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on February 16, 2014 at 7:10 AM
HAMILTON — They started out in towns near the Jersey Shore, small day spas offering massages to people on the go.
Within a few years, they’d become hot spots in the New York and Philadelphia markets.
Now, there are nearly 150 Hand & Stone locations throughout the United States and Canada. Like many other businesses looking to spread their name far and wide, Hand & Stone operates as a franchise business, allowing individual investors to own and operate one or more stores.
“Using a franchise model for development of a brand is tremendous for a business with low capital,” Hand & Stone president and chief executive officer Todd Leff said last week. “You have franchisees use their capital to help grow the distribution and breadth of the brand.”
“And of course, they profit from that. It’s their own business,” Leff said.
In 2005, chief operating officer John Marco founded Hand & Stone in Toms River after years as a physical therapist. Within five years, the business expanded to more than 40 franchise locations and has more than tripled that number since then, operating 145 locations.
Leff, who became CEO in 2010 after working as CEO for Cottman and AAMCO Transmissions, attributed the success to a changing business model to attract a changing customer base. As the job market went south, Leff said, the company switched from a long-term membership contract to smaller month-to-month commitments and began offering simple day services, such as facials and waxing. Facials quickly became the fastest growing sector of Hand & Stone’s business, Leff said.
“We positioned the brand as a health and wellness business,” Leff said. “People wouldn’t spend $2,000 or $3,000 on a vacation where they could get a massage, but they might spend $50 or $60 on health and wellness. We had to make adjustments.”
Continued strategic growth is the goal in the future, Leff said. He projected between 50 and 60 new spas to open up each year but only with thoroughly vetted franchisees and in areas prime for growth.
New Jersey has been one of the fastest growing markets for Hand & Stone, which hit more than $90 million in sales in 2013, but the brand also has taken off in Houston, Dallas, Denver and south Florida.
But it takes a lot of scouting before opening up in new markets, Leff said. For example, before committing to bringing Hand & Stone to the Atlanta area, the company will seek a franchisee willing to open between five and 10 locations. With multiple locations, the company can advertise on television and ensure viewers have a Hand & Stone within driving distance.
“It’s hard to support locations that are far out in the field and we need to have a concentration of stores in any given TV market,” Leff said.
In 2015, the business could grow even more with the help of a $10 million “franchise fund” from Benetrends, a firm that provides loans and consults with small business owners on how to develop or expand their business and how to fund it.
The “franchise funding” will streamline the process for franchisees looking to open a Hand & Stone location, having already pre-approved the Hand & Stone product and business model.
“One of the biggest concerns of people deciding whether to buy a franchise is having sufficient capital and getting funded,” Leff said.
“This takes a lot of the worry away from them. If the candidate meets some pretty objective requirements, they’re basically guaranteed funding. That takes a lot of the guesswork out of the process and a lot of fear away from the franchisees.”
Contact Mike Davis at (609) 989-5708 or firstname.lastname@example.org.