, it’s dead quiet here except for sound effects similar to a wind tunnel. One woman is reading a dense academic article while having her hair done, but the other three clients, including a little girl getting blond ringlets, are staring intently at their images in the mirror as their twenty-something stylists wield curling irons and brushes and blow-dryers.

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Sharon Dhaliwal, 33, is one of those clients. As her time in the chair comes to an end at Blo Blow Dry Bar, she studies herself critically and then smiles, satisfied.

“At my regular hairdresser, this would cost $65 or $70,” says Ms. Dhaliwal, looking at her thick, dark hair – now teased up slightly at the back and falling down into glossy curls from there. Here, the 30 minutes of styling has cost $35. “I usually come just for special occasions” – this particular Saturday, she’s off to a birthday party at a lounge –but I’m thinking of starting to do it every week.”

Ms. Dhaliwal and many other women like her – women who want a little hit of pampering and glamour but don’t want to pay a fortune for it – are the target audience for Blo, a new entrant into Canada’s $4.5-billion market for personal-care services.

It’s a hyper-charged and rapidly shifting market, with day spas, nail and makeup bars, and salons offering everything from men’s facials to braids-only weaves, all competing for recession-weary customers and their limited discretionary dollars.

Blo’s essential premise is that it will provide that slice of glamour by streamlining what it offers and charging less: No haircuts. No colouring. Just a wash and a blow-dry style for less than your regular hairdresser was charging you.

Blo got its start in 2007, when 20-year-old Vancouverite Devon Brooks came up with the idea for one of her class assignments at the London College of Fashion.

Ms. Brooks’s mother, Judy, a self-described “serial entrepreneur,” had already started two businesses in Vancouver. She looked at her daughter’s business plan for a blow-dry bar, thought it was a great idea, borrowed some money on a line of credit, and worked with her daughter to start the Yaletown salon in June of that year.

It produced positive cash flow within the first month. By July, 2008, the Blo team had opened two more salons – one at a downtown hotel, and one on Granville Street near Vancouver’s old-money Shaughnessy neighbourhood.

Around this time, Blo had been brought to the attention of Toronto-based entrepreneur Ari Yakobson and his business partner, Paul Spindler, who realized that this new concept could be meshed with their experience in franchising hair salons. The two already had a salon franchise called Melonhead focused on children’s haircuts.

“I was instantly impressed,” says Mr. Yakobson. “It’s an affordable luxury, something that makes a person feel great without spending an absolute fortune.”

He also liked the way Ms. Brooks’s team had developed a franchise-ready system that laid out exactly how each salon should look and operate. Within months, Mr. Yakobson had an agreement for an undisclosed amount to purchase Blo and merge it with his Melonhead operations; the new outfit, Head Co. Inc., would combine Ms. Brooks’s concept with Mr. Yakobson’s and Mr. Spindler’s franchising experience, keeping the Blo brand completely distinct.

Today, there are 18 Blo salons – five in the United States, with two more due to open in Miami this month.

But, while the concept has proved successful so far, the road ahead is bumpier.

Blo, which started out as one of the pioneers in the market, is now facing considerable competition, especially in the United States, where Mr. Yakobson and Mr. Spindler are concentrating all of their efforts.

The company also faces an uncertain economy, and the challenge of maintaining standards in a business that is all about service. “It’s not like a hamburger,” Mr. Yakobson says. “It’s all about the training.”

While Blo promotes itself in marketing materials as “North America’s original blow-dry bar,” the evidence suggests otherwise. Forensic Internet research reveals that New Yorker Julie Flakstad started a new kind of salon in the city’s meat-packing district in 2005 called Blow, “the New York blow dry bar.” By the end of the first year, she had served 10,000 customers and had a profit margin approaching 15 per cent from an original $300,000 investment.

But even if Blo wasn’t the first, Judy Brooks did manage to create a unique and unforgettable brand for when the inevitable competitors came along.

Every salon has the hot-pink counters and mod pink lampshade, the Philippe Starck clear-plastic Louis Ghost Chairs and the clear-glass pendants above the stations, all the choices of Vancouver interior designer Lesli Balagno.

The design team also came up with a name for everything, using the Starbucks model of never calling something a “medium” when you can get customers to use the word “grande.”

Every salon has a book with a menu of cutely named hairstyles: Holly Would, Red Carpet, Hunt Club. The linguistic cuteness also extends to the titles for lead stylists and customers – Style Bosses and Hair Cadets, respectively – and, of course, the name of the salon itself, Blo, with its frequent exhortations via hot-pink buttons and web messages to “Blo Me.”

“We just nailed that fricking brand so well. It was just cheeky and fun,” says Judy Brooks.

Blo was a new kind of venture for Ms. Brooks, whose early career included teaching aerobic-exercise classes for Vancouver fitness entrepreneur Barbara Crompton in the late 1980s. In 1990, when she was only 27, she formed a company with two other fitness entrepreneurs/young moms that focused on injury prevention.

Though she doesn’t own BodyLogic any more, it still bears her touch: a cool name, a unique logo and a codified system for assessing workplace problems. Ms. Brooks used that same business structure on her second company, a workplace conflict management business called ProActive ReSolutions, and eventually on Blo.

Mr. Yakobson liked the solid image the Brooks team had created. That wasn’t all that he saw, though.

“We were attracted to the aesthetics and the look, but also the depth of the system,” he says, using the franchisor’s favourite word for what is, essentially, a how-to guide that lays out every detail of how each salon should look, feel and operate. “Blo had the operating manuals you’d expect for a company with 300 locations,” he says.

Mr. Yakobson and his team made some adjustments to Blo after the acquisition went through, adding more hair-washing stations, a better floor plan and a slightly toned-down shtick. “We have reduced some of the sexual innuendoes,” he says.

But the basics have stayed the same, and Blo’s image still comes across as unforgettably provocative – which, as Mr. Yakobson has discovered, draws more potential franchisees than does his Melonhead brand.

“Blo is an easier sell because of the sexiness. The big cities like it. It sometimes doesn’t work so well in the Midwest or in suburbs. But, at the same time, it gets attention so it’s always a balance.”

While Mr. Yakobson is convinced that the sexiness will continue to sell as Blo expands into the United States, unlike in Canada, he doesn’t have the field all to himself.

In the last three years, the U.S. has seen a wave of new independent blow-dry operations and the launch of one other significant franchise chain, called Drybar. That chain, started in Los Angeles in 2008, now has 12 locations in California, Arizona, Texas, Georgia and New York, and is talking about expanding to other cities.

It has gone for a slightly more sedate image than Blo. Although Drybar also has cutesy hairstyle names, based on drinks (Manhattan, Cosmopolitan, Southern Comfort), the brand’s dominant colours are the more neutral charcoal grey and a sunny yellow. There are no “blo me” puns. (Nor, as is the case with www.blomedry.com, is its site likely to lead a careless Googler to the web page for a far different kind of consumer service involving blowing.)

Mr. Yakobson acknowledges that there are a lot of blow-dry bars around these days, some opting for a slightly different look, some sailing very close to the wind of Blo’s image.

“There’s nothing we can do to prevent someone from opening a blow bar. There are always copycats,” he says. “But we aggressively defend our brand.”

He can’t stop a chain like Drybar, which has emulated many of the elements of Blo while steering clear of exact reproduction– but Head Company has sent out more than one “cease and desist” letter to salons that have come too close.

But even if there were competition in Canada, franchising expert Wayne Maillet says, it’s not necessarily a bad thing. McDonald’s, Wendy’s and Burger King have all managed to come up with slightly different angles to selling meat on buns: one kid-friendly, one fresh-focused, one emphasizing “we do it your way.”

Similarly, competing blow-dry salons can target different markets: younger, older, single, family-oriented, and so on. The bigger challenge for franchises, he says, “is developing clearly defined operating procedures where the customer is going to have a consistent experience.”

Mr. Yakobson says that’s why Blo has chosen to pace its growth. “We could be growing significantly faster if we wanted,” he notes. “We’re growing through a controlled environment. We want to make sure we have the right partners and the right locations.”

Blo franchisees have to pay $25,000 for the franchise, as well as 6 per cent of their gross revenues as a royalty fee, and variable advertising fees.

On top of that, franchisees typically invest $200,000 to set up their small shops – between 400 and 1,000 square feet – and cover all the usual operating expenses that any business would.

Mr. Yakobson expects to sign agreements with 10 to 12 more franchisees within the next year, all in American big-city markets like New York, Los Angeles, Boston, Washington and Chicago.

The company would also like to develop franchises in Quebec, something it hasn’t managed yet because of language laws and other complications. But Blo’s new home turf, Toronto, is full up, he says, with eight locations in the metropolitan area. That’s enough for a service that caters to a tight niche. “We are very conscious of the investment by the franchisees and we don’t want to jeopardize that.”

One of the essential elements for any franchise is a head office that ensures franchisees help maintain the company brand, by rigidly sticking to exactly the same look, quality of service and procedures.

A franchise company that sells a product at least has some control over what the customer gets, by delivering the same taco ingredients, fitness equipment or cups to all of its franchisees. But a franchise based on services, like Blo, depends on the scary human variable: a person who may be fast, slow, more talented, less well trained, chattier, gruffer or somehow different in any one of a hundred ways than others delivering the same service.

Reviews from the influential Yelp website make it all too clear that customers are hyper-aware of variances in service. For the Hollywood Blo, the comments range from “awesome” to “Blo Blow Dry Bar blew for lack of a better term,” with occasional references to better service at Drybar.

In Vancouver, the reviews cover the same wide spectrum –f rom “I had a terrible experience” to “my hair felt like it was floating,” along with more than a few that seem suspiciously promotional. More often than anything else, the reviews detail the great or awful service from a particular stylist.

To create a level standard of service, Blo requires that all staff at a new salon attend “Blo U” (yes, really), which seems to consist of a chain-letter method of training. A senior Blo stylist – oops, Style Director– teaches one class to the new recruits, then picks out one of them to be a Chief Style Boss. That person gets additional, intense training, which she then passes on to the rest of the staff.

Mr. Yakobson says that, in addition to Blo U, the company works to maintain standards and support franchisees with periodic visits from head-office personnel. Franchisors aren’t in the business of policing, he notes, so “our primary role is to be their helper. ‘These are the four things you’re doing wrong and the 30 things you’re doing right–so let’s focus on the four.’ “ But ultimately, a franchisee’s success depends on variables outside of head office’s control: location and, especially, how good franchisees are at sticking to the established system.

Success also depends, of course, on that giant and capricious variable: the economy. Blo is part of what’s called the “masstige market” – that part of the consumer world which caters to middle-class buyers looking to buy a tiny slice of the yacht-and-trust-fund life at a reasonable price. Some marketing experts say the masstige market is vulnerable during tough times as people cut even little luxuries from their budgets. Others say they can do just as well, as people use treats to keep themselves going even while they’re squeezing elsewhere.

Mr. Yakobson is confident that, despite three tough years that saw masstige product lines from Target to Coach take a hit, the Blo franchise will continue to do well. People are cutting back on “old luxury” – they’re going longer between full-service salon haircuts and colourings and buying fewer fur coats – but they’re still saving some money for “new luxury”: blow-drys and fake furs. “The economy, particularly in the U.S., is challenged, to say the least,” he says. “But I believe women will continue to get their hair done. And our numbers are steady, even as the economy’s gotten worse.”

Judy Brooks is watching all of it from afar these days. After Blo merged with Melonhead to become Head Co., she stayed with the new organization for a year and a half as president, helping to develop new franchises. Then she pulled back – remaining as a shareholder but moving on to her current position as “chief of staff” at Nurse Next Door, another franchise company in rapid-expansion mode.

Ms. Brooks, with her 1,000-watt smile, still talks about Blo enthusiastically. But she also hints at some behind-the-scenes tension that, ultimately, sealed her decision to leave.

One was a lawsuit. Ms. Brooks’s company and Melonhead were sued earlier in 2011 by one of Blo’s minority investors, hairdresser Kevin Lai, for $39,000 that he said wasn’t paid to buy out his original $60,000 in shares. Mr. Yakobson says that was some kind of mix-up between Mr. Lai and the founders; Ms. Brooks says it was money that the Melonhead team were supposed to pay out but didn’t until she prodded them to make good.

Ms. Brooks also talks about things she’d do differently if she were in charge. Blo’s salons are still pink on the outside, but she doesn’t see the brand’s spirit reflected at the centre of the company. “It’s important for the head-office culture to reflect the franchise culture,” she says.

As for the complaints on the Yelp website, Ms. Brooks thinks those could be reduced through an energetic customer-satisfaction program, where any customer who appears less-than-happy gets special attention.

She’d also be developing far more franchises: “If I was going to do it, I’d do 60 a year.”

And the all-important training: She’d be trying to standardize that even more by producing videos, rather than using the current chain-letter approach. “Big franchise systems are always looking at how to do things better or faster,” she says.

Despite her reservations, Ms. Brooks says she’s proud that the ideas her original team came up with have stood the test of time.

“One of my definitions for knowing you’ve started a successful company is that it can still flourish after you’re gone. I loved it, but I’m not really about hair; I’m about business. I’m proud of Blo, the brand. I’m proud every time a Blo opens. But it was time to let that one go.”

Special to The Globe and Mail

This article originally appeared in the December issue of Report on Small Business magazine.

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