Site Visit: Great Clips!  Entrepreneur Franchisee Provides Career Opportunities for Stylists

By Bruce E. Lundegren, Assistant Chief Counsel

Jerry Akers has a real passion for his businesses – and for his employees.  Jerry’s family-owned business – called Sharpness, Inc. – currently owns fifteen Great Clips hair salon franchises in Northeast Iowa, with many more on the way.  Advocacy staff met with Jerry in Cedar Rapids, Iowa, following Advocacy’s Regional Regulatory Reform Roundtable in Des Moines.

As Jerry explained, many of his 130 employees lack college or even high school degrees, but they can still achieve a rewarding career as a hair stylist, with his average stylist making about $47,000 a year.  However, the training is a bit more rigorous than one might expect.  Although there is considerable variation by state, hair dressers in Iowa must undergo a 2,000-hour training program that can take up to eighteen months to complete and cost up to $20,000.  This can be a real challenge, especially when up to 60 percent of Jerry’s employees are single moms.  That also means that health insurance is a real priority for them, and why the company has tailored a generous benefits package to recruit and retain stylists.

Asked about the business and regulatory climate, Jerry mentioned several regulatory burdens his company faces.  The first is the NLRB’s recent joint employer ruling, which has caused a real struggle between franchisors and franchisees.  In the past, franchisors could only be held liable for acts of a franchisee if they had direct control over the franchisee.  Now, however, with the new ruling, franchisors can be held liable if they only have indirect control.  This has made franchisors hesitant to provide the advice, training materials, and other support that were once a mainstay in the industry – and items that are clearly spelled out in the contractual documents entered into by the parties.  Fortunately, this decision is under review and Jerry hopes for a return to the prior rule.

Jerry also noted other barriers to business, including the cost and paperwork burdens of the Affordable Care Act, uncertainties in the new tax law, and some rigidity in SBA lending programs.  However, the biggest issue weighing on Jerry’s mind is the brewing labor shortage across the region.  He has been understaffed and it is difficult to find people who will to go through the necessary training to become a stylist when there are so many other jobs available.  That’s another reason Jerry has fostered a supportive business culture and a generous benefits package for his employees, including tuition reimbursement, retirement plans, health care insurance, and lifestyle training.

Great Clips is a top 50 franchise group, and Jerry is an active member of both the National Federation of Independent Business and the International Franchise Association.

Advocacy was in Iowa for Regional Regulatory Reform Roundtables July 17-19.

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Bruce Lundegren is an Assistant Chief Counsel for Advocacy whose portfolio includes safety, transportation, and security. Lundegren can be reached at bruce.lundegren@sba.gov.