Sola Salon Studios: Innovation and Risk in the Sharing Economy
The case examines two entrepreneurs who were considering opening a Sola Salon Studios franchise in Pennsylvania, despite a challenging regulatory environment and intense competition. Sola is an innovative salon business model in which stylists (aka Solapreneurs) license fully equipped salon studios to run their own businesses. Sola's business model epitomizes the entrepreneurial opportunities available in the sharing economy, resulting in its rapid expansion across the United States. Despite this opportunity, Sola and its franchisees faced significant legal risks, similar to those encountered by other pioneers in the sharing economy, because the laws in the state of Pennsylvania, as currently written, could be interpreted as preventing the Sola business model from operating. The case prompts discussion of various business concepts including: the sharing economy, the inherent risks and likely tradeoffs of entering an uncertain market, and behavioral aspects of decision making.