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The barbershop business has staged a steady, if unspectacular, comeback since hitting bottom in the late 1980s. Now, Joe Grondin is trying to jump-start the business by franchising the traditional corner barbershop.

Mr. Grondin, 56 years old, opened his first Roosters barbershop in 1999, and began franchising the brand in 2002. There are now 14 Roosters barbershops open, eight more under construction and 20 under contract to be built.

But the question remains: Can the traditional neighborhood style be preserved in a franchise setting?

After all, the basic idea of a franchise is to standardize a successful business model and replicate it across geographical boundaries, allowing the brand to proliferate while keeping costs down for the franchisee. But the success of a barbershop has depended to a great degree on the barbers as individuals — not just their skills, but their personalities. Men traditionally have gone to barbershops as much for the comfortable camaraderie as for a haircut or shave. Can that personal touch work within the standardization of a franchise?

Mr. Grondin is convinced that it can. “Men like the concept,” he says. “They’ve gotten real tired of going to their wife’s beauty shop. And the wives were tired of having them there.”

The number of licensed barbers in the country climbed to more than 220,000 last year from a low point of about 185,000 in 1989, according to the National Association of Barber Boards of America, based in Arkadelphia, Ark. That is still down from an estimated 350,000 in 1960, when longer hairstyles started to come into vogue, triggering a decline in business. “Elvis and the Beatles started it,” says Charles Kirkpatrick, the barber association’s executive officer. But short hair has made a comeback, and so have barbers.

Roosters MGC Inc. is trying to re-create the traditional barbershop experience, where men go to hang out, argue about politics, chat about the weather and, while they are there, get a shave and a haircut.

Some observers are skeptical about the company’s efforts. Barbershops are “all totally individual,” says Mic Hunter, author of “The American Barber Shop,” a book about neighborhood barbershops. “If you try to franchise it, it doesn’t work. You can put a dead animal on the wall, and a gumball machine in the corner and say ‘This is a barber shop,’ but unless you know the barber, it’s not a barbershop.”

But Mr. Grondin isn’t deterred. He acknowledges that he is up against a tough task, but suggests that the advantages of franchising, careful selection of franchisees and a detailed set of standards will overcome the difficulties.

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Question: My husband and I are in our mid-20s and are interested in starting a business — and purchasing a home — within the next two to three years. We are wondering whether it makes sense to buy a home before or after starting the business. Would taking on a mortgage help or hurt us when we apply for small-business loans? 

– Courtney Myers, Arlington, Va. 

Answer: Qualifying for a start-up loan will probably be tricky no matter what you do. Many lenders are reluctant to finance new businesses without a financial track record in hand, and a sizable number of start-ups fail within a few years. So most start-up entrepreneurs resort to tapping home equity, taking loans from friends or family and maxing out credit cards. 

That said, a mortgage may give you an edge when applying for loans as long as your credit rating is healthy and your mortgage payments don’t seem disproportionately big compared with your projected monthly income, says Jim Hammersley, head of the Small Business Administration’s loan programs division. 

The most critical factor lenders consider when underwriting a loan is the likelihood of you paying them back. So if your credit history is rocky or monthly mortgage payments stretch your budget too thin, the lender will generally consider you too risky a bet. 

But here is also where a mortgage can help: Many small-business lenders, including those offering loan guarantees through the SBA, request that borrowers put up collateral as a way to get paid back in case you renege on your loan obligations. Homes are typical forms of collateral that lenders look for, says Bill Morland, chapter chairman of the Orange County, Calif., SCORE, a volunteer group of retired executives loosely affiliated with the SBA. As a general rule, assuming that the home has equity, “that helps because there’s an asset,” Mr. Morland says. (And, yes, this does mean the lender can take your home if you can’t pay it back.) 

If you do get the mortgage first, you are best waiting at least a year before applying for the business loan, suggests Rebecca Macieira-Kaufmann, head of the small-business unit for Wells Fargo & Co. The reason is that too many credit inquiries and new loans too close together can temporarily bruise a credit score. And because it will give you time to prove to lenders you can handle your debt payments. 

 

 

By Kelly Spors From The Wall Street Journal Online