Interview with Raymond Barton CEO and Chairman of Great Clips, Inc.

Date: APR 22nd, 2010

Topic: Interview with a CEO

Ray is a graduate of San Diego State University with a Bachelor of Science degree in accounting. He was a member of the professional staff of the international accounting firm of Alexander Grant & Co., now Grant Thornton. He was Vice President and a member of the Board of Directors of the North Central Region of Century 21; and, Vice President of Questex Energy, Inc. before joining Great Clips in 1983.

Ray, whose insights into the power of franchising led to the expansion of Great Clips into the World’s largest salon brand – a company with over $700 million in system-wide revenue and over 2,800 franchise stores in 42 states and western Canada.

He is a volunteer speaker for the College of St. Thomas in the area of franchising. He has been a long-time member of the Young Presidents’ Organization and World Presidents’ Organization.

BeTheBoss - What’s the story behind Great Clips?

Raymond Barton - Great Clips, Inc. is a franchisor of high-quality, value-priced salons.

The first Great Clips salon opened in 1982 in Minneapolis, Minnesota on the University of Minnesota campus, offering customers high-quality cuts and perms at a reasonable price. In addition, the customer didn't need an appointment. The success of the first salon led to the establishment of other locations. Great Clips began franchising salons in 1983. By 1989, the last corporate salon was sold and Great Clips began franchising exclusively. By 1994, a new franchisee was approved every 10 days, a new salon opened every 3 days, and a franchise agreement for a future salon was executed every 2 days. Today, Great Clips has 988 franchisees operating over 2,800 salons in 140 markets, and is the World’s’s largest salon brand.

We believed the haircare industry, as it was known, was about to face a revolution. In the early 80s, most received haircuts in one of three ways: in full-service salons, from a mom-and-pop barbershop (remember the barber pole?) or at home. We saw the industry changing. We believed that haircare, like real estate, fast food, pizza and many other industries, would change from one dominated by independent mom-and-pop salons to one dominated by national brands. We believed the Great Clips concept of providing the customer with outstanding quality, more convenience at a low, affordable price would be the concept to change the industry.

Great Clips led the haircare industry in change, providing better service and more convenience for customers. We were among the first to be open evenings and all day Saturdays and Sundays with no appointment necessary. Our stylists are motivated professionals, highly trained to serve the customer. For the customer, this means high-quality, convenience, at a low price – more value.

Great Clips led the way in creating a better work environment for stylists by providing base wages, paid training, paid vacations and heath care for our salon professionals. Great Clips quickly became the place to work; we attracted the best of the best stylists to our salons.

The success of Great Clips is the result of combining sound business principles with a concept of convenience and quality in haircare. The company has developed comprehensive training systems, policy and procedure manuals, and sophisticated marketing and advertising programs that support the development and ongoing operations of every Great Clips salon.

BTB - What made you decide to franchise?

RB - Franchising is very powerful. It combines the capital and management skills of local entrepreneurs with a proven operating system. As a franchisor, we provide the system, training, and marketing clout of a large organization. Our franchisees provide capital and management skills. By franchising, we could grow much faster than we could on our own. More importantly, the local management of our franchisees means our salons will be better operated and our customers will get better value and higher quality.

BTB - Tell us a little about the hair salon market?

RB - The haircare industry is a $55 billion industry. The industry is predominately made up of independent, single salon operators, but national and regional brands are beginning to make their presence known. Great Clips, with over 2,800 salons, is the World’s’ largest salon brand. The top 10 national and regional brands still account for a very small portion of the market.

National brands will continue to grow and take market share from the independents. Great Clips, with the power of national advertising, a sophisticated customer-driven operating system, the best training in the industry, delivered in local training centers and a dedicated team of business services specialists, will continue to lead this transition. We believe the industry will soon be dominated by national brands, and Great Clips, by continuing our disciplined focus on giving customers what they want, will be the largest, best positioned brand in the industry.

BTB - What have some of the challenges been in growing your franchise?

RB - Like any fast growing business, we have faced many challenges. The most important one we face every day is making sure every customer who walks into any of the 2,800 Great Clips® salons gets the comfort, connection, and freedom they want. We have spent over 25 years refining and focusing our system to deliver what is important to the customer. We know what customers want, we know how to give it to them, the challenge is to make sure it happens over 70 million times a year.

BTB - Who has been your greatest inspiration?

RB - Ray Kroc. He built a franchise powerhouse by focusing on keeping the system simple, customers happy, and helping franchisees become successful and profitable.

BTB - What are some of the advantages in being a Great Clips franchisee?

RB - Great Clips is a very focused, disciplined system. We have the systems, training, and tools to help franchisees build very successful and profitable businesses. As I look back over the past 28 years, what I am most proud of is the franchisees who have used the Great Clips system to build successful businesses, change their lives, live their dreams, and build a legacy for their families.

BTB - What “Gadgets” (Blackberry, Iphone, Ipod, etc) can’t you live without?

RB - I am old fashion…the one thing that would be hard to live without is a simple cell phone.

BTB - What do you do in your spare time?

RB - I like to stay very active. In the summer, I water ski, golf, and run. In the winter it is snow skiing and hiking.

BTB - What advice do you have for someone looking to acquire a Franchise?

RB - It is important you find a good fit when you join a franchise system, so it is important to talk to as many people as possible. This includes the corporate team and the franchisees. Ask the franchisees the money questions, but more importantly, ask them what they do every day, how does that fit with what you enjoy. Ask them what the franchisor does to help them. Ask for specific examples of tools and systems they use.

BTB - In your opinion, why do you think that Great Clips would be a great opportunity for someone?

RB - Great Clips is nearly 30 years old. We have a proven track record of helping franchisees live their dreams and build their legacy. Great Clips has grown in good times and bad. While others have struggled through the last couple of years, Great Clips and our franchisees have continued to grow and prosper.