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Companies trying to franchise tanning salons

Harvin Greene still loves looking tan, but with a 3-year-old daughter, she doesn’t have much time anymore for sitting in the sun or keeping frequent appointments to use a tanning bed.
“The tanning business is dominated by independents ... They still use handmade signs,” says Steven Berkman, vice president of franchising for Palm Beach Tan Inc. “There’s an opportunity here for a great retail brand."Ron Heflin / AP
/ Source: The Associated Press

Harvin Greene still loves looking tan, but with a 3-year-old daughter, she doesn’t have much time anymore for sitting in the sun or keeping frequent appointments to use a tanning bed.

So every once in a while, the 31-year-old Atlanta homemaker dashes into a local salon and gets a spray-on tan that lasts about a week.

“It’s big, I don’t have to wait, and I get an immediate tan,” Greene said. “Everybody asks, ‘Did you just get back from vacation?”’

Greene’s Atlanta salon represents a new trend in indoor tanning. It is huge, brightly lit inside, and is owned by one of several companies that are trying to create major national chains in an industry that doesn’t have any.

Americans spend an estimated $5 billion a year on getting and staying tan, but the five biggest chains account for a minuscule 5 percent of the market, according to industry experts. There are an estimated 25,000 tanning establishments in the United States, but that includes health clubs and nail salons with a tanning bed or two in the back.

Unhappy customers say those outfits lock customers into costly long-term contracts, offer outdated equipment, minimal service and not enough beds to meet demand during the peak season, which runs from now into June.

Many of these new tanning tycoons come from the movie-rental business. They see similarities between their industry and video stores before Blockbuster Inc., which offered better selections at reasonable prices.

“The tanning business is dominated by independents, and many of them are single-store owners. They’re not in good locations. They still use handmade signs in the windows,” says Steven Berkman, a former Blockbuster executive who is now vice president of franchisi'g for Palm Beach Tan Inc. “There’s an opportunity here for a great retail brand, just like the video industry in the '80s.”

Privately held Palm Beach Tan has been building stores — including the one in Atlanta that Greene visits — that are bigger than 3,000 square feet and contain 20 or more beds. Based near Dallas, it claims to be the largest chain by sales — about $50 million — because it owns half its 100 stores and makes more revenue than franchise-heavy chains that just get royalty payments from store operators.

Other large chains include Planet Beach Tan, based in Marrero, La., with 300 stores; Hollywood Tan of Mt. Laurel, N.J., with about 225; and L.A. Tan of Lincolnwood, Ill., with 140.

The average franchise requires an investment of about $250,000, but it’s about $350,000 at Planet Beach and closer to $600,000 at Palm Beach.

The chains are aggressively pursuing successful independent operators. Janie Robins of Harrisburg, Pa. and a partner already operated several video stores and four independent tanning salons when they opened a Palm Beach Tan last year. She said being a franchisee stretches her advertising budget because the company helps design and test promotions.

The chains also offer equipment that many independent salons lack, including newer, more powerful beds and spray-on tanning booths that don’t use ultraviolet radiation. They can do this partly by negotiating discounts with manufacturers of the beds, which cost $6,000 to $30,000 each.

Donald Zale, a former Blockbuster franchisee who runs nine Palm Beach stores in the Washington, D.C., area, said he is breaking with past practices that angered customers of other salons, especially forcing them to sign long-term contracts.

“There were some horror stories about those,” he said.

There is a good reason why the new chains are chasing customers of other salons: The tanning industry, for all its size, is essentially flat.

A majority of salons say foot traffic is down and sales have been flat to up just slightly recently, according to industry publication Looking Fit. Judie Bizzozero, the magazine’s editorial director, said customers have been forced to cut back to pay higher gasoline and utility bills.

John Overstreet, executive director of the Indoor Tanning Association, a trade group for salons and bed manufacturers, said the business is stable but not growing like it did in the 1990s. He and his members blame the stagnant market on warnings that exposure to UV radiation can lead to skin cancer.

The National Cancer Institute reports that users of tanning equipment are far more likely than nonusers to develop skin cancer, the fastest-growing form of cancer, with 1 million new cases diagnosed last year. The American Medical Association favors prohibiting anyone under 18 from using tanning equipment.

Regulations vary by state. Some prohibit children under 14 from using tanning beds, and a few, including Arizona, Illinois and Ohio, require parental permission for anyone under 18.

Industry officials have countered that doctors overstate the dangers of UV exposure, citing the work of Boston University researcher Dr. Michael F. Holick, who recommends up to 15 minutes in the sun without sunscreen several times a week to help the body produce vitamin D.

Ronald Moy, a dermatologist and surgeon at the University of California, Los Angeles, dismissed the need for more vitamin D and said the industry is undercutting doctors’ ability to counsel patients to protect themselves.

It is particularly hard to convince teens that tanning could lead to cancer many years later, Moy said.

“They nod their head and agree,” he said, “but they think the risk is small if they just go a few times.”

Clearly, tanning salon customers are willing to take their chances.

“My vanity overrides health concerns,” said Lana Morgan, a 45-year-old sales rep from Kings Park, N.Y., who visits a salon three or four times a week. “I’m in sales, and I have to look good.”

But the percentage of Americans using tanning beds has flat-lined, and most of the industry’s growth now comes from selling spray-on tans, said Steve Smith, chief executive of Planet Beach Tan.

Smith’s company, which franchises about 300 stores, is adding skin-hydrating machines and facials and recasting itself as “the tanning spa” — it’s even trying to trademark the term.

“We had a lot of negative press when it comes to UV tanning equipment,” he said. “This approach might be the missing link that takes us into the future.”