This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel

Patrick: Again, I want to introduce Emad Aovida. And I’m going to add him on to the live stream here. Emad Aovida is an engineer by trade. Originally from Israel, he speaks a few different languages, English, Hebrew, and Arabic, as well. His specialty over the years since graduating in engineering has been in construction, particularly in the interior build outs. So you can imagine for building a franchise system where the interior design is that important and keeping the costs low. It’s huge value add for a system like ManCave for Men barbershop.

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Learn about a growing luxury barbershop franchise directly from the Co-Owner

P: He founded it back in 2011. So nine years strong, they have nine operating locations, and three under construction, and another three that are in negotiations for the leases. So he’ll talk a little bit more later on about the opportunities on the real estate side in terms of negotiating rents, getting decrease rents, because of the COVID and also talk about how they’re positioned during COVID-19 and the pandemic.

But first, I just wanted to pass it over to Emad, just for a brief introduction. Maybe just a minute to introduce yourself. And then I have a few questions for you that we’ve gotten from on pass Vetted Biz, consumers. Thanks Emad for being on.

ManCave Founding Year And History

Emad: Hi, Patrick. Thank you for having me. And thank everybody who’s listening. So my name as Patrick said, my name is Emad Aovida. I’m the founder and the owner of ManCave for Men. I started this business in 2000. The first store was opened in 2011. And in two years later we opened you know, we were doing really good. And we went we opened a second location.

In 2018, we decided to start franchising. So right now we have nine operating stores and three under construction, we trying to have them open by the end of this year. And also another three that we are in lease negotiation right now. And also we just hired a development company that we’re gonna be expanding to all, most states, especially none registered, and we have a few that we’re gonna register too. So we’re gonna be almost going after like 30 states by… this is gonna start November.

P: Really exciting stuff, Emad. So tell me a little bit how did you get into the barber shop space? So you first started in engineering and then entered the civil construction interior build outs? How did you come across barber shops?

Why A Barbershop Franchise?

E: Okay, as you are aware, Patrick, back in 2010 when we have that recession, and the construction went really bad. So I started looking for other ideas and I always liked the idea of beauty to be in the beauty business. And I’ve seen the lack of of having like a place for men that he can go and just like, you know, women do have a salon that they can go there have their manicure, pedicure, haircuts, facials, and everything maintain.

P: A man cave a place setting out.

E: Exactly so when I thought the man needs also the same, you know, I felt like we were lacking that and we needed a place for a man. So the first thing came to my mind the man cave, you know, a place for the men to go and feel comfortable and even myself I used to go to hair salons and I never felt comfortable being there you know? Especially, with women being next to, you know, women using like hair blower and very loud. And so I wanted something more quiet more somebody can come in, they have sport channels we have like a large screen TVs, you come in you relax, you grab up a beer or Hawaiian,…

P: That’s nice.

E: …and enjoy, you know, enjoy just that feeling that you’re in your own man cave.

How Often Do Most Of Your Customers Visit A ManCave For Men?

E: We have customers that come every two weeks, and we have a lot they come every almost two weeks.

P: I imagine especially because beards are becoming more fashionable, first time in many, many years, that they’re becoming more fashionable that people wanna pay for that.

Men’s Grooming: Emerging Trend

E: That’s true. I mean, if you see I mean now, right now, if you look at the, 80s, 90s and what’s going on now, men now you see that they really take care of themselves. You see, like the beard, you see the trimming, you see the manicure, everybody like to look more clean, even see people like, just with the hair growing or leaving their, you know, just wild…

P: And probably a key thing at first, maybe you started in big cities like New York, but since then it’s spread all over.

E: It did. It did.

P: So yeah, definitely. I mean, in Miami, you clearly see that. And now we’re starting to see that across the states. So how do you, you know, one thing that I found that is kind of difficult, on the man grooming space, and just the beauty industry overall is finding and training the employees, the barbers in this case, because at times, they’re kind of like an artist, and they can be kind of difficult to manage if you don’t have the right systems in place. So could you tell me a little bit about how you find trained barbers, support franchisees with those efforts?

Training Staff For Your Franchise

E: Yeah, I mean, first of all, when we hire a barber, we make sure he brings someone with him, so he can watch how he does his haircuts to make sure it’s all standards. And after that, what we’ll do, we’ll take them to shadow another barbers that we have for a week or two weeks to make sure they are following our standards.

1099 Contractors or W-2 Employees

P: Okay. And are these barbers on…do they get paid? Are they W-2 employees? Or are they more of a contractor, or a 1099 contractor? How’s their employment status in most states? Because I know it varies by state too?

E: Right. Mostly what we use, we use them they work and 1099 you work in commission. So, yeah, so we have normally we go with them as 50/50 commission or 40/60 depends. Somebody who’s… [crosstalk 00:08:26]

P: Okay, it depends on how good they are, how good they are with the clients.

E: Exactly.

Staff as a Cost of Goods Sold in Income Statement

P: That’s great. So you have, I mean, they’re at cost of goods sold. So if you’re managing a business, you’re only paying them if they’re producing and selling services.

E: Exactly, exactly. And this way, also they hustle, if you give them hourly, it’s hard, you know, you have to have somebody all the time over them and watching them and make sure that you’re not wasting time.

But we do know they are in commission, they are going outside with their cards talking to people and trying to bring customers they are going on the website…

Barbershop Franchise Location

P: Exactly, yeah, you instill in them that they’re an owner in this, you know they’re making more money the more they hustle so it seems like a great alignment together with franchisee and then yourself the franchisor. So we have some questions come in from the live stream. I wanted to start with Philippe St-Pierre, “Does the franchisor do market research to see if a location and city that has a potential franchisee will be interested if it’s a good opportunity?

E: Yeah, 100%. I get, first of all, if franchisees find the location, and he brings to me, we do the demographic we do the whole nine yards to make sure that it’s a fit and the players are gonna be successful and I wouldn’t take a location if it’s not an A plus. It has to be a place that 100% gonna work for a ManCave concept.

Target Market For Barbershop Business

P: What are some of the things that you look at? Do you look at demographics? What makes a good location in terms of basically the demographics and then more on the real estate side?

E: Yeah, like, demographic I mean, we go from medium like, when it comes to income medium to up because our is not like, that expensive but it’s…

P: What is it again?

E: Our ticket like the average is $30 for a haircut.

P: Okay.

Ideal Location For Barbershop

E: Yeah, so we are like an upscale but at the same time we’re not that expensive. So we can’t compete there’s something called the Great Clips they do for 9.99 and 12 bucks and that’s not our market. So we stay away from their market. Also when we do we make sure we negotiate a good lease and also when I started this business I used to have 1400 to 1500 square foot of space. Now I’m trying to go up to 1200, 1000 to 1200 this way dropping the cost in real estate especially in areas because you’re going to a high end area. So the real estate there will be expensive so to cut down and…

P: What’s like, the ideal areas? The more suburban urban you know is it a strip mall? What would be the best location your best performing locations. What do those look like?

E: Would be like you said in a shopping center right but would be a mixed-use most of that you have residential, and offices, and commercial. So what I’ve been finding out, most people they get their haircuts and their services when they come back home you know when they come back from work. So it’s more to be where you have area that surrounded by a lot of apartments density and/or homes. Not just in a commercial area not like in a downtown. I see it more of a…

Franchise Owner Responsibilities

P: Right. And then another question from Philippe, “Could you explain what are the day-to-day tasks for a franchisee that don’t wanna do their haircut and wanna be more managing operations?

E: Doesn’t wanna be managing you said?

P: Basically they don’t wanna be cutting hair, they want to be more managing.

E: Yeah, I mean, one concept most I’ll say all of our franchisees none of them cut hair or their day-to-day will be I mean, we have two different franchisees, franchisee who wanna be involved day-to-day in the store and we have them they’re semi-absentee. So if you’re in the store, day-to-day you just be watching what’s going on the operation, but also you’ll be involved in making the payroll, ordering the products. I mean, there’s a lot of stuff for them to be doing beside I mean, if you’re not cutting hair, I mean, like I said this concept is not for I mean, so far we can have one person as a barber taking this concept. And you can be as a manager in the store or you can hire a manager in the store. If you wanna be semi-absentee you don’t even have to be in the store.

Semi-Absentee Franchise Model

P: So the folks that are semi-absentee, like how many hours are they putting in a month? Is this something that you could invest five hours of your time, 10 hours of your time and have a full-time manager?

E: A week, a month, you mean or?

P: A month on a monthly basis or you could say weekly.

E: Yeah, I mean, in a weekly I’ll say, a few hours, if you have a manager. Also, as we have cameras you can see them from your phone. So you can be watching your store from anywhere. Even if you’re out of the country, you could be watching your store and seeing exactly the whole operation.

P: And so how much does the franchise costs?

Less Investment To Open Franchise Than Competitors

E: Our franchise if you compare it to our competition or anything in the beauty, we are almost half of the others. It varies from…the cheapest would be 120 to 180.

P: Okay, and that includes a franchise fee, working capital and everything.

E: Yes.

P: Okay, great. So yeah, in terms of just any franchise, I mean, there’s obviously some low cost franchises like property management or things that the customer doesn’t come to you, but in terms of a franchisor where you receive the customer and it’s definitely on the low end.

Tenant Improvement for the Franchise

E: Also, what we do, like when we negotiate the deal with the landlord, we always try to get a TIA, which is a tenant improvement budget. So we can get money from the landlord, back to the franchisee, so that helps, with the cost. Most of the locations, and even the one I’m negotiating right now, I’m given between 40 to 70,000.

P: That’s significant. So, is that an upfront deduction? Or is that taken off the rent? How does that usually work for tenant improvement?

E: No, that’s when you finish building your store in a month’s time, 30 days after you open your doors, the landlord will write you a check.

P: That’s great.

Franchise Success: Differentiator

E: And the reason we’ve been successful with this when you’re a franchise and this is maybe you know, like a different when you go as a mom and pop and/or you’re a franchise always landlords willing to work because they know your concept is proven and they know that you’re gonna be there for 10 or 20 years. And normally we sign a minimum of five and we start at 10 years, and we do occupation up to 20 years. So the landlord feel much comfortable working with a concept that it’s…

P: For longevity. They want someone that’s gonna be around for a while not just open up for a year see how it is maybe close.

E: True.

Barbershop Response to COVID-19

P: Now it makes total sense. And tell me, it’s October 16th 2020 we’ve been in this pandemic for months now. I’ve seen the beauty salons here in Miami Beach where I live and barber shops here started opening up and seems like they’re pretty busy some of them. Can you tell me about how men’s grooming is affected by COVID-19 and how ManCave for Men, in particular is affected?

E: Yeah, I mean, what’s happening with us in the COVID we were closed for two months. As you know this is an essential business so we start… assume we opened after the two months we were like slammed with people because I mean, you know, you cannot… that’s one of the thing like, a bad barbary. With restaurants you can eat at home you can go buy something from us, but you cannot cut your own hair. Everybody’s hair is growing wide and we had to…

P: I had a Zoom call in like early April and I had my wife cut my hair a little bit I looked like an idiot. So I should have just waited and kept it growing up.

Franchise Safety Precautions

E: But we follow all the safety. We’ve been very good about cleaning, the whole chair and the tools and everything after each customer. The customer has to have their mask, the barber their mask. We’ve been using gloves. So it’s been very safe. We are,… I would say we are back with people, you know, there’s people still not coming out. They’re still feeling unsafe and staying home, but…

Financial Impact on Business Because of COVID-19 Pandemic

P: What are system-wide sales down? Down 10%, 20%? Or is it much more than that?

E: I’ll say 20%.

P: Okay, it’s all good. We have some…

E: [inaudible 00:20:29].

P: …franchises that are down 80% still in the food side. So that’s not bad all things considered.

E: Sure.

How Much Does The Business Make?

P: And then we have another question from Phillippe. What is the owner benefit that a semi-absentee franchisee can expect? And also for a non-absentee? So for those that don’t know what owner benefit is it’s basically how much can you make? How much money are you receiving from the business?

E: So normally, in our concept, you make approximate 20% to 30% of your sales. So the good location that the one that’s been established an average will be like in a 500,000. So 20% of that you’re talking about 100,000. That’s 20% if you’re more successful. And also depends if you can get people to work at 50% more than a [inaudible 00:21:50] So that’s more money for the store.

What Is The Barbershop Profit Margin?

P: And the margin I mean, I’m sure it varies on a lot of factors in terms of sales, and you have your fixed costs. And yeah, you mentioned how your labor costs are split into commissions with the barbers but for someone that’s an owner operator, and they’re there every day, I imagine it’s close to the, in the men’s grooming industry, someone owning a business franchise in that sector would be closer to 30%. Would that be right?

E: Yes.

P: And then a day-to-day manager maybe closer to 20%?

E: Yes.

P: Okay.

E: That’s correct.

P: All right. So tell us about your plans. So you mentioned you have three locations that you’re under construction, three more locations that you’re just going back and forth, negotiating the leases, helping your franchisees out? What’s in the future Emad?

Orlando Barbershop For Sale

E: Yeah, the three locations right now that are under construction one is Miami, which is in Palmetto Bay with South Miami. There’s also the one under construction also in Orlando by FSU. Sorry, by UCF, UCF, University of…

P: Central Florida.

E: Central Florida yeah. UCF…

P: That’s a good area. So you got it in one the plazas there?

E: Yeah, that’s a good job even behind us that’s a great location like I’m building it but I’m looking for a franchisee for that one. And I see that one is gonna be a very successful store. It’s…

P: So sometimes you’ll go out and build the location and if a franchisee wants to buy it, great. And if not, you keep it is that right?

E: Yes. Yes. So this is what I’ve been doing. You know, like building the stores. Because you know, when you are a new concept, so people to believe in you they wanna see an open the store. And so this is what I’ve been doing, I even, like, nobody does this and I always told you know, I told my franchisee and I’m willing to sign that, “If you’re not after a year…”

Personal And Corporate Guarantee

P: So you’re given a personal guarantee or a corporate guarantee with these landlords?

E: I’m sorry?

P: When you’re going out and opening up a new ManCave for Men location, and there’s not yet a franchisee that is interested in that location are you signing a personal guarantee or a corporate guarantee? Does the landlord require that from you?

E: Yes, yes, they do.

P: Okay, so you’ve got some pretty big skin in the game to make sure that that location works.

E: I am. I am. And like I said in that location you’re like, I mean, half a mile from the university where they have like, 60,000 students.

P: Yeah, it’s like one of the I think Michigan State and UCF are like the largest colleges.

E: Yes, and behind us, just behind us. And it’s the main entry to a 2 million square feet office space.

P: Oh, wow.

E: It’s just behind, that’s their main entrance through the shopping center.

P: That’s great.

E: So that’s, like, I’m really excited about that location. Like I said, I only, I go for really A plus locations. I’m not willing to….if somebody even comes to me, and he said, “This is the money, I wanna buy it, and I wanna be in this location.” And I don’t think that he’s gonna be successful, I’m not gonna do it.

P: So it’s been nine years. The stat is that 50% of businesses within the first five years, businesses that have any employees fail. Over the last nine years have you’ve had any closures?

E: No.

P: Okay, that’s great. Congrats.

E: Thank you.

Franchises for Sale in Florida

P: So tell me, so you have a couple of franchises, locations that you’d be willing to sell right now. You have the one in Orlando. Are there any other existing franchise locations you’d be willing to sell?

E: Yes, we have one in East Boca downtown Boca, Boca Raton. Also, we’re looking for a franchisee that’s in the areas called Royal Palm by Meisner Park. It’s a very high end. And right now they built in really high end hotels and ‘s Iitjust a few hundred feet away from the location and that location is sitting on Federal Highway physically…

P: Yeah, I’m very familiar with Federal Highway. We’ve had a few clients open up franchises in Boca Raton and I’ve been really impressed by just the money that’s there. And people are spending a lot of money on services.

E: So yeah, I mean, we have by the Boca Resort and they’re building this a huge Mandarin hotel. It’s a high end, you know, it’s a basically…

P: Yes, definitely. We have one here in Miami Beach. It’s great.

E: Yeah, we are like a walking distance, you know, from these high end locations.

Gulf Coast Of Florida Franchise Opportunity

P: That’s great. We have a question from Christian Benitez, “In your opinion, which is the area with the major development to put a franchise? And he’s saying “Fort Myers,” for example.

E: We just opened Sarasota, location Sarasota.

P: Okay, a little over an hour up the coast.

E: Yeah, so Fort Myers just before Sarasota. In Sarasota I was not like I said, all my stores were open first in the east coast of Florida. And we opened one in San Pete and one in Sarasota. And I find out that that area, it’s for some reason, it’s better than even the east for some reason. The guy in my franchisee in Sarasota he’s already signed another location and he’s looking for a third in Sarasota itself. He opened a month ago, and he opened with six chairs. And we have to go squeeze a seventh chair for him, because the demand that he had.

P: Seven, so he can have seven customers at the same time and it’s only been a month in business?

E: Yes.

P: That’s great. Fantastic.

E: Yeah, I’m telling you he went and he signed another location and he’s looking for a third in Sarasota, because he’s doing really well there.

P: That’s great.

E: Yeah.

Different Rents by City

P: Yes, and it seems like also in terms of rent, it’s gonna be a lot less and in Sarasota than Miami Dade County or even Broward County.

E: Miami. Yes. Especially like Coral Gables and…

P: Pricey.

E: Yeah. And Brickell.

P: We’re right up Lincoln Road. So it’s nice to see these businesses be able to pay their high rent, you know, 10,000, 15,000, 20,000 every month.

E: Sure. So the answer for Fort Myers like I said, I mean, I love the West Coast, but I’m not familiar to be honest with Fort Myers downtown or the you know,…

P: What do you do? Will you go and then you’re working with a local realtor to look at different commercial spaces? How do you explore a new area?

E: Yes, I have a company that I’m working with that they are very friendly and they have offices all over…

P: Great.

Franchise Focused Real Estate Agent

E: …and every time you know, I tell him, “Find me locations in Fort Myers,” he will go he will give me the best areas that fits the ManCave, and I’ll go and visit it with him to make sure it’s what we’re looking for.

P: Okay. And another question from Phillippe, “How long can it take to get to maturity?” So maturity, how I see it is your past breakeven because you don’t wanna just make $50 a month from the business, but to the point that you’re making thousands of dollars every month, and it’s not going into the red and your cash flow positive.

E: Sure. So normally it should take up to six months.

P: Okay.

E: But the Sarasota deal, it’s an exception. He’s already was in profit in the first month.

P: That’s great. And for people that are interested. Take me through the steps, a prospective franchisee reaches out to you, after this livestream, or after this recording, they talk to you are they also able to talk to franchisees to understand better the maturity breakeven and all that?

Franchise Disclosure Document (FDD)

E: Yeah, sure. Like, even in our FDD which is the franchise document, there’s a name of each franchisee, and their contact. So, this is let’s say somebody have an interest and we send them a nondisclosure agreement and we send them the FDD. So, from there he can make his phone calls or we can give it to, you know, if he I mean, we can, like I said, I mean, the FDD but if he need another one from… [crosstalk 00:32:03].

P: Help connecting, you can be the bridge to connect them.

E: Sure. Sure.

Item 19 Sales And Financial Information

P: Great. So tell me in the Franchise Disclosure Document do you have an item 19 where you disclose sales and other financials?

E: Yes, we do.

P: Okay, perfect. And at what time does a prospective franchisee usually review that? Is that after an initial call with yourself?

E: Say that again, Patrick, I’m sorry.

P: They would review… I imagine they would review the item 19 after having an initial conversation with you right?

E: Yes.

P: And then they would receive their Franchise Disclosure Document?

E: Yes.

P: Okay, great. And then yeah, I mean, you see, you know, biz buy sell and different sites even Vetted Biz we’re having more and more existing businesses for sale barbershops and beauty concepts. Why invest in the ManCave versus just buying an independent barber shop?

E: Like I said, ManCave it’s a proven concept and also it’s a difference between when you are the owner of the shop and competing with your barbers. So, it’s a different…and the support, the unlimited support that you get from us and your…[crosstalk 00:33:43]

P: Do you get support like, discounts with suppliers on the product cleaning solutions. How does that work?

E: Yes, we do because we have accounts with the factories, not with the stores.

Franchise Opportunities In Your State

P: And then we’ve talked a lot about Florida, outside Florida, what are good opportunities that you’d like to grow Texas, California, where do you wanna grow? And where can someone make money with ManCave for Men?

E: I think anywhere in the U.S., any state it depends of… and I’ve been talking to a lot of different people that they have an interest and any area that it’s developing and growing. So the ManCave will fit in all these areas. Like I said, there’s states that they are registered that we have to register first before they…

P: Exactly, to comply with the franchise law. So like, California is one of them, [inaudible 00:34:55] there’s a hint, maybe like 11 or 12 states.

E: That’s it. But the rest right we can get in with no problem. Right now I mean, we have one franchisee who came to us a few years ago. And he’s in North Dakota.

P: Okay, that’s a hot state. I mean, a lot of energy is going on there a lot of natural resources.

E: Yeah. And he’s doing very well. And also right now I’m talking to one in St. Louis, Missouri.

P: Okay. Yeah.

Area Development Opportunity

E: We almost just a negotiation, last final negotiation with the landlord to open a store there and he wanted his idea to open to be like as an area development, you know, he wanna start with one and try to open more stores like, multiple stores.

P: How many could someone manage? Could you have two, three, four, of these barber shops going on at the same time? Would that be difficult to manage multiple locations?

E: No, it’s the opposite. It would be easier after we train you and you get to all the training how to manage the first one, after that the rest will be much easier. Even like, if you go and open stores not too far from each other, I’m talking about like maybe four or five miles away from each other, so it’s much easier and this way you could even help each other .

P: Okay, so like the barbers for example, might go back and forth between the two different or three different locations.

E: Yeah. Like, somebody who’s absent for any reason the other barber can go you can work. Like like even here in Delray and Boca I think we have like two they go between two stores with a franchisee.

P: Solid okay.

E: Yeah. So they have a day or they go and work with them.

Business Breakeven/Maturity

P: When the business is at maturity making good money, like how many barbers? Tell me a little bit about the employees or contractors, you have the owner who might be a manager or might not be an owner operator. Besides that, that manager or having the owner manage it, how many barbers are you gonna have?

E: You know, our concept goes from you get six to 10, barbers.

P: Okay.