Shining A Light On Sun Tan City
Launching Sun Tan City in 1999, brothers Rick and David Kueber were no strangers to the success found in the tanning industry. Prior to opening Sun Tan City the Kuebers owned and operated a 13-unit independent video rental chain. Building a successful business in the video industry came easy to the gifted entrepreneurs, despite their vast competition and seasonal slowdowns.
Seeking a way to generate revenue in the spring, a generally slow period for video stores, the pair decided on tanning beds. With spring being the busiest time for indoor tanning, installing the UV beds in the back of their video stores was the perfect solution to offset the down season.
“We knew there was an opportunity for a business in this industry because of our success with tanning in the back of video stores. Several of our video stores had tanning beds with a seven to 14 day wait for tanning appointments,” Rick explains.
Aware of the demand for the growing phenomena, the Kuebers starting looking at the current market and quickly noticed that there were no high capacity salons. “There were a lot of four to 10 bed salons, all of which had the problem that there was a demand but no capacity.”
In January 1999, the Kuebers opened the doors their Sun Tan City, a 30 bed-tanning salon, in Elizabethtown, Kentucky. Selling the video rental store in 2002 to Movie Gallery, the second largest North American video retailer, their sole focus was now on Sun Tan City.
“In the first year we owned Sun Tan City we were tanning 800-1000 people a day,” Rick says, adding that although they were busy they hadn’t yet learned how to maximize productivity or total revenue, and therefore weren’t making a lot of money. This didn’t stop the business savvy brothers, and by 2004, through hard work and determination they began seeing exponential revenue growth.
Learning how to maximize productivity and total revenue, a pivotal step was made when they began selling monthly memberships, requiring a credit card or banking information to conveniently process monthly payments automatically. This user-friendly system by Sun Tan City has lead to over 50 percent of revenue today coming from recurring customers.
Initially, the brothers had not intended to franchise their tanning business. However, when former colleagues from their video rental business visited to express their interest in the tanning industry, they proposed that rather than reinvent everything the Kuebers had already done, why not franchise the concept from them. After careful consideration and advice from attorneys, the Kuebers agreed to open their first franchise location in Augusta, Maine in 2007.
With the building blocks in place, and plenty of opportunities in the national market, their focus shifted to developing a successful franchise plan. “We want to be smart about our franchise growth. We’re not interested in selling to everyone and anyone, we want to make sure that we find franchisees that are a good fit because they are business partners, and what they do impacts the brand and other franchisees,” Rick says. “We want to make sure we’re absolutely certain we have the right partners.”
The most important factor when assessing potential Sun Tan City franchisees is if they’re a business minded individual. While previous multi-unit franchise experience, retail management, or a real estate background can prove to be helpful in this industry, it is not required. “Anyone with previous franchise experience that is looking to diversify their portfolio [is welcome],” says Beth Ransdell, Director of Franchising for Sun Tan City, adding that the Sun Tan City concept could be a good fit for someone who is looking for something with a simple operating plan and a small footprint.
A potential Sun Tan City franchisee must have a minimum net worth of $500,000 with liquid capital of at least $250,000. The franchise fee is $30,000, and investments between $457,150 and $780,700 may also be necessary to build and equip a salon, the amount varies depending upon the size of the salon and the geographical area. While the initial investments may be high, the rewards of entering a five billion dollar per year industry can quickly prove it’s worth. Indoor tanning has grown substantially in the last 25 years, and in the US, approximately 28 million people tan indoors annually. On an average day, more than one million people tan in salons, and due to the industry’s rapidly expanding demographic, this number continues to grow.
Franchising with Sun Tan City involves a seven-step approval process, beginning with submitting a franchise application to qualify the applicant financially and geographically. If the individual is approved they then participate in Discovery Day, which involves a visit to headquarters, interaction with its various departments, taking tours and visiting established salons. Once the paperwork, background and credit checks are complete, the applicant works with the Director of Franchising to finalize their Development Agreement.
Sun Tan City gives franchisees the resources, training, and tools they need to be successful and provide a great tanning experience. A rigorous training program includes webinars and hands-on in salon training. Sun Tan City also offers full marketing support. “We know marketing is critical to success,” Rick says. Each month franchisees receive a well-researched promotion kit. Franchisees also benefit from the assistance from three full time analysts who are devoted to helping their businesses thrive, as well as a full time call center which receives all salon level customer service calls, a feature very unique to the industry. “One thing we know about being a Sun Tan City franchisee is that we treat our franchise locations very much like corporate locations. There are a lot of things administratively we handle on our end,” Rick explains. “We have strong internal systems to automate different processes, and we build those not only for our corporate stores, but they handle our franchise locations as well.”
Sun Tan City is also looking to convert independently owned tanning businesses to their brand. In doing so they are offering special discounts including no upfront franchise fee, a reduced royalty structure, and a $13,000 credit to each location. This credit will offset the costs of exterior signage, interior-branding materials, and other conversion related expenses. A major selling point for converting to the Sun Tan City brand is that while the tanning industry average for an independent salon is $261,000 a year, Sun Tan City franchisees earn $583,000- more than double the industry average.
The Kuebers have grown Sun Tan City from “a few tanning beds placed in the back of an existing video store” to its current position as the fastest growing chain of indoor tanning salons in America. They have overseen the growth of their business to over 240 locations in 17 states.
Focused on rapid expansion across the east coast, franchising in new states is also being considered. “Our first layer of focus will be to fill in the areas around where we’re already located,” Ransdell says. Currently researching areas in Michigan, Indiana, Ohio, Alabama, Pennsylvana, she assures, “If an opportunity presents itself more west coast, we’ll take a look.”
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