Companies trying to franchise tanning salons

updated 2:17 p.m. ET March 15, 2006

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Unhappy customers say those outfits lock customers into costly long-term contracts, offer outdated equipment, minimal service and not enough beds to meet demand during the peak season, which runs from now into June.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

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