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Booth Rental vs. Commission Salons

As the proliferation of booth rental salons continues throughout the U.S., I thought now would be a good time to reflect on your thoughts of this trend that has reached the tipping point.

Way back in the day, the coasts (LA and NY) started booth rental due to high real estate costs and difficulties in getting prime locations. This trend picked up steam and spread in TX and many of the New England states.

The Midwest has been mostly commission but even in Michigan, we are seeing more booth rental salons open.

Peter Drucker, perhaps the most influential business writer and teacher of all time (he wrote more than 30 books) talked about the 5 basic questions businesses should ask themselves on a constant basis. One of those questions is, "What value do we bring to our customers?"

In assessing the value commission and booth rental salons bring to customers, what are the differences? I would love to see your answers to this question.

The other question that needs to be addressed is the value salon owners see in opening a booth rental vs. commission salon. Here are some of my thoughts:

Commission salon advantages:

  1. Cohesive team of employees

  2. Increased retail business

  3. Team meetings

  4. Scheduled education

  5. Consistent talent that customers identify with

  6. Better amenities such as complimentary soda, single-dose coffee bar, newspapers, snacks

  7. Ability to implement spiff's, contests, dress codes

  8. Easier to implement employee benefits such as 401(k) plans and health insurance

  9. Employees using similar brand of products

Booth rental salon advantages:

  1. Steady income regardless of business flow

  2. Don't have to pay high commissions to attract stars that bring in lots of customers

  3. Don't have to manage employees

  4. Quicker return on investment if rent all space

  5. If renter doesn't fit image, don't renew contract

What are your thoughts? Please share if you work in a booth rental or commission salon and if you worked in both types, which you prefer and why. And finally, which type of salon would you like to see the industry leaning towards for the next five years?

Happy Monday!


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