Self-described spelling nerd Robert Aertker was using a $25 coupon to take a lesson at a golf shop in Colorado Springs, Colorado, when he saw the sign for Phenix Salon Suites next door. As the owner of a nearby shopping center with a 3,000-square-foot vacancy, Aertker paid the salon a visit that day 15 years ago and received a card with the phone number of Gina Rivera, Phenix’s founder.

He called and soon after met with her husband and business partner, Jason, for a cup of coffee. He learned that a few years prior, Phenix had shifted from a conventional salon business to one that rented individual suites to beauty professionals. Jason laid out plans to offer franchises and take the concept nationwide. Aertker, by then a 23-year real estate business veteran, saw an opportunity far beyond simply filling his own vacancy. “It was business love at first sight,” recalled Aertker. “Right from the start, it just made a lot of sense to me.”

He signed on to become the real estate department for Phenix and still serves as director of real estate now that the company has franchised and reached 30 states.

Expansion Minded

Aertker began working closely with vice president of franchise development Ken Aselton, and over the past dozen years, the duo has guided the launch of more than 450 locations. An additional 50 locations are under construction. The franchisee roster numbers around 100, said Aertker, who himself is part of a group that owns nine Phenix franchises: eight in Southern California and one in Sarasota, Florida.

Phenix also is growing internationally. Franchisees have opened a handful of locations in the U.K., and it foresees 85 franchises across the U.K., Ireland, Sweden and Canada.

Phenix’s introductory pitch to potential franchisees points out that the salon suites concept attracts beauty professionals because it allows them to set their own hours and keep more of their earnings.

Phenix also casts its franchisees as landlords who lease and manage space, which as of midway through 2022 had an average occupancy rate of 95.4%. Because of that structure, franchisees have no employees, a differentiator among franchise opportunities, Aertker explained.

“A lot of franchisees say: ‘Wait, what? Tell me about that,’” he said. “It’s the kind of business where you’re leasing space to people and taking the salon owner out of it. The beauty professionals are taking care of people all day, and our franchisees cater to their needs. And most of these professionals have never been catered to.”

While the Riveras had opened additional company-owned stores in Colorado and Florida as they prepared to branch out, Phenix’s first franchise opportunity came in Detroit. The firm had identified a potential franchisee who was familiar with the concept, and Jason asked Aertker to fly out and guide him through the next steps. “We found him a great site and got a great deal,” Aertker said, “and away we went.”

Space and Location Needs

For the past 11 years, Entrepreneur has recognized Phenix on its annual Franchise 500 list, a guide for those looking to become franchisees, and this year, it ranks 89th. Becoming a franchisee requires an investment of $700,000 to $1.2 million, according to Phenix’s website. Aertker acknowledged that the company asks “quite a bit” of its franchisees, especially in the recent inflationary environment but said it provides a suite of support, from financing and site location to legal work and construction. “It’s tremendously expensive to build our salon out, but it has gotten more expensive to do business in general; it costs more to borrow money, it costs more to build and there’s not much real estate on the market,” he said. “So it’s a tough market, but even when it’s not a tough market, there’s still a lot to negotiate.”

A typical Phenix salon is 5,000 to 7,500 square feet, but franchisees have opened locations as large as 17,000 square feet and as small as 2,000, although Aertker is quick to point out that it likely wouldn’t pursue one that small today. The average salon has 30 to 35 suites available for rent, but that number can vary, as well.

While grocery-anchored centers are ideal, Phenix welcomes other formats, including malls, freestanding buildings and office buildings. Suburban versus downtown makes no difference, Aertker said.

“One of the many beautiful things about this concept is that it’s a destination, so we can go anywhere,” he added. “We even did a deal in the River Oaks district in Houston in what had probably been an administrative office on the third floor of a parking lot. I was a little nervous about that one, but it has been wildly successful.”

Steady Growth

Phenix tends to complete about 40 to 50 new franchise deals a year in the U.S. but is mindful of oversaturation. It analyzes the number of competing salon suites in a given trade area and then assesses demand from beauty professionals. Still, Phenix is willing to locate near competitors if the analysis is positive. In Las Vegas, a franchisee opened on a separately owned outparcel of a shopping center that included a Sola Salons, he said. “We were on the same pylon,” he laughed. “In those situations, we’ll assess and take the appropriate action. If it’s too crowded, we tend to shy away.’

Phenix has begun to push more strategically in certain states in and around the Northeast. Late last year, the company inked three new deals in the New York metro: 7,832 square feet at the two-story, 133,000-square-foot Broadway Plaza in the Bronx; 6,000 square feet at Mid Valley Mall in Newburgh, New York; and 9,000 square feet at Midstate Mall in East Brunswick, New Jersey.

David Townes, a managing director with JLL who represents Phenix in the region, noted that Phenix’s co-working concept disrupts the traditional salon business. “The New York metropolitan area is a tremendous market for the company,” he stated, “and we look forward to supporting its expansion efforts in other prime locations.”

While Phenix already has dozens of franchise salons in the region, the company’s focus on New Jersey, in particular, follows legislative reform that opened up the state to Phenix’s franchise concept about three years ago, Aertker remarked. Prior to that, old laws blocked the company’s entry into the state. Pennsylvania posed similar challenges, but it, too, has undergone change, he added.

“It took years of legal battles to get our concept OKed in New Jersey,” he said, “but then it just became a gold rush for us and our competitors because it was virgin territory surrounded by existing locations in nearby markets.”