Toni & Guy makes big bucks with franchising model

by Rebecca Burn-Callander - Monday, 17th November 2008 -

“McDonalds was the first franchise on the high street. We were the second,” says founder Toni Mascolo.

Mascolo’s international hairdressing brand boasts 405 salons across the globe. Only 12 of these are proprietary, the others are all franchises.

“We’ve got shares in every Toni & Guy franchise,” says Mascolo. “And we take a royalty from them. The overall turnover of the franchise business is £135m, and we’re still expanding.”

Mascolo launched the first franchise in the early eighties. It was a shrewd business decision: rather than allow the hairdressers he’d trained and nurtured to start up on their own and become competitors, he gave them the option to extend the brand. “You can’t open a franchise unless you’ve been with the company for four or five years,” explains Mascolo. “Then we have a team of nine developers that works with each individual to create the franchise business.”

This creates additional revenue in itself. Mascolo runs a shopfitting company under the Toni & Guy brand, and a data management firm, not to mention the arm that sells the products and outfit that provides the tools (scissors, hairbrushes etc) to get the new businesses off the ground. Overall turnover at the company has hit £175m.

Back in the nineties, Mascolo was opening 20-30 franchises a year. Now growth has slowed: “You can’t open too many salons,” he says. “You run out of space. And you don’t want to have salons too close to each other, in competition.”

But there are international opportunities for the firm. “We are expanding into Europe and our strongest expansion is China, Russia, Australia and some Eastern countries. Russia’s doing extremely well, and China, I think, is going to be amazing, so is India.”

But it wasn’t always easy. Franchising was virtually unheard of in the UK when Mascolo first trialled the model. But it was already huge in America, and Mascolo returned from a visit to the US buzzing about the five-year millionaire plan, which was all about franchising. “But when I had a meeting with my bankers to talk about it, they’d never heard of it,” says Mascolo.

This made Mascolo a franchising pioneer on the high street and the Toni & Guy chain exploded across the UK. “People have said to me, ‘I couldn’t imagine England without Toni & Guy,’” he says. “The only other franchise at the time was McDonalds, so we were among the first. I’m very proud of the fact the I brought franchise to this country.”