Hair Salon Chain Closing Doors Over Inability to Pay Debts

Beauty industry sources say closing forced by entanglement with gray market lenders, leading to accumulated debts of millions of shekels.

After more than 20 years in business, the Shuki Zikri chain of hair salons is shutting down due to financial problems, owners Shuki and Mike Zikri announced on Wednesday.

Sources in the beauty industry say that the closing was forced after the chain got entangled with gray market lenders and accumulated debts of millions of shekels.

Shuki Zikri - Moti Milrod - 22122011
Moti Milrod

While nothing has been filed with the police regarding alleged off-market debts, there are several lawsuits and Execution Office cases against the chain for other debts that haven't been paid to landlords, workers and suppliers.

Shuki Zikri had 15 branches, some of which were operated by others as franchises. The network also operated three hairstyling schools, and earlier this year, it expanded and rebranded a branch in Tel Aviv under the name Boutique Salon, spending some NIS 10 million.

The company also has a line of hair products that are sold in leading pharmacy chains and supermarkets. These products are manufactured in a plant in Yeruham owned by Emilia and are marketed by Sano. Sano said on Wednesday that it had no idea whether they would continue to market these products or whether they will continue to be produced.

The Shuki Zikri salon in Kiryat Ono, which is a franchise, said it would continue to operate.

"What happened has nothing to do with us, since we're a franchise," said franchisee Ofer Shimon. "When the picture becomes clearer, we'll decide what to do about the name, but for now we are still called Shuki Zikri."

The owners of the Boutique Salon in Tel Aviv, the Yaakobson family, said that while the salon had been opened as a joint venture with the Zikris, they had bought the Zikris out a few months ago, and thus would not be affected either.

The chain had been having problems over the last few years, but they intensified in recent months. Last week Shuki Zikri's headquarters was forced to evacuate its Tel Aviv offices when the company's rent check bounced.

The Zikris were already facing a lawsuit from another landlord, Shalam Products, for nonpayment of rent at a property in Herzliya, and another suit from a group of former workers demanding that they be paid their legally mandated severance.

There are also three open files at the Execution Office against the chain totaling NIS 500,000, of which two are claims by Loreal totaling NIS 300,000.