Executive Q&A
Executive Q&A: Heather Elrod, Executive Chair of Uni K Wax® and Managing Pa...
1851 Franchiseyour franchise story
Heather Elrod, Executive Chair of Uni K Wax®: I essentially grew up in franchising. My father Jim Amos is often dubbed the "Godfather of Franchising". He introduced me to this world, and I climbed the ladder in various brands, handling training, operations, marketing and even quality service and cleanliness standards. Eventually, I found myself in executive roles such as COO and CEO for different brands.
I've been in franchising for over 30 years now, which is hard to believe. I was even on the IFA board from 2006 to 2008. Franchising has been wonderful for both me and my family. I cherish the idea of helping others achieve their dreams and supporting franchisees, and the relational aspect of franchising is deeply significant to me.
1851 Franchise: You obviously knew your father's profession, but did you grasp the essence of being a franchisee?
Elrod: Absolutely. It was a learning journey for me, but over time, I came to understand the core of franchising through my father and other mentors.
Franchising fundamentally revolves around relationships. The business model has to be solid, underpinned by robust unit level economics. It's about the franchisor supporting the franchisee's success. I grasped quite early that it's centered on this mutual relationship and the right business structure. Both the franchisor and franchisee must benefit. If this balance is skewed, things can easily go awry. With the influx of institutional capital and private equity, the franchise landscape is evolving. While this is largely positive, it's crucial to not lose sight of the relationship's value and ensure it's not solely about franchisor profitability, especially at the expense of the franchisee.
1851 Franchise: Do you think this oversight stems from the influx of new franchisors, an abundance of consultants or perhaps the significant influence of private equity?
Elrod: I believe when there's institutional capital involved, there's often an exclusive focus on maximizing every penny of EBITDA. When companies go public, they're constantly judged by their quarterly earnings, leading to short-sighted decision-making. However, there are investment groups like my company, Conscious Capital Growth, and others like Exaltare Capital, that truly grasp the franchisor-franchisee relationship and the mutual success therein. Maintaining this balance is crucial.
1851 Franchise: How did you transition from the franchisor side to the private investment realm?
Elrod: My last stint as a CEO was with Amazing Lash Studio. I genuinely enjoy aiding founders, assisting them in their growth and ensuring their financial success. With Amazing Lash Studio, we successfully expanded from 70 to over 200 locations in just two years. We then sold the business to KSL Capital under the Wellbiz Brands, Inc. umbrella. I continued working with them post-acquisition and during the COVID period, always knowing that I wanted to move into deal-making.
My partner in Conscious Capital, Christo Demetriades, co-owned Lunchbox Wax, currently renamed Radiant Waxing, and sold it to KSL. We always envisaged venturing together due to our shared values and leadership styles. By late 2021, we established Conscious Capital. We now collaborate with various founder-led companies and executives, aiming to bolster their brands. Our approach focuses on wholesome growth rather than growth for its own sake. We've inadvertently found a niche with brands that have fewer than 50 locations and are yet too small for traditional private equity. We offer a flexible investment approach, focusing on high-growth industries.
1851 Franchise: As someone from the private investment sector, when you're evaluating brands, do you actively seek these gaps in fundamental elements? And does your investment and intervention potentially offer more value by addressing these areas?
Elrod: Absolutely. We scrutinize the product or service, its quality and the consumer feedback. Equally vital is the sentiment of the franchisee and the profitability of individual locations. Many younger systems need resources, both in terms of finance and human capital. A common shortfall we've observed, even in brands with over a hundred locations, is the absence of a robust business intelligence platform and technical stack. This is a pivotal element for us because it unveils the brand's latent potential. Data often narrates an operational story, and by delving deep, we can identify opportunities for franchisees to enhance their revenue and profitability.
Existing franchise owners who recognize these enhancements often come forward, keen on expanding their domain before others capitalize on the opportunity. We don't directly run the business units. Instead, we invest in the founders. Some founders wish to remain, while others want to retire. Our goal is to support and broaden the executive team when necessary. Our help is behind the scenes, fueling the success of the business unit.
We intentionally want to retain the soul of the entrepreneurial spirit within the business. I've experienced instances where, after institutional capital comes in, things change drastically. Although additional capital provides resources for requisite growth systems and processes, it sometimes introduces bureaucracy and mandates that can alter the original mission of the business. This can stifle the energy and creativity within the brand. We strive to avoid this. Our intention is to add value from day one, aiming to increase value for all stakeholders — employees, franchisees and the corporate office team. That's one reason we named our firm Conscious Capital Growth. Our intent is to act as servant leaders, seeking brands and businesses to invest in that serve a higher purpose, such as improving people's lifestyles, health, wellness, education and overall life experiences.
1851 Franchise: What motivated the decision to acquire a brand like Uni K rather than building one from scratch?
Heather: Our investment approach is focused on established businesses, not startups. We want to invest in strong businesses and accelerate their growth. With Uni K, it had history and innovation on its side. The brand has been around for over 30 years and has remained innovative. The wax we offer is superior, and customer reviews reflect that. The brand primarily operates in the Florida and New York/New Jersey markets. We saw significant growth potential, especially given the brand's strong financial performance. We typically look for brands in the beauty category that also have a product vertical, which Uni K offered since they manufacture their own wax in the U.S.
1851 Franchise: How do brands like Uni K get on your radar?
Elrod: We've always been interested in the beauty category. Uni K was on our radar for years. The opportunity arose when the founder, Noemi Grupenmager, wanted to retire. The brand's product and the franchise arm appealed to us. Also, having a strong Item 19 in the FDD, showcasing impressive revenues, solidified our interest.
1851 Franchise: Having someone with your experience and track record backing a business speaks volumes. This should be compelling for potential franchisees.
Elrod: I appreciate that sentiment. We conduct thorough due diligence before making investments. In the case of Uni K, I also partnered with Exaltare Capital Management and its president, Omar Simmons. Omar is a successful franchisee investor, particularly with brands like Planet Fitness. He has a track record of growing his own locations from just five to over a hundred. With Uni K, this is his first venture as a franchisor. This brings a unique perspective to our board. We prioritize the franchisees' perspective, evaluating every strategic initiative through their lens. Not all companies prioritize this franchisee-centric approach in the boardroom.
I hope prospects and founders find our blend of investment and operational experience compelling. There's a track record of success, but there's also a history of learning and mistakes. We want founders to feel confident that they're in good hands.
1851 Franchise: Is there anything else you want potential candidates to know about Uni K, Conscious Capital or you, that might help them decide if this is the right opportunity for them?
Elrod: With Uni K Wax, our most recent investment, the product and guest experience stands out. It's the only brand that provides an individual wax pot for each guest, ensuring hygiene. During our due diligence, the all-natural wax and the brand's history were compelling. The brand, having been around for 30 years with a pioneering founder like Noemi, has a personal touch to it. Noemi created the brand with her daughters in mind, which showcases the care and detail she infused into every aspect. I'm confident that Uni K Wax will be among the fastest-growing franchises in the country.
The total investment necessary to begin operation of a Uni K Wax Studio ranges from $390,135 to $ 650,345, depending upon the size of the location and the type of market in which it is located. If you sign a Multi-Unit Development Agreement, your Initial Franchise Fee will be reduced to $30,000 for your second Studio and $20,000 for all Studios you agree to develop in addition to your first and second.
For more information, visit: https://unikwax.com/franchises/
